Energy accounting

[Dimentio]

Energy accounting, for those who are not familiar with the term, is a distribution system where we look at the total emergy capacity of an entire society (society in this term is understood as the energy generation, the machine park and the infrastructure).

We divide the total capacity equally between all humans living within the area which is using the EA system. That means that they get a small plastic card (not necessarily a card) with an unique account tied to their ID. That is rather a quota for their possible consumption opportunities than energy in itself.

When they are ordering goods and services, the energy needed to produce said goods or services are subtracted from their quota.

The quota is supposed to cover for two years. After that, the level is reset to the highest available quota for the new period.

You could not exchange energy credits, as the KW units of the quota are called. You could not save them over the two-year period. You could not steal a card unless you try stealing someone else's identity.

Of course, this is only a very basic blueprint of how the system will look like, and it might be more complicated when applied in the real world.

There are some moral hazards as well, associated with Energy Accounting.

For example, should healthcare and schooling be associated with EA if it is implemented, or a whole own area which is "free"?

Should everyone have the same income, or should those who work harder get a bit more "income" (a bigger energy quota)?

Demogorgon claimed, in one thread, that Energy Accounting goes against economics. I think, in my divine innocence, that he might mean that it somehows contradicts the notion that human wants are equivalent with human needs, the basic of neoclassical economics.

I could assure, that since the capacity always is equal to the total aggregated amount of quotas in a technate, situations of hoarding will only affect the individual hoarder badly, without affecting anyone else, so there will not be an extent of queues, at least not according to the design.

I will claim, that Energy Accounting sounds a lot more sane than for example gift economics.

What is your take on it?

[Lynx]

The idea that energy credits would replace paychecks sounds radical to me. I don't believe that such a disconnect would work from the outset. Unless workers trust the functionality of such a system and recognize the importance of their contribution to it, then you would have a free rider problem.

The technocratic energy credit system appears to be the equivalent of the higher level of communism.

[Dimentio]

Andrew's and Lupus's are those focusing most of it. You could find them on http://en.technocracynet.eu

I agree that it is radical, but radical problems need radical cures, and capitalism is devastating the ecological and social balance of Earth.

Nevertheless, I think that Energy Accounting as a system needs to be introduced gradually and in a controlled way.

[Lynx]

Calculating energy looks like a useful tool for calculating opportunity cost, that alone makes it worth considering.

[Dimentio]

It is not only calculating energy, but calculating emergy as well, taking in the whole production cycle, thus accounting in externalities. Moreover, it is also calculating energy in terms of resources as well, and the losses by depletion.

[Cult of Reason]

For example, should healthcare and schooling be associated with EA if it is implemented, or a whole own area which is "free"?

No, they should be free, IMO. Schooling benefits the whole of society, not just the individual. Also, treatments with a high energy cost could restrict the purchasing power of the sick.


Should everyone have the same income, or should those who work harder get a bit more "income" (a bigger energy quota)?

Same income. There should be a social duty to do useful work. In the event where more people want to do a particular job than there is need for that job, then only those best qualified should be allowed to do that job. Further, if there is a particularly unpopular job that cannot feasibly be done away with or made less bad, then those least educated, and so less fit for anything else, should probably be assigned to it or, alternatively, more people as a whole should do the job so that the working hours for the job can be decreased.

Besides, when there is an abundance of goods and service, the effect of a differentiation of income is moot.

Regarding the transition to the energy accounting system from a situation of scarcity (artificial) to abundance, I think the following scheme could be considered:

Energy accounting is introduced immediately. When it comes to environmental and material costs (I will explain this bit later), it is already sufficient. The only problem might be in equitably dealing with demand in a situation of scarcity. Therefore, for as long as scarcity exists, there should be energy accounting where everyone gets an equal share of the (scarce) energy available to the system. That is, there would be restriction on people's consumption in the short term, where they need to budget their consumption in terms of energy. In addition to this rationing of energy, there should also be rationing of any other scarce objects that are vital to each consumer, such as food, water, clothing etc. (incidentally, this period might well help remove the lingering elements of today's consumerist society -- a good thing).

As things continually improve, the rations of energy, food, water, clothing should increase until the point where they become irrelevant to typical consumption. At that point, all the restrictions aside from energy should be dropped. After all, if you are never finding any particular use for all your clothing coupons, then they might as well be done away with so that people do not have to work to administer them anymore.

In a revolutionary situation, the idea of gradual introductions does not seem very relevant. In that situation, changes must be fast if collapse is not to occur. In the short term, the change in the system can be justified by "it's for the revolution, comrade". After all, after you have abolished private property and taken over the means of production, do you really expect your income to come in in the same way? In the longer term, the performance of the system will be enough.

With regards to materials etc., the beauty of an energy accounting system is that, properly executed, it already takes account of this. Open-cast mining, for example, devastates country-side. If it is assumed that people will demand for the country-side to be adequately restored, then then energy cost of such restoration should be added to the energy cost of the mining and then compared to the energy cost of deep-shaft mining the same resource. Whichever is less, wins.

If the question is of mining versus recycling then the answer is easy. Recycling usually will win because the materials do not usually have to be processed as much as mined materials. For mined materials, the total energy cost is given by:

Energy needed to find new equivalent resources + energy needed to develop the mine (infrastructure and equipment costs, etc.) + material extraction energy costs + smelting/refining costs + fashioning costs + all the transportation and distribution costs, all in energy terms

For recycled materials:

waste collection costs (and the waste must be collected anyway) + processing costs + fashioning costs + distribution costs

Since the latter has fewer things to add up, it will usually have lower energy cost. With an energy accounting system, environmentally friendly choices become obvious. mining will usually only be done when recyclable materials are for any reason unavailable.

[Dimentio]

While political change indeed could be very rapid, I think that the deeper system change will occur over several generations. No system was born out of the ashes of the previous one without at least being partially tested.

No one would claim that Europe in 1789 or 1848 was as feudal as in 1348. In fact, the gradual fall of feudalism in Europe took basically 500 years, between the Black Death 1348 and the Revolutions of 1848.

Only the last phase of that enormous transition was ideological.

I think ideology is paramount, but economic interests, changes of technology, of organisation and similar on the micro-level might be necessary in order to forment social change towards a more egalitarian society.

The main problem is of course that we might not have any time for testing, or rather too little time.

[Demogorgon]

The most fundamental objection to energy accounting is that it bears no relation to the fundamentals of economics, most importantly of all that economics is about inter-human relations. Economics really comes down to how much it costs to make things and bearing this in mind what should be made and how should it be made. From there we come to all the other questions, such as the desirability of different economic systems.

Trying to work out the question of what to produce with energy accounting is a non-starter because it does not measure cost in a way relevant to economics. it attempts to take notions from physics and apply them to economics and that won't work. Costs in economics come down to labour costs. Through manipulation, artificial costs can be created of course, but leaving that aside, all real costs are the amount of labour expended on something. This cost is best understood by the fact that if Labour is expended doing something it cannot be expended doing something else. So if I labour on x I sacrifice my ability to labour on y or not to labour at all and take my time as leisure.

Energy accounting attempts to ignore all that and look for costs where from an economic standpoint there aren't any. In physics and other sciences you can work out all sorts of things based on the amount of physical energy that went into something, but you cannot do that in economics. Consider the example of getting a train from a to b. The physicist or engineer wants to know how much electricity is needed to do this, where the energy is going to come from and so forth. The economist does not need to worry about this, all she need concern herself with is how much human effort is going to be required to get this energy. If for instance we are going to be old fashioned and get our electricity from coal, the physicist must work out the level of energy gain from burning the coal, the economist only cares about how much effort to remove it and offer the power plant. Calculating the physical applications of this is only relevant to the economist in terms of how much human effort need to expended by the physicist and engineer to work that out.

So for the cost of running our train, the energy accountant wants to know about the electricity, the energy extracted from the coal or whatever, the energy the workers involved need to use in order to do their bit. That however is useful to calculating cost. The actual cost comes down to how much work was done to achieve this, nothing more, nothing less.

That more than anything else is why I said that energy accounting has no bearing on economics, it fundamentally misunderstands costs.

It misunderstands a fair few other things as well mind you. I don't have time to list them all so I will refer to just two. Firstly the whole theory is meant to be based on working out productive capacity, but that is not a finite number or even necessarily a tangible thing. The amount we can produce comes down to what we are producing. Because we are not equally proficient at all things that means our production will vary wildly in its level depending on what we make. Moreover we cannot know exactly what our productive capacity actually is until we try it out. So we will at first at least, be making stabs in the dark as to what we can do, and of course in order to determine what we do make we need to know what people want in the first place. Demand needs to be tracked and energy accounting will not be able to do this in a manner that is relevant to actual cost of the goods people want because of the aformentioned problem that it does not address real economic costs.

The other problem I will refer to is that people simply won't go along with it in practice anyway. If we decide what to make, how do we enforce it. What if I am told to work on x and tell you I just want to go and get drunk instead? I am getting my energy credits anyway, so why should I care? Moreover, even if we avoid that, there is the fact that all transactions will have to go through a bureaucratic procedure in order to be tracked. Why go to that effort. Why not just say, "I will do x for you if you do y for me" and not concern anyone else with it. We will both then expend energy and receive goods without any energy credits being used. If it is simply easier to do that, why not do it.

The great problem in other words is that it attempts to apply scientific methods of examining the natural world, operating by predictable laws of physics to the less predictable world of human relations. That isn't going to work. Physics and economics are related in that they both use applied mathematics to calculate answers to various problems, but the methods of one cannot be successfully applied to the other.

[Dimentio]

The thing is that the reason why labour has a cost is that we have a monetary system from the beginning, because we have several different nodes which are producing different stuff, or at least we have had that for a majority of human history. Also, the amount of energy generated still in year 1800, was about 97% based on human labour. Today, this relationship is almost inverted in developed economies.

People are getting a share of the production capacity anyway. The main problem (and most discussed question) is human motivation.

As for the question what should be produced. A technate does not centrally plan what should be produced.

All the consumers individually allocates their energy credits to services and products. The cost in EA equals the emergy input into the production of a product or service.

Hence, the production is decided by the needs, the demands of the population of the technate. You decide what should be produced for yourself, while William decides what should be produced for himself. Both you and William are happy.

Since your share is a share of the total amount available during a specific period, the system will not enter scarcity either.

As for the whole argument about economics and labour. I must add that work in a technate is supposed to be a sort of social contract. If you live in a technate and is of a certain age (and not ill or disabled), you are supposed to do some social service, at least a minimum time.

The problem is not lack of labour, but about how to make labour as motivating and giving as possible.

While we technocrats acknowledge that human beings are important actors, we also believe that technology is essential. 50 diggers in one day could not reach the abilities of an excavator and one digger. Thus, we see society as an interaction between natural resources, people and technology.

[Demogorgon]

That is incorrect, you are assuming that there are costs in existence that cannot be reduced back to Labour. This is not a position supported by any economics I know, either you have those backing the Labour Theory of Value supporting what I say or Marginalists who hold that cost of production isn't the issue in terms of value, but still acknowledge labour when they discuss cost.

The monetary system doesn't come into this, indeed you could probably see the effects of costs of Labour even more clearly in primitive societies without money (how much effort will it take to irrigate the field? How long to harvest the crops? Will it require less effort to hunt?) Again, you are making an assumption, with any economic basis that energy is relevant here. It isn't. In order for something to be made we must expend effort in doing so, energy not coming from us has a cost in terms of what we need to do to acquire it. Electricity does not cost anything in of itself for instance, the entire cost is the effort expended in producing it.

This is why Energy Accounting is a non starter as I say, to get around my objections you will need to provide some kind of concrete example to prove your position as you have no recourse in economic theory. That is fine of course, I always like to see empirical back up, but you need to show me it. Until I se an example of Energy Accounting in action, all I have to go on is my knowledge of economics and said knowledge tells me you are mistaken.

As to your argument about people deciding what is produced for them, the problem is it still needs to be produced. If I decide I want product x, who then makes x? What if they would rather make product y, their interests and talents being better suited to that? Also you presume we can just order up our products to be made. What if I want a beer now, not once my order has been carried out?

On another note, I apologise for speaking harshly with you earlier. I find Noxion and Jazzratt utterly intolerable for their obnoxious manner, authoritarian politics, latent racism and lack of any understanding of real politics and take to mocking them periodically. I often do that in the form of mocking their childish views on technocracy and on this case I fired a bit too indiscriminately so to speak and was also rude to you. I recognise that your views are far more sophisticated than theirs and worthy of serious academic consideration even if I am almost certain they are wrong, so while I take nothing back of what I said and have yet to say to the gruesome twosome, consider the thoughtless comments I made to you withdrawn.

[Dimentio]

The fact is that the human body needs energy to operate, like everything else does. While you could increase your capacity to produce through technology, you could not get rid of the laws of thermodynamics, unless the physics of the universe changes.

Labour is thus also a matter of resources. Labourers need a place to sleep, nutrients and leisure to operate. In primitive societies, and societies which are using monetary exchange, we are calculating labour because the system, or the node is exchanging food, resources, security or money in return for labour.

Of course, labour is still needed in the technate, but the presumption is of course that the technate relies far more on machine-generated production than human-generated production.

There is a famous graph which shows the relationship between man-hours and machine-hours between year 1800 and year 1920. While man-hours in year 1800 accounted for around 95% of the total production, it nowadays accounts for about 5% of the total production in terms of energy input.

Thus, on an aggregated scale, a human being working and operating under a technocratic system will roughly receive 20 times more than she is putting into labour.

Technocracy does not work according to exchange, but according to distributionism. Hence, you cannot hoard your energy credits, as explained in the first post in this thread, or exchange them. They will cease to exist once allocated.

While this might be in contradiction to traditional economics, traditional economics is just a way of understanding the concept of value.

When economists are talking about value, they mean how much human beings are valuing things. Some economists claim that people only value things after their use-value or after how scarce they are, while others claim that they value things after the labout input.

We technocrats are not - as you correctly pointed out - focusing on that, but rather on how much resources it would take physically to produce the stuff. As for labour time, you should also realise that we will eliminate a lot of things which we consider waste, like for example multiple teams doing the same task, and a lot of the service sector (stores and such stuff). Thus, we will probably get a huge reserve pool of people which could help us reduce labour time while not necessarily reducing production capacity.

I do not like to talk about theories, but about practical issues.

One such practical issue is your thoughts on how the introduction of EA would affect a given economy.

One such reply I will give you is regarding who is going to make the products. A technate is divided into sequences, composed of the experts in various fields. For example, programmers, electricians and hardware facility technicians might compose members of a sequence focusing on the production of software. They build up various holons, autonomous production units focused on different tasks in the production chain, in a goal oriented manner.

That is the European model, the North American is more simple.

Here is a link which explains how we allocate the production to the facilities best suited for their purposes. http://en.technocracynet.eu/index.php?option=com_content&task=view&id=75&Itemid=103

For food and drinks, we will of course have a continuous distribution to the depots, and to the consumers.

I think NoXion and Jazzratt are fine users, and hope that they get their ACT together. :)

[Dimentio]

http://en.technocracynet.eu/index.php?option=com_fireboard&Itemid=63&func=view&catid=9&id=9764#9764

Andrew wanted all the participants to see this entry.

[Lynx]

The LTV and EA are categorized as heterodox economics.

When we speak of costs, are we referring to the method of valuation?
In capitalism, whatever is not defined as a cost ends up as an externality. In order to better calculate opportunity cost there should be as few externalities as possible. This is an assumption I am working from.

[Dimentio]

Value as understood by economists, as the subjective valuation on the view of the economic actors, do not apply to EA. As earlier stated, all values in EA are understood in physical emergy terms.

[Lynx]

Value as understood by economists, as the subjective valuation on the view of the economic actors, do not apply to EA. As earlier stated, all values in EA are understood in physical emergy terms.
Yes, so the method of valuation in EA would be energy/emergy and the method of valuation in the LTV would be labour-time. These methods form the basis for decision making for each system.

Could the two methods be combined or reconciled one vs the other?

[KC]

Why isn't this in Chit-Chat?

[Die Neue Zeit]

Yes, so the method of valuation in EA would be energy/emergy and the method of valuation in the LTV would be labour-time. These methods form the basis for decision making for each system.

Could the two methods be combined or reconciled one vs the other?

If compensation based strictly on labour-time were implemented (i.e., one labour credit per hour regardless of job), then no. Some jobs require more "energy" than others. Of course, some have other views on labour credits, allowing for adjustments based on, say, risky jobs and what not.

[Lynx]

If compensation based strictly on labour-time were implemented (i.e., one labour credit per hour regardless of job), then no. Some jobs require more "energy" than others. Of course, some have other views on labour credits, allowing for adjustments based on, say, risky jobs and what not.
What if labour-time were strictly observed, with planning decisions based upon EA? Transparency, as always, would include both mechanisms.