A Process Model of Technological Efficiency and Improvement in Socio-Economic Systems

NOT FOR QUOTATION WITHOUT P E R M I S S I O N O F THE AUTHOR

A PROCESS MODEL O F TECHNOLOGICAL E F F I C I E N C Y AND IMPROVEMENT I N SOCIO-ECONOMIC SYSTEMS

P . K . M ' P h e r s o n E . S . L i m a n t o r o

J u n e 1 9 8 0 W P - 8 0 - 1 1 4

W o r k i n g P a p e r s a r e i n t e r i m r e p o r t s o n w o r k o f t h e I n t e r n a t i o n a l I n s t i t u t e f o r A p p l i e d S y s t e m s A n a l y s i s a n d h a v e r e c e i v e d o n l y l i m i t e d r e v i e w . V i e w s o r o p i n i o n s e x p r e s s e d h e r e i n do n o t n e c e s s a r i l y repre- s e n t t h o s e of t h e I n s t i t u t e o r o f i t s N a t i o n a l M e m b e r O r g a n i z a t i o n s .

INTERNATIONAL I N S T I T U T E FOR A P P L I E D SYSTEMS ANALYSIS

A - 2 3 6 1 L a x e n b u r g , A u s t r i a

PREFACE

P r o f e s s o r P h i l i p M ' P h e r s o n w o r k e d i n t h e Management a n d T e c h n o l o g y A r e a o n s a b b a t i c a l l e a v e f r o m t h e S y s t e m s D e p a r t m e n t o f t h e C i t y U n i v e r s i t y , L o n d o n , U K , f r o m S e p t e m b e r 1 9 7 6 t o

A u g u s t 1 9 7 7 . H e w o r k e d o n d e v e l o p i n g m o d e l s t o e x p l o r e t h e t e c h n o l o g i c a l e f f i c i e n c y of s o c i o - e c o n o m i c s y s t e m s b u t w a s un- a b l e a t t h e t i m e t o o b t a i n s u f f i c i e n t e m p i r i c a l d a t a f o r a d e q u a t e t e s t i n g o f h i s h y p o t h e s e s . The t i m e s e r i e s o f a v a i l a b l e d a t a i s now l o n g e n o u g h f o r s u c h t e s t i n g t o b e g i n a n d t h i s p a p e r i s t h e f i r s t p u b l i c a t i o n o f h i s r e s u l t s . I t w a s p r e s e n t e d a t t h e F i f t h E u r o p e a n M e e t i n g o n C y b e r n e t i c s a n d S y s t e m s R e s e a r c h a n d w i l l b e p u b l i s h e d i n t h e p r o c e e d i n g s o f t h i s m e e t i n g by t h e H e m i s p h e r e P u b l i s h i n g C o r p o r a t i o n . F u l l e r a n d more d e t a i l e d r e s e a r c h r e p o r t s w i l l f o l l o w i n t h e n e a r f u t u r e .

R o l f e T o m l i n s o n A r e a C h a i r m a n

Management a n d T e c h n o l o g y A r e a

CONTENTS

INTRODUCTORY E S S A Y : THE ECONOMICS AND THERMODYANMICS O F

TECHNOLOGICAL RESOURCE CONVERSION 1

T h e E f f e c t of E n t r o p i c D e p l e t i o n on a n E c o n o m y

SUMMARY O F THE RESEARCH REPORTED I N T H I S P A P E R 4

THE P R O C E S S MODEL O F RESOURCE CONVERSION 4

T h e C o n v e r s i o n P r o c e s s i n G r o w t h E c o n o m i c s 4 A T e c h n o l o g i c a l Model of t h e R e s o u r c e C o n v e r s i o n P r o c e s s 5

T h e S t a t e of T e c h n o l o g y 6

T h e S i m p l e " E n g i n e " Model o f a N a t i o n a l T e c h n o l o g y a n d

E c o n o m y 6

T H E L O G I S T I C F U N C T I O N F O R GROWTH 7

THE L O G I S T I C V A L I D A T I O N O F THE E N G I N E MODEL 7

CONCLUSIONS 8

A P P E N D I X : FORMULATION F O R GENERAL P R O C E S S 9

R E F E R E N C E S 1 0

F I G U R E S : NOS. 1 - 1 2 1 1 - 2 2

A PROCESS MODEL OF TECBNOLffiICbt EFFICIENa AND MPROVDlENT I N SOCI0-ECONOUIC SYSrPHS

Department of Syrtems Science

The C i t y U n i v e r r i t y . London -- .

It

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a g w d t h a t orthodox e c d c a n a l y r i s Thsre d e f i n i t i o n s damonatrate the c l o s e of r e r o u r c e conversion should takm account of t h e r e l a t i o n s h i p between E c o n d c s and Technology, e f f i c i e n c y of r e r o u r c a comrerrion p r o c e s s e s , although one may be f o r g i v e n f o r th-ing t h a t a p a r t i c u l a r l y v i t h r e d p a c t t o the c o n s t r d n t s c o n q i r a c y of r i l e n c e hPs been joined byecoaomists applied by t h e Iavm of t h e i m o d y n d c s . Xf a .and e n g i n e e r s when i t comes t o t h e i r mutual

p r o c r s r modal i r added t o arr ecmamic model t h e i n t e r a n t : r e s o u r c e conversion. M a t e r i a l w e a l t h r e s u l t a n t " e n t r o p i c d e p l e t i o n e f f e c t " induces o r i g i n a l l y stem. f r m t h e conversion of n a t u r a l most of t h e f a m i l i a r rymptcmr of i n f l a t i o u . The resources i n t o a good t h a t is u s e f u l o r consmrr- n a t u r a l trend t w a r d r entropy i ~ c r a a s e that i s able. Ths added v a l u e of t h e good is what t h e i n h e r e n t i n every m a t e r i a l r e s o u r c e conversion commmrs pay f o r

. . .

so wealth is created. But procare carrnot b e l e g i r l a t d away: it imposes f i r s t t h e t e c h n o l o g i s t s have been buay c r e a t i n g l i m i t . t o p a v t h . The paper develops a g e n e r a l t h e mranr whereby tho n a t u r a l r e s o u r c e can be proeeas modal, and aggregates i t t o a simple e x t r a c t e d , processad, m a n u f a c w e d and d i s t r i b u t e &

"engine modal" of a n a t i o n vith primary energy During t h i s r e s o u r c e convarsion p r o c e s r t h e conrumption a s i n p u t and CKP a r output. The added value appears am a r e s u l t of technological energy and QUP d a t n f o r 29 davaloped n a t i o n s f o r a c t i o n t h a t l o v e r s t h e entropy of t h e m t e r i a l s 1950-77 . r e shorm t o have a r l m u k a b l y good f i t t h a t a r e being transformed i n t o h i g h l y s t r u c t u r e d t o thn "Campertz" l o g i s t i c f u n c t i o n t h a t is gooda. But every chonge in n a t u r e must a l s o be t y p i c a l of rmnp f m of n a t u r a l and t e c h n o l o g i c a l covered by e n e r n flow, conreclueutly, t h e growth. So, it i r argued, n a t i o n a l e c o n d c u p p a d i n g of m a t e r i a l i n t o u a a f u l a r t i f a c t s and growth t o l l - t h i s -11 b o w d'evelopment p a t t e r n a e d c e s - - l i e s t h e d m g r a d i n g of t h e .anergp a s -11. Economic grouth does obey t b r m o d h c u m d in t h o process. The r u t u r a l balance, a r lnrr. p r e s c r i b e d by t h e Lovs of Conserrration o f , b e r g y

and Matter, a r e i l l u s t r a t e d in f i g u r e 1 in which PIm 1

INTRODUCTORY ESSAY : TEE ECONOMICS AND TlElM0- DYNAMICS OP TECBNOLOCICAL R E S O W CONVERSION

Perhaps a few d e f i n i t i o n s would be u s e f u l a s a s t a r t :

. Economics. The s c i e n c e t h P t s t u d i e s t h e production, d i s t r i b u t i o n and consumption of wealth

(with t h e r e l a t e d p r o b l e m of labour, f i n a n c e , t a x a t i o n and gwernmant c o n t r o l ) .

Technology-as-roduct. The range of machinery m d procedures that r e s u l t from technological a c t i o n t h a t a r e r e q u i r e d f o r . .

..

~ e & o l o ~ a n - p r o c e s s . The -system by which s o c i e t y t r a n s f o r m m o t e r i a l (throuah t h e

applic;tion of s c i e n t i f i c bowledg;) t o provide t h e goods and r e r v i c e s t h a t i t needs and d e s i r e s .

Entropy. A m e a s y e of t h e d i s o r d e r of t h e s t r u c t u r e of n a t u r a l m a t e r i a l . In therrmdynamics entropy increanes as e n e r g is consumed t o do work o r d i s s i p a t e s t o the ambient s t a t e ; i n information theory entropy i n c r e a s e s a s a aystem mover from m iuprobable s t a t e t o a more probable s t a t e .

Mded value. The a d d i t i m a l u t i l i t y provided t o a g w d by an agency t h a t converts t h e good i n t o a =re r e a d i l y u r e f u l form or t h e good p a r s e s through the agency.

the upward value-adding entropy-decreasing flown of energy and m a t e r i a l conversion a r e balanced by

t h e dovnward v a l u e - d e c r e a r i n g entropy- i n c r e a s i n g f l w s of energy and m a t e r i a l coollump t i o n accompanied by

the wastes t h a t i h e v i c a b l y r e s u l t from energy and m a t e r i a l conversion

Note t h a t energy has two components:

waste due t o i n e f f i c i e n c y i n the conversiaa process

t h e u n a v a i l a b l e ener r e s i d e n t i n cvery energy conversion E o c e s s because it i s impossible to exhaust t o a a b s o l u t e zero temperature

Folloving t h e path. t h r o u g 4 o n e observes t h a t t h e y . a11 end up a s waste products r e t u r n i n g t o a

n a t u r a l high e n t r o p i c s t a t e : t h e r e i s nothing permanent about t h e h i g h l y orCered s t a t e r t h a t r e s u l t from man's t e c h n o l o g i c a l a c t i v i t y . An i n t r i c a t e and e x q u i s i t e l y o p e r a t i n g engine, i f l e f t t o i t s e l f i n a f i e l d , vill r u s t t o a s o l i d Lump of metal. The e n g i n e ' s maintainera have t o work hard and expend much energy and e f f o r t t o c o u n t e r a c t t h a t n a t r v a l decay; i n f a c t they c m o t v i a , a s t h e engine

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h o m v e r wall maintained

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v i l l e v e n t u a l l y wear out. The only r e a l l y s t e a d y s t a t e

i s tha dead s t a t e : d u s t t o d u s t , ashes t o ashes i s t h a n a t u r a l order of things. There is h m v e r a t r a n s i e n t b e n e f i t o b t a i n a b l e from consumption.

Tha p a r e n t s o c i e t y e x t r a c t s the b e n e f i t i n h e r e n t i n the added value a s it uses and conaumes t h e goods. And t h e r e i s a l s o a t r a n s i e n t c a p i t a l accuumlation i n the form s f t h a s t o c k of the technological p l a n t needed i n t h e v a r i o u s p a r t s of t h e process. But the b e n e f i t p a s s e s with t h e conswmr, and tha wualth represented by t h e c a p i t a l s t o c k decays-along v i t h t h e p l a n t . It i s n o t s u r p r i s i n g t h a t man a s c r i b e s t h e h i g h s t v a l u e t o dimmnds and gold

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t h e one a hard rock, t h e o t h e r a metal t h a t does n o t corrode r e a d i l y .

It b e c o m s apparent that economics is t h e v a l u e adding and d i s t r i b u t i n g dimsnsion of resource conversion t o v a a l t h and b e n e f i t . Aa such, the economic procass must a l s o be bounded by the p h y s i c a l laws t h a t govarn m a t e r i a l and energy comrarsion. But a c o n s i d e r a t i o n of t h e the- dynamic balances and constraints t h a t e n t e r economic procass do n o t seem t o be i n themaihscreum of orthodox economic texts.. T h i s omission means t h a t economics.tends t o be unavare of ttfeiinplortance of tha energy balance and conversion e f f i c i e n c y t o the acommic process; p r i c e s do n o t a l v a y s r e f l e c t t h a r w d p n d c f a c t o r s c o r r e c t l y . Resource con- v e r s i o n must be accompanied by enargy use.

consequently unavoidable v a s t e a a r e a l s o generated.

Tha consequant discharge of rubbish and p o l l u t a n t s may dagrade s l w l y back t o r a v m a t e r i a l again, b u t during each and every conversion p r o c a s s t h e r e i s a l s o a permanent l o s s of energy t o t h e system.

The c y c l e s cannot go on f o r ever. Honey, howaver, can keep on c i r c u l a t i n g and

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i f any g e t s " l o s t "

due t o i n f l a t i o n

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governnrsnts attempt f i s c a l c o n t r o l of some s o r t , even t o t h e e x t e n t sometimes of p r i n t i n g more usnay. But no politico-economic a c t i o n can counteract the p h y s i c a l l y necessary a n t r o p i c d e f i c i t a t the end of each conversion process. Honey cannot redeem t h i s permanent l o s s even i f tha nunay balance ends up as a p o s i t i v e p r o f i t .

The E f f e c t of Entropic Depletion on an Economy The ccmpletn a n a l y s i s of technology-economy r a q u i r e s an a c c u r a t e recording of a l l i n p u t s and outputs (including wastes) a c r o s s t h e boundaries of the system and a proper balance s t r u c k between resource flows and funding. A conceptual and s i m p l i f i e d form of such a model is s h o ~ i n FIGURE 2.. The m a t a r i a l resource flows, aided by energy fiows, a r e shovn moving from M a t e r i a l Conversion

through Industry, Goods and S e d c e s t o ^. Consumption. The r a v m a t e r i a l s and energy a r e d r a m from d e p l e t i n g n a t u r a l r e s o u r c e r e s e r v o i r s . Each c m v e r s i o n process i s accompanied by t h e a t t e n d a n t energy and m a t e r i a l waste outputs. Sa f a r che f i g u r e r e p e a t s f i g u r e 1. But t h e r e a r e t h r e e a d d i t i o n s : Buman Resource Flws, R + D and Rsneval of C a p i t a l Stock, and Money Flows.

These money flows t r a v e l i n a d i r e c t i o n o p p o s i t e t o the resource f o r which they a r e paying. The p a t h s of m e y f l w form a network v i t h nodes vhare the flows in rtnd out ought t o balance: a Kirchoff network f o r money i n f a c t . Take the resource flows away rtnd one i s l e f t v i t h a

rudimentary input-output (Leontief) economic model.

I t is u s e f u l toponder t h i s simple model f o r a while t o examine t h e i n t e r a c t i o n between resource conversion and t h e money flow. Assme f o r a r g m a n t a zero growth population with everything i n balance t o begin v i t h : the money flow i s balanced by the added v a l u e of resource flow.

The f o l l o v i n g sequence of e v e n t s can be argued:

1. S o c i e t y ' s s t e a d y consumption r e q u i r e s t h e continuing production of goods and t h e consequent e x t r a c t i o n of resources. Society happily pays f o r t h e s e a t the p r e v a i l i n g p r i c e s from i t s vagespaid t o it by I n d u s t r y . Those p r i c e s a r e i n i t i a l l y s t e a d y in this model economp.

2. Because of t h e continuing consumption resources d e p l e t e and becoma harder t o e x t r a c t . Iforewer t h e q u a l i t y of r a v m a t e r i a l degrades because t h e f i r s t r e s o u r c e s t o be e x p l o i t e d a r e u s u a l l y t h e b a s t q u a l i t y ores.

3. Because of resource d e p l e t i o n u s r e energy i s r e q u i r e d t o e x t r a c t t h e l e s s a c c e s s i b l e o r e s , and w r e energy i q r e q u i r e d t o convert those lower q u a l i t y o r e s t o engineering grade m a t e r i a l . 4. This model is n o t demanding more o r d i f f e r e n t goods, so the production of f i n a l goods can remain constant. But t h e r a t e of energy consumption has now t o i n c r e a s e s t e a d i l y t o balance t h e degrad-::' a t i o n of t h e d e p l e t i n g raw m a t e r i a l s t o produce the same output. In turn t h i s d e p l e t e s t h e energy s t o c k s f a s t e r .

5. The i n c r e a s e d energy consumption has t o be paid f o r . So the p r i c e of goods has t o go up.

Society' s vages can no longer buy the same m m m t of goods a s before, so i t demands q u i t e reasonably a wage incregse.

6. To meet the vell-behaved s o c i e t y ' s r e q u e s t f o r h i g h e r vages t o maintain t h e i r standard of l i v i n g :

E i t h e r (a) the production of goods must be r a i s e d t o balance the i n c r e a s e i n t h e money

~ U P P l y ,

O r (b) t h e e f f i c i e n c i e s of energy and m a t e r i a l use i n the conversion process must be increased t o lower t h e energy demand,

O r (c) the p r o d u c t i m / e n e r g y balance must be r e s t o r e d by ( i ) f i n d i n g nev energy sources. ( i i ) s u b s t i t u t i n g m a t e r i a l s t h a t a r e l e s s energy demanding, o r ( i i i ) i n t r o d u c i n g a l t e r n a t i v e

tachrrologies t o escape the c o n s t r a i n t s O r (d) s o c i e t y has- t o be t o l d t h a t times a r e

hard and that they must accept a lower standard of l i v i n g

Or ( e ) s o m people a r e sacked t o reduce t h q wage b i l l

O r ( f ) m e y is p r i n t e d t o provide t h e e x t r a wages

Or (g) a d d i t i o n a l value-adding a c t i v i - t y i s planned (eg road b u i l d i n g ) t o generate e x t r a employment and wages.

Consider now t h e l i k e l y consequences of t h e s e s o l u t i o n s , and the l i k e l i h o o d that..they might provide a cure t o the " e n t r o p i c d e p l e t i o n effect":

( a ) i s the "increase p r o d u c t h i t y " s t r a t e g y , but i t a c c e l e r a t e s the r a t e of energy and resource d e p l e t i o n , hence p r i c e s r i s e f a s t e r .

Consequently (a) o f f e r s no curc.

(b) the e f f i c i e n c y increases i n energy use w i l l provide a r h o r t t o leid-term cure, but the d e p l e t i o n e f f e c t i r bound t o catch up in t h e end. d l r o increased e f f i c i e n c y u s u a l l y means p r i c i e r highar technology! No l o u p t e r m c u r c (c) thin has been the usual technological escape

r o u t e by innovation o r s u b s t i t u t i o n : the

"technological fix". But t h e R + D and the neu p l a n t ham t o be paid f o r f i r s t .

inducing f u r t h r p r i c e r i s e s end vage d d s h n t r u l l y f e a s i b l e r u b r t i t u t e technologies may be fouud and hp1awnt.d. But they w i l l have t o c o r t =re per unit of production to pey f o r t h e i n v e s m t i n new technology aad th higher vage labour f o r c e

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^even

though the model s o c i e t y ccmtinuea t o a s k o n l y f o r t h e o r i g i n a l standard of l i v i n g .

Techbological f i x e r can provide a p a r t i a l c u r e . but i t i s a race b e m e n technological

e f f i c i e n c y improvement and c o r t incraaoee due t o highar technology and rerource depletion.

In th very long-term, resource depletion i s bound t o win t h e race.

(d) a d i c t a t o r s h i p could, o r a very d o c i l e or enlightened population might, accept this eolution. A d i f f i c u l t s o l u t i o n t o impose.

(a) i s tha a- (d) r e a l l y : the in-work population must rhare i t s wages vith t h e unemployed. & h i s t o r i c a l t e r n a t i v e has been t o r u b s t i t u t e enrrgy f o r paople. eg t h e i n c r e a r e of enrrgy consumption i n a g r i c u l t u r e replacing labourers v i t h t r a c t o r s and

n u c h k u y . Works only i f energy is under- valued. No lon&tem cure.

( f ) the u t r a printod w n e y i n c i r c u l a t i o n i s n o t matched by an increase of goods, coruequently thr v a l m of w u o y ham t o f a l l . C l a s a i c i n f l a t i o n i s induced: no cure.

(g) i r t h e Keynesian s o l u t i m . The t r o u b l e i s

thpt it does not g e t rormd t h e underlying came: resource and energy depletion. I n f a c t i t dl1 probably make matters worre a# energy u r e is increared t o build t h e roads. No cure, except in t h e short-term i f energy is cheap.

Tho simple model of a rerource-linked but enargy conatrained model of an economy obeying the l a m of thermodynamics har demonstrated t h a t t h e entropy d a f i c i t of energy-using resource cycles produces i n f l a t i o n

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^{f o r em} very r t r a i g h t forvard reasons:

t o give t h a appenrance of conatant r e a l value t o vages t h a money c i r c u l a t i o n has t o be inereread uaaupported by an i n c r e a s e i n production

increasing production r e q u i r e s an i n c r e a s e i n energy and m a t e r i a l use which only makes n u t t e r s w r s e *en resources a r e depleting.

Tbir i n f l a t i o n i r induced by t h a t a n t r o p i c d e p l e t i o n a f f e c t . It is t

(a i t van up t o 1973 p r i o r t o the-OPEC a c t i o n ) . But the e f f e c t on e c o d e s w i l l becoma more marlcod the t i g h t e r the m a t e r i a l and energy conetrainto become. The only s o l u t i o n s t h a t have

any p a l l i a t i v e e f f e c t are:

(b) and (c) vhich are "technological f i r e r " and o f f e r soma hope of eecape

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f o r a v h i l e an]NaY

(d) c o n t r o l s t h e money supply (Monetarism), but i s only u r e f u l f o r t h e short-term while an escape r o u t e i r engineered

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^providing

s o c i e t y accepts t h e d i s c i p l i n e .

(e) and (g) vhich a r e coupled a s t h e Keynerian s o l u t i o n t o high unauployment. It is no e o l u t i o n i f th unsl~ploynmnt i s induced by high c o s t s dua t o energy and resource depletion, a s increased p u b l i c w r h do n o t c o r r e c t t h e e n t r o p i c e f f e c t .

There i s one f u r t h a r cmmmnt on e o l u t i o n (d): it is a l s o t h e "go backwards" s o l u t i o n favoured by protagonists of t h e simple "green" l i f e unclutter- ed by high technology.

A l l these a r g m e n t r a r e very f a m i l i a r . The i n t e r e s t i n g p o i n t here is t h a t .Imost t h e e n t i r e vocabulary of t h e contemporary discussion on i n f l a t i o n in i n d u s t r i a l l y developed countries has bean reproduced, nor by d i r c u s r i o n of complex economic theory, but by following the l o g i c of a simple m d e l i n vhich an elementary ( i n i t i a l l y s t a b l e ) economp reaches the point where the ^, second and t h i r d laws of thermodynamics intervene t o exact t h e i r price. I n f l a t i o n i s of course no simple phc~omsnon: t h e r e a r e many economic and psychological f o r c e s a t work. But i t doer seem t h a t an e c d c model t h a t is a l s o constrained by t b e r n d y m m i c lawa homes i n t o a t l e a s t one important underlying problem of i n f l a t i o n r a t h e r nicely. A d i t does seam t h a t t h e present public discussion on i n f l a t i o n control misses the s i g n i f i c a a c e of t h a a n t r o p i c d e p l e t i o n e f f e c t . Engine.rs vould have no d i f f i c u l t y i n following thn argumsnt. Unfortunately, however, t h e r e is no m y t h a t an economist o r p o l i t i c i a n can

l e g i s l a t e t h e lava of thermdynamics o u t of u d s t e n c e . They have t o be accepted, end

-

^{a s}

haa been h i n t e d a t a b w e

-

t h e 1-term

,implications of t h a t acceptance a r e none too happy. Economists tend t o argue t h a t economic progreor need n o t be constrained am t e c h o l o q y v i l l alvays be a b l e t o invent s u b s t i t u t i o n s t o g e t rouud c o n s t r a i n t s (eg 1 ) . Engineers

-

^always

optimists

-

tend t o agree, b u t muLd point out t h a t a r r i v i n g a t s u i t a b l e technological f i x e s becoma more d i f f i c u l t , and t h e p r i c e f o r the e n t r o p i c d e p l e t i o n e f f e c t haa t o be paid con- tinuously, h o ~ v e r e f f i c i e n t o r i n e f f i c i e n t technology may be. An economic "perpetual m t i o n machine" is n o t porsible.

Tho coupling of thermodynamics t o economics i r n o t new. ThP name of t h e eminent economist Csorgescu-Roegen i n , perhaps, most c l o s e l y associated with t h e devalopment. Efis v r i t i n g s ou t h e t h began during t h a 19508, culminating i n h i s book '"he Entropy Law and t h e Economic Rocess" (9). His 1975 paper (10)provides a c r i t i q u e of orthodox economic theory. Callagher (8) v r i t e r a u s e f u l and concise ruuunary.

Georgescu-Roegen has h i s c r i t i c s of course

-

^{j u s t}

about every o t h e r t r a i n e d economist, so he has been i n t h e v i l d e r n e s s somewhat. But orthodoxy i s s h i f t i n g under the sustained a t t a c k of events and the protagonists of energy-economics o r energy a n a l y s i s ( 2 4 , 2 5 ) . There hava a l s o been

soma e a r l i e r f o r a y r , f o r example S i r F r e d e r i c k Soddy FRS wrote i n 1926. "

...

t h e f l o v of energy should be t h e primary concern of economics" ( 2 6 . quoted 8). S i r Frederick vas a chemist.

SUMMARY OF THE RESEBBCE RFPORTED IN THIS PAPER This paper does n o t i n t e n d t o pursue the arguments betveen t h e tvo extreme camps: that s t e a d y e c o n d c grovth can continue i n d e f i n i t e l y o r t h a t limits t o grouth a r e i n e v i t a b l e . The purpose of thm i n t r o d u c t o r y e s s a y is --fold:

( i ) t o damoostrate t h a t e c o n d c atodels should . c o n t a i n a s e c t i o n t h a t s u b j e c t s m a t e r i a l . r e r o u r c e cornrersions t o thermodynamic c o n s t r a i n t 8

( i i ) t o provide some arguments t h a t w i l l l i n k up with t h e l a t e r a n a l y s i s of n a t i o n a l e c o n o h c growth p a t t e r n s .

The trail t o Ceorgescu-Roegen vas stumbled over while searching f o r e ~ o a o m i c t h e o r y to support a notion born of an e a r l i e r study on t h e modelling and dynemics of t e ~ o l o g i c a l change (18). The n o t i o n is t h a t t h e economic growth of a t l e a s t t h e i n d u s t r i a l i z e d nations-might be p r o f i t a b l y s t u d i e d au i f they ve:e technological r e s o u r c e conversion process

-

o r enginer" f o r s h o r t . The engines convert a a t u r a l and h m a n energy i n t o wealth. The thought v a s born of mo o b s e r v a t i m s :

1. For lorig p e r i o d s the r a t e of t e c h n i c a l progress has been f a i r l y c o n s t a n t a8 measured by economists (eg 27).

2. The c o r r e l a t i c m between CNP and p r h r y e n e r g y consumption is remarkably good over time f o r a l a r a e ensemble of n a t i o n s (eg 25). Figure 3 presents a s p o t s q l e f o r 1973.

Lf t h i n simple "engine" model of a n a t i o n holds up t o v a l i d a t o r y t e s t s it vauld mcaa t h a t n a t i a n a l economic developmmt can be t r e a t e d a8 i f it were a technological process v i t h an o v e r a l l conversion e f f i c i e n c y t h a t changes i n time. The e f f i c i e n c y wo$d i n c r e a a e iu a r e s u l t of technological improvematt. and m u l d be c o n s t r a i n e d by thenno- dynamic.limits. Uhich s u g g e s t s t h a t t h e r e l a t i o n - ship betveen energy and CUP should have a l o g i s t i c form i n conmun v i t h t e c h n o l o g i c a l improvements k general. The o r i g i n a l sample c o n s i s t e d of d a t a from QTP and primary energy consumption over 1950-1973 f o r 26 developed n a t i o n s (both market md planned economies). The l o g i s t i c t e a t made oa.

t h i a s q l e gave encouraging but not too w e l l c o r r e l a t e d r e a u l c s . This paper r e p o r t s f u r t h e r work u r i n g an enlarged rample of 29 n a t i o n s over

th period 1950-1977. A more s o p h i s t i c a t e d l o g i s t i c t e s t i a employed v i t h good r e s u l t s . Conseque?tly i t v i l l be argued that:

( i ) the l o g i s t i c form of n a t i o n a l dwelopment is arguably t h e case

( i i ) a- procesr model of n a t i o n a l economic grovth is w r t h developing,,

( i i i ) economic development does obey" the- dynamic c r i t e r i a .

THE PRO&SS MODEL OF BESOUR& CONVEBSION The Conversion Process i n Growth Economics

The t y p i c a l Production Function model f o r e c o d c grovth i s i l l u s t r a t e d i n Figure 4.

FIGURE 4

Such models a r e used t o i n v e s t i g a t e t h e c a p i t a l requirement K t o give a continuous growth i n n a t i o n a l product Y v h i l e ensuring f u l l employment L under d i f f e r e n t types of t e c h n i c a l p r o g r e s s A.

The model i s of _ t h e general form (13):

This become f o r varioue types of technicel change (TC) :

Bickr-neutral TC

. ..

^Y

-

^AF(K,L)

-

^{em%QL1- 2a}

Earrod?leutral TC

. .

^Y-F(K.AL)

-

em(l-a)%%l-a 2b The ' r i g h t hand expression i s the Cobb-Douglas production f u n c t i o n v i t h c o n s t a n t r e t u r n s t o s c a l e where:

dY R ^3a

a

-

^? 1, the output e l a s t i c i t y of c a p i t a l 1-a

dY

_dL

- _H

^L

.

t h e o u t p u t e l a s t i c i t y of labour ^3b A

-

^emt

^,

^m i r a c o n s t a n t r a t e of t e c h n i c a l

change 4

Solving s q u a t i o n s 2 forAtsay, a given r a t e of l a b o u r i n c r e a s e L

-

^Loe

.

H i c k s ~ e u t r a l TC and . f u l l employment g i v e s

~ ( t )

-

^{yo e +}

^(i%)t

⁵

Vhich is i n t e r e a t i n g a s i t suggests t h a t t h e long- run growth in Y i s a function only of t h e grovth r a t e s of labour supply and technological improve- mant. and is independent of t h e proportion of n a t i o n a l product sY t h a t i e d i v e r t e d t o investment r a t h e r than consumption! The labour supply may i n c r e a s e f o r f r e e . But technological imprwement r e s u l t s only a f t e r heavy investment in education.

R + D and nev p l a n t i n c o r p o r a t i n g t h e imprwed processer. Other assumptions v i t h r e s p e c t t o TC g i v e d i f f e r e n t s o l u t i o n s . This i l l u s t r a t i o n i s r e p r e s e n t a t i v e of text-book a n a l y s i s r a t h e r than r e a l a p p l i c a t i o n s . Complex m i d t i s e c t o r production flmction m d e l s of t h e n a t i o n a l economy a r e used i n n a t i o n a l c e n t r a l planning aad Global models t o determine t h e optimal a l l o c a t i o n of c a p i t a l b e n e e n r e c t o r s t o provide a d e r i r e d r t r a t e g y f o r growth r a t e in GDP (eg 5, 1 5 , . 3 ; 21). But t h e i n h e r e n t d e f e c t s i n t h e production f u n c t i o n

-

^hovever

complicated

-

^remain.

Three p e c u l i a r i t i e s of t h e production f h c r i o n

should be noted: ^I

1. - It d e a l s only in terms of c a p i t a l . labour and a f a c t o r representing r a t h e r disembodied t e c h n o l o g i c a l change. The c a p i t a l s t o c k K stands f o r technology.

2. The d e t i i l s of the technological processes producing Y a r e ignored. Only f i n a l products

a r e cotmted. Intenaadiate products a r e neglected a s i t is assumad t h a t t h e i r values a r e properly reprasented by the p r i c e s of t h e f i n a l goodr.

3. The r a t e of technical change i r f o m d by d i f f e r e n t i a t i n g 2a (say):

A l l the r a t s terms can b e q u a n t i f i e d from econoaiic a t a t i a t i c a , h o n u m is t h o r e r i d u a l ( i e error!) botvoon tho LBS d BH9. I t a value hss atayad a t a d y a t b e m u r 1% and 2% per aanum.for Europe m d North

mi-

o a r tho l a a t 50 y e u s o r so (27. 6 ) . Tho a f f i c i o n c p i n c r e e r o i a a t t r i b u t e d t o technological. md a n n a g a r i d improvement i n general t o m s .

Thia a11 too b r i e f rtudg of the production f u n c t i o n in economic growth theory should be enough t o show t h a t it i a somawbat recmvd f r o m t h e thermodynamic b a l m c a a of t h o reaource conversion process i t a e l f . It can only r a f l a c t the a f f i c i r p z p of energy md m a t e r i a l c m e r a i o n proporlp i f p r i c e s a r e an euct r e f l e c t i o n of tho aranmt of

t o t a l aaerpy, m t e r i a l and e f f o r t c m w d i n adding value. There i n c e r t a i n l y soom evidence t o show that the smoothed long-term p r i c e trend. of technologicalproduct have a good c o r r e l a t i r m v i t h the m t of onergy sequestered in forming them (22). But t h e p r i c a of enorgy i t s e l f is o f t e n daterminod by p o l i t i c a l conaiderations u well ae by markat forcea.

P r i c e s a l s o ~ h a v a t o r e f l e c t the tw forme of technological i m p r m m n t t h a t occur i n t h e p m m a s :

e f f i c i m c y improvrment in t h e production procaaa r a a u l t i n g from more e f f i c i e n t mmagarial aud o p e r a t i d procedures, and omre-effective u s e of mar= d i m t e r i a l bacauao of, imprwod technological design of t h e production procaasea

q u a l i t j improvement i n t h e product t h a t c o m ~ from b e t t u daaign md b e t t e r q u a l i t y

control of t h e product during manufacture.

Tho r i s e

En

q u a l i t y i s represented by highor c a p a b i l i t y , r e l i a b i l i t y , maintain- a b i l i t y , u s a r b i l i t y , i n t a r n a l e f f i c i e n c y . b e t t o r r v l e e t c .

A good emtuple of how p r i c e s can completely miss tho q u a l i t y componant in goods is t o be f o m d in t h e praaout computer markat vhera r e a l p r i c e s a r e f a l l i n g r a p i d l y but tho q u a l i t y - o f :the good is r i s i n g by leapa and bolmda.

And f i n a l l y , it haa t o be sdmitted t h a t a f o r m l a t i o n t h a t d a t e d u o s technological c h g e a e the r a a i d u a l term in a broad brush a n a l y r i n of h i s t o r i c a l data is l e a s than p e r f e c t .

A Technological Model of tho Reaource Conversion R o c e a r

A general model of the resource f l u u s in a n a t i o n a l techuological "engine" i r represented by f i g u r a 5. Thm i n t r i c a c i e s of the flova of energy md intarmadiata products within t h e Production Soctor a r e outlined. The p a t t e r n of f l u u s i s c l e a r l y r e l a t e d t o a dynamic Leontief open umdal:

t h e r e

ft

and

?

a r e output and f i n a l demand vectors.

A and B a r e matrices of flow and c a p i t a l coef f i c i e n t s .

The economist q u u n t i f i e s the v a r i o u s types of flow (raw materials. energy, chemicals, motor c a r s

....

⁾ aa money f l w a v i a pricea. It i s d i f f i c u l t t o s e e hov one might do o t h o r v i s e a s w m y is t h e u n i t of t r a n s a c t i o n betveen d i f f e r e u p a r t a of t h e procers. But p r i c e s a r e n o t a true r a f l e c d o n of thermodynamic t r a n s a c d o ~ between and within t h e process. Energy flovs throughout t&e system because each and every technological conmrsicm process r e q u i r e s m energy transaction.

The energy flows a r e q u a n t i f i a b l e in d e t a i l as tho energy consumption of each u s e r is c a r e f u l l y maaured e i t h e r a s enorgy ruppliod o r f u e l bought in. Thw t h e engrgy c o n t m t c a r r i e d

forward by each product i n t o the n u t p a r t of t h e procasa can be a c c m u l a t e d t o provide an o v e r a l l

"energy cost" of t h e f i n a l products. Tbe energy c o s t givas a f a r = r e accurate mleaure of

technological work and e f f i c i m c y than money cost.

Energy a u d i t s on technological a c t i v i t y a r e becoming important a s p e c t s of design and manage- mmt. Enargy Analpais provides t h o methodology f o r conducting t h e a u d i t (25. 2).

A & e l is under davalopmant t o p r w i d e an e x p l i c i t account of ( i ) t h e thannodynamic t r a n s a c t i o n in conversion proceaaas and ( i i ) the improvements i n t h e efficiency aud q u a l i t y of t h e process vith t h e a s a r e s u l t of t a d m o l o g i c a l change. A modal o u t l i n e f o r t h e general procese is a h m i n f i g u r a 6. Any n a t i o n a l engine vill have many much general processes linked together by matrices of resource and product f l o w , energy f l o w , c a p i t a l aud -nay f lovs. (but tho model i s assumed t o l i n k i n t o an appropriate economic and c a p i t a l a l l o c a t i o n modal v i a p e c e s of the input and output f l w s ) . The general proceaaes v i l l

FIGURE 6

cover such technorectors a s reaource e x t r a c t i o n , conversion, energy paneration, maaufacture.

construction

....

d i r t r i b u t i o n

...,

s e r v i c e s , domestic sector. Each s e c t o r a l & e l i s con- s t r u c t e d along the l i n e r of f i g u r e 6 v i t h three

compartments: t h e coaversion process i t s e l f , t h e supporting energy u t i l i s a t i o n and manponr

(labour) syrtema. Tho formulation i s swmarised i n t h e Appendix. It w i l l be seen t h a t t h e model i s described i n terms of i n p u t s , output8 and i n t e r n a l a t a t a (see matrix-over t h e page).

The modal operatos a8 a resource demrmd:

given a daaired output P

,

t h o p r e v a i l i q s c a t a of Technology Tx(t) d . & e aaaociated conversion ef f i c i e n c e s rt (Tx, t )

,

tho i n p u t s necessary t o provide thh'iutput a r e c a l c u l a t e d aubject t o constraints from capacity, resource a v a i l a b i l i t y and quality. Capacity i s p a r t l y a function of the c a p i t a l stock K. U a t e r i a l resource input m a i l a b i l i t y and q u a l i t y vill have t o be provided by an e x t e r n a l resource d a t a base and depletion model (21, 11).

Technological improvement is f e l t through

changes i n t h e e f f i c i e n c i e s q and in t h e product m d labour q u a l i t i e s

3 .

& ) m a t e r i a l and energp-use e f f i c i e n c i e e . h r e c a l c u l a t e d along s t r a i g b t f orvard l i n e s (Appendix). "Efficiency" is used l o o s e l y in t e r m of o u t p u t / i n p u t r a t i o s . The more e f f i c i e n t the process t h e l e s s t h e wastes, b u t f o r a given c a p a c i t y t h e more t h e c a p i t a l charges vill be due t o the deploymant of b e t t e r technology.

Ths q u a l i t y of t h e product

rXp

i ~ ' ~ u a n t i f i e d i n t e r m of e f f e c t i v e n e s s

-

tha l u d i c a t o r of system q u a l i t y used i n Systems Engineering

-

c a l c u l a t e d i n t e r m of c a p a b i l i t y , r e l i a b i l i t y , r m i n t a i a a E I i t y a v a i l a b i l i t y . u t i l i t y , worth e t c . The " e f f i c i e n c y "

of labour use i s defined as t h e product of labour mix

5

&io of managerial and t e c h n i c a l s t a f f to operations),pe- product value added n

.

The q u a l i t y of labour

;

XL is d i f f i c u l t : i t

i F a f u n c t i o n of educational and t r a i n i n g l e v e l s , experience, i n i t i a t i v e a d psgchological a t t i t u d e t o w r k a d r i s k taking. The change i n time i n t h e e f f i c i e n c i e s due to t e c h n o l o g i c a l improvement i s n o t e n t i r e l y e q u i v a l e n t t o t h e changes in t h e elcmnnts of t h e A and B matrices of an input-output model. S t r u c t u r a l change between t h e s e c t o r s i n an

advanced economy vould appear t o be small, and slw

-

^fn s p i t e of coneiderable advances in technological e f f i c i e n c y and q u a l i t y (4).

The S t a t e of Technology

The e f f i c i e n c i e s cover t h e thennodynamic t r a n s a c t i o n s and reaource useage in the process.

They a r e s e n s i t i v e t o technological changes, i m p r w m m t s and s u b s t i t u t i o n s , and t o human a f f i c i m c y improvament due t o b e t t e r management.

design aud operation. Figure 7 tracks t h e various kinds of e f f i c i e n c y improoamant.

Output

un

5, %

Outputs, Tech Change

GX* 5

Model Comparrment Process Energy Labour

m o n e ~ )

I n t e r n a l S t a t e

Prom a resource-use point of view t h e e f f i c i e n c i e s provide a u s e f u l i n d i c a t o r of t h e s t a t e of

technology TX(t). Tha t h r e e e f f i c i e n c i e s of m a t e r i a l , energy and labour use a r e p l o t t e d aa

elemones of a v e c t o r in a three-dimensional eu- c l i d e a n space. The coordinate (0, 0, 0) r e p r e s e n t s a c m p l e t e l y u s e l e s s technology, and (1, 1, 1) s i g n i f i e s t h e i d e a l b u t impossible technology.

Technological improvement causes t h e v e c t o r t o approach t h e (1, 1, 1 ) p o i n t , but it v i l l begin t o shy away when a r s s o u r c e , energy or labour

c o n s t r a i n t i s approached. Analysis of t h e change Input

P ~ l

% 4

Kg

of Length and d i r e c t i o n of t h e v e c t o r in time y i e l d s u s e f u l information f o r t h e manageuent of technological change (18). For example i n c r e a s i n g e f f i c i e n c i e s v i l l reduce t h e m a t e r i a l and energy demand. But continuous resource useage w i l l tend t o i n c r e a s e the energy requirement due t o depletion and q u a l i t y degradation of t h e t a u m a t e r i a l s , and energy use v i l l begin t o r i s e lowering t h e o v e r a l l process e f f i c i e n c y in s p i t e of t h e process improve- ments. This s i g n a l s t o t h e economic model t h a t an increaue i n p r i c e i s r i p e , and t o t h e technology manager t h a t reaource c o n s t r a i n t s a r e being approached

-

^{so i t} i s time t o r e s e a r c h and plan f o r s u b s t i t u t i o n .

Efficiency

' b u

"En

"' XLu

The Simple "Engine" Model of a National :~echnology

and Econoqr .. .

Quality

Iw

VXL

P r o d u c t i v i t y -

The process w d e l j u t described il complex and vould r e q u i r e considerable e f f o r t 'ro'implement i n f u l l . Thus it is d e s i r a b l e t o t e s t m : f o r t h e v a l i d i t y of the concepts on which it i s b u i l t before embarking on major modelling e x e r c i s e s . The main o b j e c t i v e s of t h e w d e l a r e t o i n t r o d u c e thermodynamic c m s t r a i n t s and w r e e x p l i c i t forms of technological change t o s t u d i e s of economic growth a d development. Consequently i t s v a l i d i t y would be demonstrated i f i t could be shown t h a t economic grovrh f o l l o v s t h e same l o g i s t i c p a t t e r n a8 t h a t of an improving technology w i t h i n u l t i m a t e reaource snd e f f i c i e n c y c o n s t r a i n t s .

The t e s t decided on vaa t o d i s c o v e r i f t h e well k n o w r e l a t i o n s h i p between increanes i n CNP and energy consumption ( f i g u r e 3) c o r r e l a t e d well v i t h t h e 'Sf shaped l o g i s t i c curve of t e c h n o l o g i c a l

imprwsment. This t e s t r e q u i r e s t h e p o s t u l a t i o n t h a t t h e "engine" model v i t h primary energy i n p u t and GIG o u t p u t ( f i g u r e 8) i s equivalent t o an over- a l l aggregation a t n a t i o n a l l e v e l of t h e process model. A process model enlarged to cover a l l t h e

n a t i o n a l s e c t o r s of technological and economic a c t i v i t y would have aa i n p u t s primary raw m a t e r i a l g primary energy and labour, while t h e o u t p u t s vould be the n a t i o n a l product rmd v a s t e s . The e f f i c i e n t

k n F

FIGURE 8

o r i n e f f i c i e n t use of improving o r degrading r a v

.

m a t e r i a l s i s a c c u r a t e l y r e f l e c t e d i n the en&

c o s t nf the product. The e f f i c i e n t o r i n e f f i c i e n t use of t h e product generate f u r t h e r energy c o s t s . Those e n e m c o s t s a l s o r e f l e c t improvements in che

s f f i c i a n c y of energy g a a a r a t i o n and u t i l i s a t i o n . ar wall am t h e improvemcntr o r o t h a n r i s a i n t h e managamat. d e r i g n and o p a r a t i o n of a l l techno- l o g i c a l a c t i v i t i a r o v e r a l l . Thur i t can ba argued t h a t t h e primary energy conounbed i s a f a i r

i n d i c a t o r of t h a aaergy coat of t h e production of t h a CNP f o r t h a t yaar. W u t e a arm "paid f o r " i n thoaa energy coata, and human a c t i v i t y i s implied.

h n c e wa asmum ' t h a t eh. engine model of f i g u r e 8 i s a r e u o n a b l a aggregation of t h e process model- a t least f o r i n d u s t r i a l l y developed n a t i o n s where high grade i n d u r t r i a l energy i r by f a r t h e major rhara of anorgy c o n a w p t i o n .

m

LOGISTIC PVNcrZON FOB GROWTH

It i s well Imoun t h a t b i o l o g i c a l and techno- l o g i c a l growth p a t t a r n s tend t o f o l l o w a l o g i s t i c curve. TM such c w e r a r a rhOM i n f i g u r e 9A.

The F + P cunre is t h e P i s h e r and Pry curve which i s s-trical about t h e half-way p o i n t f

- ^1,

^t

-

t (7). The w d e l araumar:

(2;

a c-titiva t e c h n o l o g i c a l s u b s t i t u t i o n proceaa

(b) onca a n w product haa p e n e t r a t e d a markat by a few p a r c a n t , i t r r u p e r i o r i t y i r d a m n s t r a t e d and it vill procaed t o take t h e markat over (c) t h e r a t e of f r a c t i o a o l s u b r t i t u t i o n i r

p r o p o r t i o n a l t o t h e e x t e n t of market left t o be p r a e t r a t a d .

The B + P curve i s given by:

d a r e f . - f r a c t i o n of markat s u b s t i t u t i o n . a

-

constant

On i n t e g r a t i o n :

-

f

-

^e a ( t - t o ) 1- f

Th. cum. may be r t r a t c h e d i n t o a s t r a i g h t l i n a by p l o t t i n g i t on remi-log coordinates ( f i g u r e 98) vhara v i s n o a - d h n r i o n a l t h e

F i s h e r and Pry analyzed seventeen c a s e s of

s u b s t i t u t i o n and found e a r e m s l y good c o r r e l a t i o n s v i t h t h e curve. The remarkable aosumption (b) has baen v a l i d a t e d over a l a r g e nmnber of h i s t o r i c a l r a u p l e s v i t h thn take-ovar time p r e d i c t e d a c c u r a t e l y vhan only t w p e r c e n t of tha f i n a l s u b e t i t u t i m had occurred (16). This simple l o g i s t i c form folloved th e a r l i e r r t u d i e r of b i o l o g i s t s . a g r i c u l t u r a l economirtr a d aconomistr in t h e l o g i r t i c p a t t a r n r of g r w e h and diffusion (20. 12 19). And i t was f p l l w a d by conaidarable research iziro the l o g i s t i c p a t t e r n of s u b r t i t u t i o n , pAr- titularly t o p r e d i c t f u t u r e s u b s t i t u t i o n s and growth. Many of t h e s a s t u d i e s a r e c o l l e c t e d i n -

(17).

In s p i t e of i t o undoubtad success, t h e F i s h e r m d Pry & e l bar a nmnber of l i m i t a t i o n s , one of vhich i s i t s q u a a t i m a b l e a a s w p t i o n (c) t h a t the f r a c t i o n a l r a t e of s u b s t i t u t i o n i s proportional t o tho remaining p e n e t r a t i o n p o t e n t i a l (23). Many

r e s a a r c h e r s i n t o b i o l o g i c a l , information.

t r a n s p o r t a t i o n and u r b a n i s a t i o n grovth have n o t i c e d a non-sgnrmatrical p a t t e r n of l o g i s t i c growth t h a t is b e t t e r f i t t e d t o what i s k n m a s the "Compertz" function:

vhere a.6, a r e c o n s t a n t s t o be found.

The form i s shorn a s curve G i n f i g u r e 9A- Its i n f l e x i c u p o i n t i s a t t h e point y

-

^a/exp.

t-

B/r.

I t . c r m e l s o be s t r e t c h e d i n t o a s t r a i g h t l i n e v i t h t h e transformittion

The "Gompertz" c u m has a f a s t e r a c c e l e r a t i o n during e a r l y grovth r a p r e s e n t i n g t h e a b i l i t y of small unaacumbered o r g a n i z a t i o n s t o develop r a p i d l y . Writing t h e LHS of 12 a s Yi, f o r a t r i a l value of a9ai, t h e c o e f f i c i e n t s

. .

6.

8

^{a r e}

found

minimizing:

TEE LQCISTIC VALIDATION OP TEE ENGINE MDEL The d a t a used f o r t h e t e s t e r e t h e p e r c a p i t a GNP (g) and primary energy conrumption i n tons c o a l e q u i v a l e n t (e) f o r a family of 29 developed n a t i o n a . Ona h a t o be vary of c r o r s - s e c t i o n a l CaSP compuisons. Tha a b s o l u t e f i g u r a s a s l i s t e d i n t h e source. c o n t a i n ol'l the anomalies of currency exchauge r a t e r which a r e u n r e l i a b l e i n d i c a t o r s of t h e r e a l purchasing power of t h e curreucjt i n the p a r e n t nation. A d d i t i o n a l l y , t h e r a t s of i n f l a t i o n v a r i e s v i t h t h rmd country.

and tho b a r e currency may a l s o be s u b j e c t t o i n f l a t i o n . We have s e l e c t e d the 1970 US d o l l a r aa r e f e r e n c e m d allowed f o r d i f f e r e n t i a l

i n f l a t i o n aa b e s t ue c m . I n t e r n a t i o n a l GN? d a t a i s a l s o w u a l l y r e l a t e d t o t h e US d o l l a r . Bu: t h e s e l e c t i m of 1970 a l s o allows us t o a t l e a a t a t a r c w i t h i n t h e framewrk of t h e most e x t e n s i v e comparison of c r o s s - s e c t i o n a l GNP a v a i l a b l e (14)

A t y p i c a l example of t h e d a t a i s s h a m i n f i g u r e 10 f o r 11 of t h e 29 n a t i o n s examined.

Each naticm- i s represented by a (g-e) t r a j e c t o r y over t h e period 1950-1977. Notice t h a t t h e s e t r a j e c t o r i e s maintain a f a i r l y steady s l o p e up t o

1970. a f t a r t h a t they steepen due t o t h e i n c r e a s i n g p r i c e of o i l energy. TBe curving l i n e s a c r o s s t h e t r a j e c t o r y a r e t h e b e s t r e g r e s s i o n f i t s t o t h e exponential paver model f o r t h e i n d i c a t e d year:

where a , i s t h e g/e r a t i o and & i s the slope of the l o g a r i t h m i c f i t f o r t h e year t. Notice t h e v a r i a t i o n r i n B which i s the o v e r a l l " e f f i c i e n c y "

of energy conversion t o GNP: technological improvenr~nt i s a t work. Notice a l s o t h a t t h e e f f e c t of t h a OPEC c a r t e l i s t o improve t h e e f f i c i e n c i e s ( i n c r e a s i n g 6) a s t h e n a t i o n s a t t e n d t o energy conservation. Svaden demonstrates

t h a t one may reduce energy consumption and s t i l l In othar m r d s t h e r a comes a time when the engine i n c r e a s e W. Table 1 l i s t s t h e c o n s t a n t s f o r the i s up a g a i n a t i t s design limits and no more wealth 29 n a t i o n s in the sanple. I n d i v i d u a l n a t i o n a l d a t a ( p o u r ) can be squeezed o u t of e x t r a energy f i t t h e povcr model v e r y well, t h e average of t h e c o n s u q t i o n . The a c t u a l v a l u e of t h e l i m i t i n g a c o r r a l a t i o n c o e f f i c i e n t s rr being 0.95. tba average i s s e n s i t i v e t o t h e c o r r e l a t i o n c o e f f i c i e n t . t h e s l o p e during 1-77 vas 1-06. The United King- a c t u a l valuas of a-, a

.

l i s t e d give t h e range d m is d i f f a r a n t . of course! It is o f f on some of o tha: keeps t h e c o r r a i t i o n c o e f f i c i e n t above law of its own v i t h a very high s l o p e of 2*9(!). t h e n a t i o n a l RX l i s t e d .

and a lousy c o r r a I a t i o n c o e f f i c i e n t of 0.69. While i n d i v i d u a l n a t i o n s f i t tha power model well; f i g u r e

10 s h m t h a t tha n a t i o n a l t r a j e c t o r i e s have a v i d e CONCLUSIONS d i r p a r r i o n in ( r e ) spaca. Comsequantly t h e

c o r r e l a t i o n c o e f f i c i e n t f o r t h e b e s t paver m d e l It would seam t h a t t h e very good r e s u l t s f i t t o t h e whole sample of 29 n a t i o n s during 1 9 5 0 , - obtained when f i t t i n g n a t i o n a l GNP and energy d a t a 77 is low. rr f o r the family is o n l y 0?5604. t o t h e Gompertz f u n c t i o n damrmstrates q u i t e

The a a r l i a r study f i t t e d a smaller 24 n a t i o n s t r o n g l y that n a t i o n a l economic development and rample t o t h e Pirhar-Pry l o g i s t i c & e l f o r 1950- growth is e n e r g y u a e dependent, and t h a t i t s 1973: t h e r e s u l t vas encouraging r a t h e r t h a n g i v i n g evolvement i n tima follows a l o g i s t i c p a t t e r n a good c o r r e l a t i o n (18). Tha l a r g e r sample of 29 c l o s e l y . This h q l i e s t h a t economic development nation& extended t o 1977 f o cover t h e "OPEC

-

i s constrained t o thermodynamic e f f i c i e n c y

effect", has been f i t t e d t o the Gompertz f u n c t i o n c o n s i d e r a t i o n s , and provides encouragement f o r t h e v i t h v e r y s a t i s f a c t o r y r e s u l t s . Figures 11, 12 d e t a i l e d development of process type models t o p l o t the d a t a f o r t h e s-la a g a i n s t t h e l i n e a r b r i n g thermodynamic c o n s t r a i n t s i n t o economic and logarithmic forms of t h e Compertz function. a n a l y s i s .

(Tha energy index v i s given. by A l l t h e evidence s u g g e s t s t h a t l o g i s t i c e ( g )

-

^{e ( - 5 )} t r e n d s a r e s t a b l e over long p e r i o d s i n time. Thus

- *

^e(.g)

^-

e ( - 1 ) 15 n a t i o n a l plauuers could use the Gompertz f i t s t o provide some i n d i c a t i o n a s t o where t h e design of vhere e(g) i s e a t =/cap

-

^g). their n a t i o n a l engine i s going t o take t h e n a t i o n Table 1 a l s o lists the c o a f f i c i a n t s f o r the b e s t t o , what t h e limits t o gmvth a r e and when the national f i t s and t h r b e s t s q l e f i t t o t h e l i m i t i s raached. Tbis i s not an f i n a l a s i t

Gmpertz cume. Note: sounds, because the limit r e f e r s t o the techno-

l o g i c a l design in use. The p r e s e n t n a t i o n a l

-

the c o r r e l a t i o n c o e f f i c i e n t s f o r i n d i v i d u a l engines depend on high-grade energy consuming n a t i a a s a r e high, t h e average being 0.953 industry. A change i n design could provide an t h a t the c o r r e l a t i o n c o e f f i c i e n t f o r t h e escape from t h e p r e s e n t c o n s t r a i n t s

...

b u t t h e r e

vhole sample of 29 n a t i o n s over 1-77 is never auy escape from l i m i t s . Each d e s i g n has i s

a

high. BB

-

^0.941. i t s necessary t h a r w d y n d c limits. F i n a l l y t h e

evidence of the good Gompertz f i t s lends weight For t h e Gompertz f i t , a is t h e f i n a l maxinum v a l u e t o the arguments of tha i n t r o d u c t o r y essay. The of g vhen t h e curve f i n a l l y f l a t t e n s off (100 a

-

e n t r o p i c d e p l e t i o n e f f e c t is a v i t a l m a t t e r f o r g + q , S (1970)). This s a t u r a t i o n means t h a t each economic a n a l y s i s . Perhaps S i r F r e d e r i c k Soddy natio& "t chnolqgy::

i n

i t ? 1 9 5 p 7 7 s t p c t u r e . h a s vas r i p h r .

a gSa r a t r o b u r l t I n t o ~ t s engrne desrgnl'.

APPENDIX : FORMULATION FOR GENERAL PROCESS ( s e e f i g u r e 6) MATERIAL CONVERSION PROCESS

ENERGY CONVERSION PROCESS

Q u a l i t y of product rn

-

^{f ( - 9}

^TX,'b

Energy c o s t of the product

LABOUR

COSTS

Quality of labour 'b ^XL

Product value added per u n i t labour

- - ^nPx2 +

Tr

XL ^;

^~r

- ^{a high reference}

Lx ^XL

% = % + C m ^{+ CXL + Cm + cXR} r Money value added per u n i t product

55-5

Ir,

^--•

^{= a high} r e f erencl

Px2

2. a . 1H, _{a t} d, b p e c r s of Energy Corroarsion, Pargamoa, W o r d , 1976.

3. BRUClQ4AN, C, (Ed), "Latin-Ihuricap Werld W e l o ' . 2 d IfaSB Symposium on Global

C l t A c

U.

Mndelling, CP-76-8. IIASA. 4 , '

4. clann, A P, S ~ T U C M I ~ Chnnge ln the E c y . E a n r u d Univarrity Prara.

G m b r ~ d g e , Hnss. 1970.

5. C1QIC)CPI. K, "Opthcm Iavesunent A l l o u t i o a

FO

A lbbl s f E c 4 c Grovth", Control Vol 6, l o 1, p p x 6 .

Dm-,

^{E P,} 5my Groveh Rates D i f f e r , a e

BrooLinga b e t i t u t i o o , Washington D C, 1967.

7. BISHEB, J C, FEY, B 8. "A Simple S u b s t i t u t i o n We1 of Technological

a?",

T e c h n o l o ~ c 8 l Forecarting and Social Change. Vol 3, No 1. pp 75-88, 1971.

8. G C. "Zconombte and &arm"

9. CEOBCESCU-BOEGEK, H, Th. Entropy Lnv a d t h e

LIN!iTOBE, E A,. SBBbt. D, ( ~ d s l ) , Tachaological Substitution. E l r e d a t . Amatordam, 1976 I'PHEBSON, P .K. "Kodelling Technological

Gauge" in CichocLi K, Straajak A. (Eds).

Syrcemm Analysis Applications t o Camplax h o p a m , Pergaqm, Oxford, pp 69-76, 1978.

WSPIKLD, E. Tlla Economics of Tachnological Churn.. Laannunr. Green. Loodon. 1968.

w -

^Y B, Th= ' i i o l o b of ~ & u l a t i & Growth, rf. 1Y.v Pork. 1925,

. - -

ROB&; P, e c al 'SbBIM 76'. itas-ch Rapom, 0.puoant of tho E m i m a m m t , W o a , 1977.

BO-, P.C, %ugy Analysis in ModO1liql*,

- - con-c

.Process. -d University -ass Catbridge, m a . 19711.

10. CEOBCESCO-ROEG3, I. '??nergp and Economic K y t b " , Soathem E c d c Jourral. Vol 41.

Ik 3, pp. 347-381, Jan 1975.

11. CgEHm; Y, LILPILLmNE, B, "The '-Approach t o Energy S t r a t e g i e s and O p d m a n . RR-76- 19. b t e r u a t i o n a l b s t i t u t e of Applied Syatmw donlyais, Laxfjaburg, Austria, 1976.

l.2. -1-S, 2, 'ggbrid- Corn: an E s p l o r a n o n in eh E c o n d c s of Tachnical Changa", Ecmomatrica, Val 25. (1957).

13. HAMBERG, D, Models of Ecmamic G m h , HPrper and Rov, New York, 1971.

14. m C . B K. BESTOH. A. SUEBEB. R.

I a t a & m t i & a l ~ & a r i s o a of G a l - p r o d u c t end Purchasing Pover, John Bopkias University R e a r . 8 a l t b o r e . 1978.

15. KIREDWSQ[,-B, a t

h,

' t o n g

em

~ o r n m t i v e Model a f Deve~opmant", 4 t h

IIBSB

W e r m n c a on Global Modelling, Sept 1976.

I n t e r r u t i d b r t i t u t a of Applied Systems

d r u l p r i s , ~ ~Auetria. g ,

16. -2, X,. W O R D , EU, "The S u b s t i t u t i o n

~ h ~ o n " , Business Borizon, Vol 15, ITm 1. pp63-68, 1972.

opdt

a t 2.

SBBAL, D, "The Z¶ultidimcnsioaal Diffusion of techno log^",

opcit,

a t 25.

SLESSEB, M, (Ed), Energy Analysis, Iat Fed f n s t i t u t t s f o r Mvaaced Study, Stockholm Uorkahop b p o r t , . No 6, 1974.

S U S S E X ,

n,

Energy in the World Ecmomp, Ma3Ullan, Lon&m. 1978.

SOODY, P, Wealth, V i r t u a l Wealth and Debt,

&orgo Allen & &win. London. 1926. . aOtOOf,-% T e c i m i c a l &e and tha Aggregate

R o d a c t i o n Puuctiopn, b d e v of Ec&cs a d S t a t i s d c n , dug 1957, pp 312-20.

R A T I O O F G N P / C A P , 1 0 W O R L D A V E R A G E

N I G E R I A ^I K E N Y A

S O U T H A F ? I C A

A L G E R I I I

Q A T A R

e

RATIO OF 'fCE/CAP

C E N T R A L . A M E R I C A S O U T H & W E S T

E U R O P E

C E N T R A L L Y P L A N N E D E U R O P E

"

TO WORLD AVERAGE TCE/CAP

Figure 3 : RELATIVE TECHNOLOGICAL hTEALTH FOR WORLD REGIONS

SOURCES:

q i

^P W O R L D B A N K A T L A S 1 9 7 5

O i = UN WES 1 9 7 0 - 7 3

I- ^{- -} - - -

G E N E R A L P R O L E s s I _I

T E U A J I C ~ L

P R O C E S S X

P r o c e s s

PX1 m a t e r i a l i n p u t ; P p r o d u c t X 2

WXpl m a t e r i a l wastes;WXp f i n a l w a s t e s

"XPU e f f i c i e n c y o f m a t e r i a l u s e E e n e r g y c o n t e n t of p r o d u c t

X

a s c r a p r e c o v e r y f a c t o r ;

XF t ' ^wast

Energy Use

EX1 t o t a l e n e r g y s u p p l i e d t o o p e r a t i o n

EXlp, EXIS t o t a l e n e r g y i n p u t s t o p r o c e s s , r e c y c l i n g EX2S e n e r g y consumed by p r o c e s s , r e c y c l i n g WEXp, WEXS e n e r g y w a s t e s from p r o c e s s , r e c y c l i n g WXE t o t a l e n e r g y w a s t e s

I

a p r o p o r t i o n of e n e r g y t o r e c y c l i n g

XE

I

"EUXP' "EUXS e f f i c i e n c y o f p r o c e s s , r e c y c l e e n e r g y u s e

"XEU o v e r a l l e f f i c i e n c y of e n e r g y u s e Labour

LXM'

L ~ Q '

LXO management, t e c h n i c a l , o p e r a t o r l a b o u r A l a b o u r mix

"XLU e f f i c i e n c y of l a b o u r u s e F i n a n c i a l

C x ( . > c o s t s o f x(.) o p e r a t i o n s r e v e n u e f r o m p r o d u c t

$ c a p i t a l s t o c k o f X

F i g u r e 6 : MODEL OF T I E GENERAL PROCESS

Figure 9 : LOGISTIC FUNCTIONS A linear form

B logarithmic form

F

+ P

:

Fisher and Pry

G

:

" ~ o m ~ e r t z "