greenspree.ca at The Sietch

What came first? Cheap energy in the form of fossil fuels or ever increasing levels of consumption? And what relationship did they have on each other? I have heard many analysts, politicians, pundits and thinkers throw out the statement that cheap oil has artificially propped up the pace of developement and the rate of consumption in places like America. This may sound reasonable and valid, oil and coal are cheaper in terms of extraction and conversion to usable energy than almost any other source. But does this account for the explosion in technology and material wealth enjoyed by so many since the The Great Depression? Could there be other factors that helped out or were maybe even more of an influence?

John Maynard Keynes was a British economist that developed and advocated what is roughly the same theories used today in modern capitalist countries. In simplist terms, he advocated basing the economy on consumption levels and spending out of depressions. The wikipedia artical on Keynesian economics states:

In Keynes’s theory, macroeconomic trends can overwhelm the micro-level behavior of individuals. Instead of the economic process being based on continuous improvement in potential output, as most classical economists had believed from the late 1700s on, Keynes asserted the importance of aggregate demand for goods as the driving factor of the economy, especially in periods of downturn. From this he argued that government policies could be used to promote demand at a macro level, to fight high unemployment and deflation of the sort seen during the 1930s. This however is contrasted by Supply-side economics. Keynes believed that the government was responsible for helping to pull a country out of a depression. If the government increases its spending, then the citizens are encouraged to spend more because more money is in circulation. People will start to invest more, and the economy will climb back up to normal.

More after fold.

What’s important here is that there was a shift in the 1930’s from classical economics which measured the economy based on theoretical output of a country taking into account the natural, technological and labour resources available to one based on limitless consumption and spending. If you look at the graph below you’ll see most forms of energy usage start risely almost exponentially around the 1930’s.

Also, when you look at crude oil prices ( I only have data fro 1946 on but we can extrapolate) you see that costs remained fairly even throughout most of the 40’s, 50’s and 60’s, dropping slightly, but not enough to be a driving force in increasing consumption at the rates shown above.

I’ll admit to not being any sort of expert or even novice at economics and economic analysis, but to me it seems that Keynesian economics, not the cheap prices of oil, spurred the levels of consuption and technological advancement in the 20th century. This says to me that if we want to save the world from environmental and sociological failure, we need to find alternative economics as well as alternative fuels. Consume less!