Title: Second Law of Economics, Energy, Entropy and the Origins of Wealth
Author: Reiner Kummel
Scope: 4 stars
Readability: 3 stars
My personal rating: 4 stars
See more on my book rating system.

Topic of Book

The author is a physicists who applies the concepts of energy and entropy to the study of human economies.

My Comments

While books written by Vaclav Smil (see bottom of post) are more approachable, Kummel makes some interesting observations about the relationship between energy, economic growth and progress.

If you would like to learn more about energy and the origins of wealth, read my book From Poverty to Progress: How Humans Invented Progress, and How We Can Keep It Going.

Key Take-aways

• Energy is the capacity to cause changes in the world; it is stored in matter and force fields. Energy conversion provides the work that drives the processes of life and the production of goods and services.
• Universal history can be subdivided into three parts. Each part is characterized by a certain energy system. This energy system establishes the general framework, within which the structures of society, economy, and culture form.
• Human economies arise from man’s ability to channel energy from the sun into food for human consumption.
• Europe’s rise to global domination cam from harnessing the energy from wind and gunpowder.
• The wealth of modern economies could not have arisen without the energy from fossil fuels. These “energy slaves” allowed use to replace human slaves with free people.

Important Quotes from Book

Whereas the food energy harvested per hectare per year by hunters and gatherers is only about 1 kWh, it amounts to more than 3,000kWh for Indian wheat farmers, and nearly 80,000kWh in Chinese intensive farming. The energetic yields of agricultural technologies are the foundation of the preindustrial high civilizations around the Mediterranean, in Asia, northern Europe, and southern America.

The early agricultural societies unfold… Craftsmen join the peasants. On these pillars rest the first agrarian high civilizations that rise about 5,000 years before the present. They develop an urban business sector, pronounced social strata, trade, art, and writing. Thus, farmers and craftsmen provide the energetic and technological means that empower the ancient empires of East and Southwest Asia, Egypt, Greece, and Rome.

In the agrarian societies economic and political power is with the land owners, because they are the ones who control the energy derived from the direct and indirect products of photosynthesis.

With this information we understand the sad fate of peasants and slaves we observe during the 5,000 years between the first Sumerian, Babylonian, and Egyptian empires and the nineteenth century. Whenever huge armies invade a country in campaigns that last much longer than a week, they have to confiscate the food for soldiers, horses, and draft animals from the peasants of that country. Thus, in times of war, peasants are often robbed of all they have.

Slavery, and its modification socage, was the prerequisite of the impressive cultural achievements of agrarian societies. The glory of the few rose from the misery of the many.

Europe’s global dominance between the sixteenth and the twentieth centuries is due to the ever more efficient maritime use of wind power by oceangoing sailing ships and the military use of gunpowder energy in firearms… Guns are the first weapons whose destructive impact does not depend on muscle power. Rather, they transform the chemical energy of gunpowder into the kinetic energy of bullets, cannonballs, and grenades.

A lasting loss by a folly is much more likely in an isolated society than in societies interacting with each other.

Agrarian society obtains heat essentially from wood. Peat and coal are burned to a much smaller extent. There is no technology to transform this heat into mechanical work. Rotatory motions are generated only by wind, water, and animal and human labor – energy forms not permanently available and not very reliable. The corresponding machines such as winches, windmills and water mills are limited in size and power by the small pressure resistance of the universal raw material wood and its intense abrasion. Greater use of iron is frustrated by the high energy cost of iron ore smelting. Iron is very expensive because of technological and resource constraints, which limit the size of blast furnaces. The larger the blast furnace, the larger the quantities of wood required per unit time, and thus the larger the distances over which wood from sustainable forestry has to be transported.

The human rights, as proclaimed by the Declaration of Independence, and market economics, as established by The Wealth of Nations, would not have become ruling principles of free societies had not steam engines and more advanced heat engines provided the energy services that create the preconditions for freedom from toil.

One may quantify these energy services by the number of ‘energy slaves’ in an economy… sense, an energy slave, via an energy-conversion device, does physical work that is numerically equivalent to that of a hard-laboring human.

The number of energy slaves at the service of a person has increased in time from one, 100,000 years ago, to roughly ten in medieval western Europe, to between 40 and 100 in modern Europe and North America. And, of course, modern energy slaves work much more efficiently than medieval ones.

Universal history can be subdivided into three parts. Each part is characterized by a certain energy system. This energy system establishes the general framework, within which the structures of society, economy, and culture form.

Thus, energy is not just one factor acting among many. Rather, it is possible, in principle, to determine the formal basic structures of a society from the pertaining energetic system conditions”.

Humans lived as hunters and gatherers on the solar energy stored in naturally growing biomass for 90% of the time of their existence, that is until the Neolithic revolution. The social structure is that of the horde. For 98% of the time of civilized life, that is between the Neolithic revolution and the Industrial Revolution, people continued to live on the daily influx of solar energy, using naturally growing and cultivated biomass, wind power, and water power. Peasants and craftsmen were the pillars of society, whose structure changed from tribal to feudal. The last 2% of civilized life, the years since the Industrial Revolution, has been determined by the combustion of fossil fuels in heat engines.

Marxism failed to realize that private wealth can be created by the exploitation of energy sources instead of the exploitation of people.

An example for the big increase of material well-being in industrial democracies in one generation is the growth of the buying power of the work minute. This is the average working time of an industrial employee the remuneration of which can buy a given quantity of goods. For instance, in the Federal Republic of Germany the number of required work minutes decreased between the years 1958 and 2005 by factors of 2 for bread, 10 for butter, 6 for sugar, 4 for milk and beef, 2 for potatoes, 5 for beer, and 3 for gasoline. Thus, for most of the basic goods of everyday life, industrial workers have to work much less at the beginning of the twenty-first century than they had to during the middle of the twentieth century. They owe this to the growing support from energy slaves. In 1960 each West German had about 20 energy slaves and each US citizen had 60 energy slaves at his service, and these numbers grew to more than 45 and 90 by the end of the twentieth century.

Choosing your energy system you’ll choose your road map to the future.

Understanding energy and its ugly sister entropy will be all important for future well-being and stability. This understanding must especially prevail in economic theory, because economists are in modern industrial societies what priests and theologians were in antiquity and during the Middle Ages.

Energy is the capacity to cause changes in the world; it is stored in matter and force fields. Energy conversion provides the work that drives the processes of life and the production of goods and services.

The Sun maintains life on Earth. It has provided all the energy carriers that are presently used in our economies, except for uranium, and is the source of the principal renewable energies, which will become important in the future.

Photosynthesis provides the chemical energy for life on Earth. Respiration converts this energy into work within living organisms.

Photosynthesis:

6H2O + 6CO2 + light => .HCOH6 + 6O2

Respiration:

HCOH/6 + 6O2 =>! 6H2O + 6CO2 + “38ATP”

Food powers the human body, whose hands perform work and whose brain processes information. Horses, asses, oxen, and mules also convert fodder into work. Food, fodder, and wood were the main sources of chemical energy for economic activities before the Industrial Revolution. Besides, there are the kinetic energies of wind and water.

Heat engines changed this situation drastically. They opened up the huge store of fossil fuels accumulated by the Sun on Earth in more than 200 million years. This had two revolutionary consequences. First, a positive-feedback circle was established in which fossil fuels facilitate the cheap production of metals, from which heat engines are built, which make more natural resources accessible. Second, heat engines convert the chemical energies of coal, oil, and gas into work outside the limitations of human and animal bodies. Transistors, powered by electricity, further reduce biological limitations. They assist the human brain in processing and storing huge quantities of information.

We would still be living in agrarian societies if we had no heat engines.

The liberation of humans from hard and dangerous work is arguably the most important energy service provided by machines.

The evolution of average energy consumption per person and day and the resulting per capita energy slaves from one million years before the present (BP) until our time:

One million years BP: 2 kWh (gatherer without fire).

100,000 years BP: 6 kWh (hunter and gatherer with fire), approximately one energy slave

7,000 years BP: 14kWh (simple peasant society), approximately four energy slaves

AD 1400: 30kWh (western Europe), approximately nine energy slaves

AD 1900: Germany 89 kWh, approximately 30 energy slaves

AD 1960: West Germany 61 kWh, approximately 21 energy slaves; USA 165kWh, approximately 59 energy slaves

AD 1990:West Germany 117kWh, approximately 40 energy slaves; USA 228kWh, approximately 79 energy slaves

AD 1995: Germany 133kWh, approximately 45 energy slaves; USA 270kWh, approximately 92 energy slaves

World average 46kWh, approximately 15 energy slaves; developing countries 20k

The second law of economics sums this up: Energy conversion and entropy production determine the growth of wealth. It complements the first law of economics: Wealth is allocated on markets, and the legal framework determines the outcome.

Related Books

• “Energy and Civilization: A History” by Vaclav Smil
• “Energy Transitions” by Vaclav Smil
• “A Question of Power: Electricity and the Wealth of Nations” by Robert Bryce
• “Foragers, Farmers and Fossil Fuels” by Ian Morris
• “The Prize: The Epic Quest for Oil…” by Daniel Yergin
• “Prime Movers of Globalization: The History of Diesel Engines and Gas Turbines” by Vaclav Smil
• “Power to the People: Energy in Europe over the Last Five Centuries” by Kander et al
• “Energy: Engine of Evolution” by Frank Niele
• “Natural Gas: Fuel for the 21st Century” by Vaclav Smil
• “How Solar Energy Became Cheap” by Gregory Nemet

If you would like to learn more about energy and the origins of wealth, read my book From Poverty to Progress: How Humans Invented Progress, and How We Can Keep It Going.