{"id":55019,"date":"2020-09-13T10:38:25","date_gmt":"2020-09-13T15:38:25","guid":{"rendered":"https:\/\/olduvai.ca\/?p=55019"},"modified":"2020-09-13T10:38:25","modified_gmt":"2020-09-13T15:38:25","slug":"frederick-soddys-debt-dynamics","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=55019","title":{"rendered":"Frederick Soddy\u2019s Debt Dynamics"},"content":{"rendered":"

Frederick Soddy\u2019s Debt Dynamics<\/a><\/h3>\n
\n

In the field of ecological economics,\u00a0Frederick Soddy<\/a>\u00a0looms large. Born in 1877, Soddy became a chemist and eventually won a Nobel prize for work on radioactive decay. Then he turned his attention to\u00a0economics<\/em>.<\/p>\n

Between 1921 and 1934, Soddy wrote four books that looked at how money relates to the physical economy. For his ground-breaking work, Soddy was rewarded with deafening silence. Here\u2019s how ecological economist\u00a0Eric Zencey<\/a>\u00a0puts it:<\/p>\n

\u2026 Soddy carried on a quixotic campaign for a radical restructuring of global monetary relationships. He was roundly dismissed as a crank.<\/p>\n

(Eric Zencey in\u00a0Mr.\u00a0Soddy\u2019s Ecological Economy<\/em><\/a>)<\/div>\n<\/blockquote>\n

Although ignored during his life, Soddy\u2019s work would become a central part of\u00a0ecological economics<\/a>. Let\u2019s have a look at Soddy\u2019s thinking.<\/p>\n

Wealth vs.\u00a0virtual wealth<\/strong><\/p>\n

Like a good natural scientist, Soddy insisted that human society is constrained by the laws of physics. Humans survive, he noted, by consuming natural resources. Exhaust these resources and we\u2019re done for.<\/p>\n

Think of humans (and our economy), says Soddy, like a machine. We transform energy into physical work. Like all machines, we\u2019re bound by the laws of thermodynamics, which say that you can\u2019t get something for nothing. Energy output requires energy input. That means humans are\u00a0forever dependent on natural resources<\/a>.<\/p>\n

Now comes the problem. Our biophysical stock of resources \u2014 what Soddy called \u2018wealth\u2019 \u2014 is bound by the laws of\u00a0thermodynamics<\/em>. But money \u2014 which Soddy called \u2018virtual wealth\u2019 \u2014 is bound only by the laws of\u00a0mathematics<\/em>. Money can grow forever. Natural resource extraction cannot. This mismatch, Soddy claimed, is the root of most economic problems.<\/p>\n

Cows and virtual cows<\/strong><\/p>\n

Here\u2019s an example of Soddy\u2019s thinking. Suppose that Alice is a would-be cattle farmer. She inherited some land and wants to use it to farm cattle. The problem is she has no money.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Frederick Soddy\u2019s Debt Dynamics In the field of ecological economics,\u00a0Frederick Soddy\u00a0looms large. Born in 1877, Soddy became a chemist and eventually won a Nobel prize for work on radioactive decay. Then he turned his attention to\u00a0economics. Between 1921 and 1934, Soddy wrote four books that looked at how money relates to the physical economy. For […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[29938,195,30302,30304,30303,30306,4312,30305,681],"class_list":["post-55019","post","type-post","status-publish","format-standard","hentry","category-economics","tag-blair-fix","tag-debt","tag-debt-dynamics","tag-ecological-economics","tag-frederick-soddy","tag-infinite-money-growth","tag-natural-resources","tag-resource-exhaustion","tag-resources"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=55019"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55019\/revisions"}],"predecessor-version":[{"id":55020,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/55019\/revisions\/55020"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=55019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=55019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=55019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}