Thermodynamics 2.0 Program: Sessions and Abstracts
Mon - Wed, June 22 - June 24 , 2020 , Massachusetts, USA
Session T17: Biophysical economics
12:00-13:00. Wednesday June 24, 2020
Chair: Jurij Renkas
Title: HARMONEY: A Biophysical And Economic Growth Model
Bio-sketch
Dr. Carey W King performs interdisciplinary research related to how energy systems interact within the economy and environment as well as how our policy and social systems can make decisions and tradeoffs among these often competing factors. The past performance of our energy systems is no guarantee of future returns, yet we must understand the development of past energy systems. Carey’s research goals center on rigorous interpretations of the past to determine the most probable future energy pathways. Carey is Research Scientist at The University of Texas at Austin and Assistant Director at the Energy Institute. He also has appointments within the Jackson School of Geosciences and the McCombs School of Business. He has both a B.S. with high honors and Ph.D. in Mechanical Engineering from the University of Texas at Austin.
Author(s):
(University of Texas at Austin)
Abstract:T17.W105
Abstract
The Human and Resources with Money (HARMONEY) model is a new framework for modeling economic growth enabled by natural resource consumption [1]. HARMONEY is a two industrial sector system dynamic model (sector 1: resource extraction; sector 2: production of capital goods) that enables exploration of interdependencies among resource extraction rate and depletion; the accumulation of population, capital, and debt; and the distribution of money flows within the economy. The post-Keynesian economic framework enables a self-consistent linkage between biophysical and monetary flows. Thus, it overcomes critical limitations in neoclassical theory, and it also provides a way to add important macroeconomic concepts (e.g., wages, debt) to previous system dynamic models, such as World3 used in The Limits to Growth studies, that do not explicitly consider the role of credit and money in the modern capitalist economy.
The HARMONEY framework is verified by mimicking trends that are also exhibited in the United States data. Examples are the wage share starts declining and the debt:GDP ratio rapidly increases after the model no longer increases per capita resource extraction rate. This model framework is perhaps the first that clearly links physical metrics (e.g., natural resources allocation and extraction, net power flows, population) to important socioeconomic indicators (e.g., wages, debt, and gross domestic product). The patterns occur using constant model parameters that govern socioeconomic concepts such as how wages are determined (e.g., “labor/bargaining power”), and thus biophysical principles can improve our explanation of socioeconomic trends (debt, wages, etc.) compare to purely social explanations.
Keywords: economic growth, biophysical economics, ecological economics, income distribution
References:
[1] King, Carey W. (2020) An Integrated Biophysical and Economic Modeling Framework for Long-Term Sustainability Analysis: the HARMONEY Model, Ecological Economics, 169, March 2020, 106464, https://doi.org/10.1016/j.ecolecon.2019.106464.