That is certainly one of a sequence of posts that may ask what essentially the most pertinent query raised by a outstanding influencer of political economic system might need been, and what the relevance of that query is perhaps in the present day. There’s a checklist of all posts within the sequence on the finish of every entry. The origin of this sequence is famous right here.
After the primary two posts on this sequence, the subjects have been chosen by me, and that is a kind of. This sequence has been produced utilizing what I describe as directed AI searches to ascertain positions with which I agree, adopted by remaining modifying earlier than publication.
On this publish, I flip to a brand new theme, acknowledging these economists who’re notable and who additionally occur to be pals, and in some circumstances, folks I’d even name mates. That is undoubtedly true of Steve Eager. I effectively bear in mind first studying his opus, Debunking Economics, and pondering this man was little wanting a genius for the insights he needed to provide in a means that was readily accessible. Now I’ve had the chance to share his firm, ideas and insights, and we discover ourselves referring to one another in selling economics primarily based on the rules of double-entry accounting.
This familiarity, nevertheless, introduced me with an issue. I ready three variations of this essay. One was primarily based on Steve’s work on non-public debt, relating in flip to his evaluation of Hyman Minsky’s work. A second was primarily based on his work on the rules of economics, which is on the core of Debunking Economics. I did, nevertheless, select to make use of this model, highlighting his current work on ecoinomics and ecology. The others would possibly seem as appendices if this sequence is ever revealed, and so they clarify the marginally uncommon title of this essay.
Steve Eager is thought for his modelling of personal debt and monetary instability, however behind that lies a deeper critique of contemporary economics — one which calls into query the self-discipline’s very foundations. He argues that the fashions used to information governments, central banks, and world establishments systematically ignore the bodily actuality of manufacturing. They fake that output emerges from “capital” and “labour” alone, as if machines energy themselves, as if power is incidental, and as if ecological limits are elective.
Eager’s work, due to this fact, asks a query that undermines a complete mental edifice: if economics describes the actual world, why does it ignore the actual world’s bodily legal guidelines? And if it ignores these legal guidelines, how can it declare to supply steering on progress, sustainability, or the way forward for civilisation itself?
Therefore, the Steve Eager Query: If the economic system is a bodily system depending on power and materials throughput, why does mainstream economics nonetheless fake it may be understood irrespective of the legal guidelines of nature?
The parable of the ethereal economic system
Eager’s place to begin is the popularity that mainstream manufacturing features — the centrepiece of financial modelling — are mathematical fantasies. They suggest that output is a clean operate of two summary inputs: “labour” and “capital.” Power doesn’t seem. Supplies don’t seem. Know-how is a magic multiplier. Development emerges from algebra, not from bodily processes.
Eager argues that this isn’t simplification — it’s denial. Actual economies aren’t conceptual preparations of inputs; they’re thermodynamic techniques. They remodel power and matter, generate waste, incur entropy, and rely on ecological stability. To deal with them in any other case is to construct coverage on make-believe.
Ignoring power results in unimaginable conclusions
As a result of mainstream fashions omit power, they produce absurd implications. They suggest, for instance, that output can rise indefinitely even with out elevated power use. They recommend that capital can substitute for pure assets with out restrict. They assume that technological effectivity can outpace bodily constraints perpetually.
Eager notes that such assumptions violate primary thermodynamics. Machines can not do work with out power. Manufacturing can not happen with out supplies. Waste can not disappear as a result of calculus calls for it. The result’s a self-discipline whose formal fashions assure that ecological crises can not occur — not as a result of they’re unimaginable, however as a result of the equations refuse to acknowledge them.
Financial progress as power conversion
Eager’s evaluation reinforces a reality identified to physicists however unusually excluded from economics: progress will not be primarily a monetary phenomenon; it’s an lively one. Traditionally, financial enlargement has all the time been tied to elevated power seize — from wooden to coal, from coal to grease, and from oil to gasoline. Productiveness features come up not from cleverness alone however from leveraging larger flows of usable power by equipment, transport, agriculture, and trade.
By reconnecting economics to bodily actuality, Eager reveals that progress is contingent, not computerized; constrained, not infinite; and depending on ecological stability, not assured by market forces.
Debt, power and the phantasm of perpetual movement
In Eager’s biophysical fashions, debt-fuelled enlargement doesn’t merely create monetary fragility — it obscures the energetic foundation of progress. Low-cost credit score can simulate prosperity for a time, however it can not conjure power or supplies. When ecological constraints tighten — water shortages, degraded soils, declining fossil gas EROEI (Power Returned on Power Invested) — debt turns into a means of borrowing from a future that can’t ship.
For this reason Eager insists that an economic system that ignores power limits will finally crash by them, financially in addition to ecologically. A society can not paper over biophysical shortage with financial institution liabilities.
Local weather change as a macroeconomic blind spot
Eager has been one of many fiercest critics of the climate-economy fashions utilized by central banks and governments. These “built-in evaluation fashions” deal with 4°C and even 6°C of worldwide warming as inflicting modest financial losses — as if the collapse of meals techniques, the inundation of cities, and the breakdown of ecosystems might be offset by features in tourism or manufacturing.
Eager calls this what it’s: pseudo-science disguised as economics. When fashions assume away the catastrophic, they encourage complacency within the face of civilisational danger. As soon as once more, the issue is similar: fashions that refuse to acknowledge bodily actuality can not produce rational coverage.
What answering the Steve Eager Query would require
To take Eager significantly would demand a metamorphosis of financial pondering — not a tweak. At a minimal, it might require:
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Rebuilding financial fashions from bodily rules, integrating power, supplies, waste, ecology, and thermodynamics as foundational, and never elective.
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Abandoning the fantasy of infinite substitutability, recognising that some assets are irreplaceable and that expertise can not bypass bodily limits.
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Re-evaluating progress, shifting from an obsession with GDP to an understanding of sustainable throughput and real well-being.
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Pricing and regulating ecological limits, not as externalities however as binding constraints on the economic system’s working envelope.
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Integrating local weather danger truthfully, treating high-temperature futures as catastrophic, not trivial disturbances.
These adjustments would overturn a lot of what passes for “rigorous economics” in the present day.
Inference
The Steve Eager Query exposes a profound contradiction on the coronary heart of up to date financial governance. Our societies are constructed on fashions that ignore the bodily foundation of manufacturing, deny the truth of power constraints, and deal with ecological breakdown as a rounding error. Eager’s work reveals that this isn’t merely mistaken — it’s deadly.
To reply his query is to just accept that economics should rejoin the pure sciences, abandon its equilibrium fantasies, and confront the biophysical limits that form the way forward for humanity. The choice is obvious: an economics that ignores nature will finally be corrected by nature, violently if obligatory.
Eager’s warning, on this model, is unforgiving and easy: an economic system is a bodily system, not an algebraic dream and techniques that defy the legal guidelines of nature finally collapse.
Earlier posts on this sequence
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