Understanding the global economic crisis: A biophysical perspective

Abstract

The recent economic meltdown worldwide has reinforced our understanding of the effects of decoupling\reconomic growth, monetary policy, and resources. Concern for peak oil and suggestions that it may have\rcontributed to the global economic woes as well as over concern for the banking fraud may be adding\rconfusion over the underlying causes and sending a misleading message to the public and ultimately to\rpolicy makers. Viewing the economy as simply a circulation of money that can be manipulated to increase\rspending and therefore consume our way out of the current economic situation, is courting disaster by\rdeluding the public that the solution lies in simple adjustments to the current monetary system. Similarly,\remphasizing that energy is the problem and that the solution can be found with another energy source\ris probably counterproductive in the short run and may be disastrous in the long run. The recent nuclear\raccident in Japan seriously calls into question increased dependence on nuclear energy and renewable\renergy sources, in the majority, have low net yields and are unevenly distributed worldwide.\rIn this paper we frame the economic system as a subsystem of the larger more encompassing geobiosphere\rand suggest that within this context, neoclassical economics is unlikely to provide sufficient\rexplanation of the recent economic melt-down. From a biophysical perspective, increasing the amount\ror speed of money circulation as well as extracting more energy from whatever source is available will\ronly compound the problems and relying on growth as the solution to what ails the global economy is\rnot a desirable nor a tenable solution.