Greetings everyone.
I am maybe blind, but I could not find any forums for introductions, so I think I would use the opportunity to introduce myself. My name is Enrique Lescure, and I was recommended this forum by a person named Thomas.
I am active in Umea, Sweden, within the Earth Organisation for Sustainability, probably one of the most radical environmental think tanks of Sweden. We have developed a model for economic calculation called Energy Accounting, which is the basis of a theorised post-monetary system.
There are long texts written on the subject, but the short summary is that the renewal capacity of a closed system is measured in terms of how much exergy it contains. Exergy in short is the total amount of potential energy within a closed system. This will be the basis of a new currency called energy credits, which will be distributed out to the users within the system according to their needs. These will not consist of actual energy, which is a common misconception, but rather of shares of the total exergy.
The users would then allocate their energy credits to what they want produced for themselves. The amount of energy credits withdrawn will be equivalent to the emergy value of the production process of a product or service (emergy is the energy cost of a specific operation). In short, the cost of extraction + transport + assembly + distribution + environmental restoration - recycling will be measured and withdrawn from the EC account. The idea is that the accumulated allocations will determine a large part of the production of consumption items.
Why energy is decided as a determinant within this system is because 1) it is an objective measurement, 2) it tells of the amount of potential labour within the system, 3) the system is designed so environmentally damaging processes would become more expensive. Under the capitalist system, they are often far cheaper than ecologically sustainable processes.
I am sure I probably have explained this as good as a rake could, so please be my guest and check in our website at http://eosprojects.com
With kind regards
/Enrique
I think I should leave a couple of lines here since I am the guilty party 🙂
Me and Enrique have had many discussions about planning, remuneration and related issues. The main disagreement is around the remuneration problem: how and if people should be paid, and how, if and which goods and services should be priced. In the Marxist camp the answer is obvious: value is labour, and so things should be priced in terms of labour. Only labour is social. Over time, as the socialist economy and society matures, we can dispense with remuneration altogether. We call such a state of affairs communism.
On the technocratic side, which I think would be accurate to classify EOS as, the proposal is remuneration based on energy. That is, one has an energy theory of value. I'm sure most people on here would criticize this, and I would agree with them, since socially necessary labour time accounts for 93% of the variance in prices. This doesn't mean we couldn't use some kind of energy based remuneration system however. For example ration cards in addition to labour vouchers. Such schemes have been used successfully in war times.
Another problem is the qualitative differences between different forms of energy. 1 MWh's worth of electricity is much more useful than 1 MWh's worth of waste heat. The electricity almost certainly embodies more labour, despite being the same amount of energy. This is similar to my critique of Ludwig von Mises claiming that two goods using the same amount of raw materials can't have different values, despite the fact that they can and do (as measure by price). In my example 1 ton of copper tubing is more valuable than 1 ton of copper ingots.
We are however in agreement that planning will be necessary, and that in planning we can formulate explicit climate constraints.
@enrique_lescure nice to meet you! I look forward to having someone with a ecological calculation background on the forum!
My initial thought is that if the economy were sufficiently cybernetic one could easily build in the constraints of energy into a labor voucher system. What initially strikes me as the obvious way to do it would be to include energy in the categorization of different ways of producing things.
I know Stockholm for example, makes great use of its heat energy. District heating, waste water heat re-capturing, etc. especially compared to the United States (where all our excess heat from power plants is wasted and we burn even more fuel to heat our homes and water).
If one were to look at a district heating setup like Sweden and a simple natural gas piping system or electric heating system like exist in the US, i imagine the labortime calculations would be similar enough yet there are still substantial differences one would want to consider. value isn't the only thing to consider imo.
the use value in home heating systems is the same for both systems and if the labortime is about the same, then the value will be as well. but, the energy use is drastically different.
@thardin I'd imagine it's possible to propose energy budgeting without necessarily a energy theory of value. One thing I found interesting after reading Classical Econophysics, is that the argument was that labor is a universal input to production, and obviously energy is too, you need energy to do work regardless who's doing it. But the thing is, humans are universal machines, and thus you have to put up with the poor energy conversion from food/agriculture production to human consumption in order to get various outputs. What you cannot fundamentally predict, however, is the energy loss involved in human labor. You can discipline workers to meet a certain standard, but how do you ensure a feedback loop that ensures that makes the ex post results line up with the ex ante budget allocations?
@casperadmin As far as planning is concerned, different forms of energy and different kinds of labour are both just factors of production with associated constraints. This is why I say it's really a question of remuneration.
I will defend Energy Accounting contra these counter-arguments on three grounds.
1) The amount of energy we utilize today in our industrial processes is (in the developed world) far exceeding the amount of energy utilized by our ancestors, even though they worked physically harder. The amount of people who are producing necessities in first world economies is a tiny fraction of the workforce (though a large part is producing socially necessary services).
2) The amount of energy we use can be utilized to track our industrial processes and the amount of environmental damage we incur. Energy Accounting is not made to measure value, but to measure costs of operations. It cannot per definition measure value, because then it would need to yield a surplus.
Energy credits are therefore erased when allocated once by the consumer. They cannot be used for trading or accumulation, only for data gathering.
3) I hope that Tomas' objection is about practical reasons rather than ideological, namely how the distribution of energy credits to the general population will happen. Obviously, this process would need to be political, unless we assume a system of full equal distribution or a system where people would be compensated according to the energy value they generate. The latter would become a terribly unfair system, as it would entail people working with power generation becoming the equivalent of multi-quintillionaires, whereas nurses would not receive anything.
What we have proposed as a model within the E.O.S is a three-tiered system where people would get compensated for the preceding year.
The first tier would be an equal basic income distributed to every person regardless of how much they have worked.
The second tier would distribute an amount of energy credits measured after the work input the person has contributed to during the preceding year. This will in no form be tiered to the amount of energy the individual has produced, because that would be... myopic (since the r-word nowadays is a bit challenged). This would be the equivalent of a wage or labour vouchers, and determined by society.
The third tier would distribute an additional amount of energy credits measured in relation to the popularity and reputation of the service provided within the framework of individual or cooperative work, compared to other nodes within the same field. This I imagine could be controversial among socialists, since it is designed to replicate some aspects of the market economy. Potentially, there could even be a negative income tiered to this post, in order to disincentivize bad actors from continuing producing sub-par bicycles or what not.
But in short, Energy Accounting is not about determining value, just about determining costs. These will be measured in relation to the amount of available exergy we have and the emergy cost of productive processes, from the extraction of raw materials to the cost of compensating for a damaged environment.
Ultimately, society has to determine value. This would also be the case no matter if we have money, labour vouchers or energy credits, and no matter whether we have a capitalistic, communistic or any other form of society. It is happening today, where Bitcoin is considered to be a valuable commodity (while it in reality is waste of energy), whereas the work nurses and teachers within the public sector by many a neoliberal are considered "wasteful".
So I would argue that our disagreement stems from a misunderstanding. Energy credits are not meant to determine value, they are meant to give us an overview of our ability to produce stuff.
EDIT: Also, regarding Stockholm, 40% of private homes in the older part of the city are apparently - according to an angry energy engineer in his 60's I recently spoke with - heated by oil. Sweden is a tad bit overrated in many regards.
@thardin amateur question, but -- by whose account of SNALT does it account for 93% of the variance in prices? and by what operational definition of SNALT? and which specific prices did it account for? Very curious to read the paper or book you're alluding to, thanks.
1) The amount of energy we utilize today in our industrial processes is (in the developed world) far exceeding the amount of energy utilized by our ancestors, even though they worked physically harder. The amount of people who are producing necessities in first world economies is a tiny fraction of the workforce (though a large part is producing socially necessary services).
I'm not really a Marxist -- or at least I don't believe in the LTV -- but in their defense, I don't think this works as an objection to the other fellow's point that SNALT predicts prices better than energy cost in today's economy. In DK's economic model, the necessity of socially necessary abstract labor time corresponds not to the necessity of the product being produced for human survival but rather to the necessity of the labor hours for producing it. I.e., one iron worker may be slower than another iron worker at churning out iron bars, but the task itself on average requires a kind of minimum number of labor hours, and it's this average minimum which determines what we're going to consider its cost of production in human labor-hours, and therefore (exchange) value, and therefore its final price. The SNALT is ultimately determined by the industrial technique of society as a whole; when one capitalist innovates a process that reduces SNALT through automation, other capitalists either adopt it or get eaten up by whoever does, and therefore the SNALT of that industrial process goes down across the entire industry and therefore so do the prices. Therefore how advanced or not the economy is per se, is irrelevant to Thomas's claims. Rather, he claims that no matter what the technological level, SNALT (by some estimate, presumably in hours, with some sort of exchange rate into dollars?) will predict the end price of commodities far better than their energy costs (in dollars?) alone. The proportion of people producing "necessities," by whoever's measure we so choose, is also completely orthogonal to the claim Thomas is making as I understand it.
That said,
But in short, Energy Accounting is not about determining value, just about determining costs. These will be measured in relation to the amount of available exergy we have and the emergy cost of productive processes, from the extraction of raw materials to the cost of compensating for a damaged environment.
Ultimately, society has to determine value. This would also be the case no matter if we have money, labour vouchers or energy credits, and no matter whether we have a capitalistic, communistic or any other form of society. It is happening today, where Bitcoin is considered to be a valuable commodity (while it in reality is waste of energy), whereas the work nurses and teachers within the public sector by many a neoliberal are considered "wasteful".
This is a much stronger argument for your position, although you don't exactly go all the way with it. It seems you're saying that what you're really concerned with is the biophysical costs of this or that economic configuration, and that you don't give a hoot about value. This is because you think "society has to determine value." Implicitly, this seems to imply you hold to the idea of value as a socially or collectively generated set of moral imperatives for which (here I'm expanding perhaps beyond the scope of your actual beliefs) economic theories are rationalizations after the fact, rather than value being as the economists of all schools believe being some actual singular force in the real world whether objective (outside our consciousness) or subjective (inside our individual consciousness) which exists separately from prices but ultimately determines them (the singular part being important, because that means there can only be one "true" source of value). The fact you think people "make the case" for this or that price based on a theory of value, rather than the theories of value being hypotheses only one of which is correct about the "true" source of all values and therefore all prices, sets you apart from your interlocutors in your underlying ontology.
My sensitivity to this perhaps pedantic point is the result of my being in your camp (though I think the greatest explicit, rather than implicit, exponent of it so far that I've come across is Graeber in his little-read Anthropological Theory of Value book. I myself, rather cheekily, call it value atheism. The upshot of it is that it sets you free to a certain extent from having to talk about value at all, whether to marginalists or to Marxists, but rather to focus on questions like "can we accomplish X goal given the current combination of biophysical resources and techniques," or "who sets these prices and why," or "what inputs in what proportions matter to this particular set of processes." And that is the situation I would prefer to occupy, rather than generations of talmudic disputation over the true metaphysics of the value-form.
@jmc Ricardo's 93 Per Cent Labor Theory of Value: A Final Comment by George W. Wilson and James L. Pate. Cockshott has written about this as well, making the argument that SNLT is the most compact predictor of prices and that Sraffa's modification make it slightly better at the cost of an extra variable. It's somewhere on his website I think
2) The amount of energy we use can be utilized to track our industrial processes and the amount of environmental damage we incur. Energy Accounting is not made to measure value, but to measure costs of operations. It cannot per definition measure value, because then it would need to yield a surplus.
You can cost productive processes in terms of energy if you like. I show how to do so here.
Energy credits are therefore erased when allocated once by the consumer. They cannot be used for trading or accumulation, only for data gathering.
Just like labour vouchers then.
3) I hope that Tomas' objection is about practical reasons rather than ideological, namely how the distribution of energy credits to the general population will happen. Obviously, this process would need to be political, unless we assume a system of full equal distribution or a system where people would be compensated according to the energy value they generate. The latter would become a terribly unfair system, as it would entail people working with power generation becoming the equivalent of multi-quintillionaires, whereas nurses would not receive anything.
The remuneration problem is an entirely practical one 🙂 Your example is precisely why remuneration based on labour is useful. I'm not even opposed to part of the remuneration being in terms of certain forms of energy, for example kWh of electricity + liters of petrol.
The third tier would distribute an additional amount of energy credits measured in relation to the popularity and reputation of the service provided within the framework of individual or cooperative work, compared to other nodes within the same field. This I imagine could be controversial among socialists, since it is designed to replicate some aspects of the market economy. Potentially, there could even be a negative income tiered to this post, in order to disincentivize bad actors from continuing producing sub-par bicycles or what not.
The USSR actually did something similar to this, with mixed results.
@thardin huh? I swear I'm not saying this in the spirit of a gotcha -- I was expecting to sift merrily through a source full of graphs and input-output tables and think about it some -- but I'm legitimately very confused. There's very little data at all in this piece, and the bit they do analyze rather cursorily from Ricardo's own lifetime shows that the numbers he might have actually seen in terms of firm profitability had little to do with the numbers he put down in his book to support a 93% rule:
Furthermore, while one can still uphold the view that Ricardo's theory of value was empirical and not analytical, in no sense is it correct to view it as a 93 per cent labor-embodied theory, although Ricardo himself believed it to be so. This figure results from numerical illustrations using numbers having no apparent connection with reality. From the point of view of Ricardo's pure theory, therefore, all one can say is that, as long as the rate of profit is not permitted to vary too much and as long as periods of gestation and capital structures are not significantly different among industries, it is logically tenable to stick with an empirical or at least a labor-mainly theory of value.
Not exactly a ringing endorsement? I admit I'm not a particularly numerate person and I might just be dense, but I don't understand how this supports your point.
@jmc It's just the first one I had on hand. I recommend checking out the citations, Paul's reply to it etc.
Just one short point: Any type of system we have in the future, whether what mode of production it utilizes, need to have a mechanism of evaluating costs based not primarily on the evaluation of the utility of the product by the users, but the effect the production process has on the ecosystems of the planet. The users will most likely not be aware of the "externalities" of producing the product, since any type of technological system requires complex production chains. Therefore, the pricing mechanism would have to take into account the planet.
Energy Accounting simply entirely bases its pricing mechanism on the effects the production process has on the environment. This means that the value judgement of the users won't at all play a role in the price of goods and services.
This will not matter since everyone will have energy credits distributed to them according to the three-tiered distribution model above. So there will not be an immediate relationship between the production process and the compensation, even though performance and labour will affect the income of the individual.
Also, the pricing mechanism under this system will probably both affect the demand curve and also fluctuate (an item with a rising demand would eventually incur a heavier environmental footprint which will affect its price).
Also, if the issue is semantic: Energy credits could be called Labour vouchers (or "Earth Credits", "Earth Dollars" or "Tokens" or really anything). What is important is not their name, but that their usage is tied to the total ability of the system to produce and that they track the demand of the users.
[...] costs based not primarily on the evaluation of the utility of the product by the users
This applies to neoclassical economists of which I presume there are zero on this forum.. In classical political economy cost (not price) = value = SNLT.
[...] but the effect the production process has on the ecosystems of the planet. The users will most likely not be aware of the "externalities" of producing the product, since any type of technological system requires complex production chains. Therefore, the pricing mechanism would have to take into account the planet.
Jan Dapprich has a method for calculating "opportunity costs" that probably can be applied here.
Energy Accounting simply entirely bases its pricing mechanism on the effects the production process has on the environment. This means that the value judgement of the users won't at all play a role in the price of goods and services.
How do you do this precisely? To price something you need to be able to quantify it. You can certainly use a remuneration system based on say fossil fuel to steer productive units away from it. Say barrels of oil equivalent. This is why me and @dz1789 are trying to collect ideas around remuneration, because there's a lot of interesting ones out there. We're not married to any scheme in particular.
Also, if the issue is semantic: Energy credits could be called Labour vouchers (or "Earth Credits", "Earth Dollars" or "Tokens" or really anything). What is important is not their name, but that their usage is tied to the total ability of the system to produce and that they track the demand of the users.
It's very much not semantics, but a question of specifics 🙂 The remuneration scheme(s) in use disciplines the system and steers it in a certain direction. That the system is within climate bounds is already guaranteed by the plan solver, assuming appropriate constraints have been put in.
How do you do this precisely? To price something you need to be able to quantify it. You can certainly use a remuneration system based on say fossil fuel to steer productive units away from it. Say barrels of oil equivalent. This is why me and @dz1789 are trying to collect ideas around remuneration, because there's a lot of interesting ones out there. We're not married to any scheme in particular.
As I said before, by measuring the emergy cost of an operation.
In short, lets say that we have a shoe factory. How do we measure the cost of producing 10 units of shoes?
It would be the energy cost of acquiring the raw materials (for example leather, rubber, wood, plastic substitutes), of transporting them, of assembling them, packaging them, transporting them again to the users who have allocated their energy credits to have the shoes produced, and then the cost of compensating environmental damages accrued by the production of said units of shoes.
Note that the process of compensating the workers for their time is entirely disconnected from this process. Energy credits do not measure labour costs, nor do they serve the function of money (at least not entirely). Workers involved in the production of shoes for period X would receive their distribution of energy credits in period X1, in accordance for example with the three-tiered model described above.
The reason why is not some desire to exploit or make the workers invisible, but because the system is about measuring the impact of the human civilization on the ecological system.
This also corresponds to the questions raised above the issue of value.
It is entirely possible to utilize the same amount of energy in producing 10 units of shoes as in producing 1 units of makebelievecoins. While shoes have a utility value, makebelievecoins have at best a cultural value, and objectively represents waste of energy usage. The same could be argued for some items without any use value, for example mechanic dolls that are pulling down their pants and giving out farting noises, or helium-powered shark-shaped balloons with small propeller airships beneath.
My answer on the question of the existence of makebelievecoins is that it would per definition need to be a political issue whether we want to ban that stuff or not. Energy Accounting should not be tweaked to make the transactions represent anything other than pure physical data, since it would then no longer be Energy Accounting but some type of political/social value judgement.