“The objective economy, part three”
https://surplusenergyeconomics.wordpress.com/“Having spent more than two centuries building an energy-profligate dissipative-landfill system, we now face reversion to a more energy-frugal economy in which the relationship between (a) exogenous energy inputs, and (b) the human component tilts back towards the latter. A useful shorthand term for this human component is ‘craft’, a word which captures skills as much as, or more than, it references physical labour…Changes in consumer purchasing will be accompanied by changes of supply processes. These changes – which will include de-layering and simplification, and will be spurred by falling utilization rates and progressive losses of critical mass – can be summarised as “de-complexification”, which involves the reversal of the economic and broader complexity that has been created by abundant, ECoE-cheap energy…In pre-industrial times, skills known as crafts played a very important role in a context of resource and energy scarcity. As the balance tilts away from energy profligacy, we should anticipate a greater reliance, not just on human labour itself, but even more on the application of craft, a term which needs to be understood as a combination of design and skill… “taxonomy of de-growth”…As this process goes into reverse, we will witness both simplification and de-layering. Whilst the latter term is self-explanatory, describing the shrinkage and elimination of whole tiers of activity, ‘simplification’ refers both to products (with customer choice reducing towards more basic ranges) and to processes, where methods of production will become less complex, whilst supply chains are shortened…Meanwhile, we should anticipate the compounding effects of two further processes. One of these is falling utilization rates…This effect applies to any activity whose viability relies on economies of scale, which means that exposure to this downwards pressure is going to be virtually ubiquitous across the economy. A second and related process is the loss of critical mass. This occurs where some of the many components or other inputs required by a production process cease to be available. Some such gaps can be worked around, and will indeed form part of the simplification process. But others either cannot be surmounted cost-effectively, or cannot be overcome at all. Accordingly, products cease to be made because some necessary inputs can no longer be sourced…the whole “de-complexification” process will affect services at least as much as (and probably more than) it affects the supply of goods. Service sectors are prime candidates for de-layering, are likely to be amongst the first casualties of simplification, and are particularly exposed to the adverse effects of falling utilization rates…Ultimately, service industries are adjuncts of the supply of goods, and are a product of the complexity and the efficiencies created by the energy-profligate system…The reality is that, in the pre-industrial economy, services were few in number, and rudimentary in character, and a retreat from an energy-profligate system can be expected to drive their role back towards that situation.”