Energy and economic models

We live in an economic world. Economic models that were developed years ago were created based on observations of how the economy seemed to work at the time. As time goes on, it is becoming clear that early economists missed important connections. The most important of these is the role of energy and its connection to the economy. It takes energy to make anything, from a piece of steel to a loaf of bread. It takes energy to transport anything. Humans need energy in the form of food to continue to live. Clearly, energy should have a place in economic models.

Gail Tverberg from,

I find this stuff fascinating; It’s this giant, emergent phenomenon. Billions of individual people going about their daily lives create such a whirl of activity and action. But the ultimate result is what… an “economy”? A path to “enlightenment” for humankind? Meaningless in total, but meaningful at the individual’s level of experience? Perhaps it’s simply [on the whole] incomprehensible. If you study a little chaos theory, you learn: The butterfly’s beating wings have ZERO affect on the weather. Instead, the fully understood system, (“stochastic”) is truly unpredictable.