A global community connected through systems science and practice 

Gail Tverberg - Oct. 30/Nov. 3 - Models that Explain the Predicament the World Economy Is Facing

Gail Tverberg has an MS in mathematics and is a Fellow of the Casualty Actuarial Society. While working in the insurance industry, it became apparent to Ms. Tverberg that the long-term models prepared by actuaries were not really right: An economy could not expect to grow at the same rate indefinitely, in a finite world. In 2005, she started reading about the oil limits problem and started writing articles on the subject in 2006. In March 2007, she decided to leave the insurance industry and investigate the issue of how the limits to a finite world could be expect to play out, on close to a full-time basis. She started her own blog, OurFiniteWorld.com, at that time. For a time, while the site was still active, she became an author and editor at TheOilDrum.com, writing under the name “Gail the Actuary.” Ms. Tverberg gradually developed and expanded her own theories, as many different energy groups invited her to give talks, and as commenters on her website brought new ideas to her attention. She has written several academic papers and has taught a short course on Energy Economics at Petroleum University in Beijing. Most of her recent writing can be found at OurFiniteWorld.com.

The world economy is a self-organizing system, powered by energy. Ms. Tverberg will explain the predicament that the world economy is up against, as a series of four models:

 

1. The economy as a rocket.

2. The operation of individual local economies as being analogous to the operation of a human body, with many different systems. Each human grows, stagnates, and eventually dies.

3. The economy as being like a child’s building toy, which that is built up in layers. Unneeded layers are removed, leaving a hollow center.

4. The economy as being like a bicycle that must go fast enough, or it will tip over.

 

She will also show that based on 200 years of experience, a major indicator that limits are being reached is energy consumption per capita that stops growing.

 

The real model of the pattern of growth and decline of economies, based on the research of Turchin and Nefedof in Secular Cycles, is a pattern of rapid growth followed by stagnation. After years of stagnation, the system tips over into collapse, slowly at first and then faster. Ugo Bardi’s Seneca Curve is similar. The authors of The Limits to Growth have indicated that their model is only predictive up until the time collapse begins. Thus, the indications provided here are also consistent with those of the 1972 analysis, The Limits to Growth.

The presentation provides an alternative to behaviorism. Instead of looking at the mind as a mechanical object driven by outside forces, it looks at the mind as a subject, as a process of communication and control (cybernetics) that is purpose driven, and has mental models, and decision-making processes. It provides a theoretical basis for cognitive therapies.