PROFILES OF A SUSTAINABLE ECONOMY THE PERPETUAL MOTION MACHINE - Emergent Phenomena From a Most Simple Economy Using ModEco Software - International Conference on Degrowth in the Americas Author: Garvin H Boyle Date: 14 May, 2012
Degrowth in the Americas 1 Profiles of a Sustainable Economy PROFILES OF A SUSTAINABLE ECONOMY THE PERPETUAL MOTION MACHINE - Emergent Phenomena From a Most Simple Economy Using ModEco Software - International Conference on Degrowth in the Americas Contact Information: Name: Garvin Harley Boyle Email 1: Orrery@Sympatico.ca Email 2: Garvin.Boyle@Sympatico.ca Snail Mail: PO Box 1149, Richmond, Ontario, Canada, K0A 2Z0 Land Line: 613-838-3561 Cell: 613-818-2359 Web: www.modeco-software.webs.com Organization: Retired. Artist s Statement: These graphs and charts are generated by my software program called ModEco, which stands for Model Economies. ModEco is the result of my personal attempts to understand some of the great and extremely critical questions of our time. Can an economy function without growth, or can economic growth be delinked from growth in resource consumption? What is the cause of the ubiquitous disparity in wealth found in all societies in the past and in the present? What are the ethical mores implicit in an economy based on profits and losses in every transaction? What role do the poorly-understood but extremely powerful mechanisms of Darwinian selection play in shaping our economy and our society? Inspired by the writings of Paul Hawken, and the emerging discipline of Econophysics, my students and I are trying, first, to understand these questions, and then, hopefully, to find some answers. Background: As a hobby, I write computer programs, and this has been one of my hobbies since 1966. I understand that most professional artists, and members of the public, would quite reasonably not consider what I do to be art, as the visual and audio components do not fit the category of fine art. To be honest, I would not presume to call myself an artist, any more than I would presume to call myself a scientist. What I do is somewhere between art and science. I think about a dynamic process that shapes our society and our lives, I try to capture its fundamental characteristics in an abstracted computer process, and then explore the essential and emergent characteristics of that abstracted process. Ultimately, I share the insights so gained by whatever medium is available to me with whoever wants to listen. So, while my skills and product are radically different from those of most artistic people, I do believe that I share an observer s outlook on life with many artists, and, on that basis, I consider my work to be artistic. While I take some effort to make my graphs visually appealing, my talent is clearly not as a graphic artist. The real value in my work is in the thought processes which I hope to invoke. So, my primary medium for exploring ideas, and then presenting them, for the past 45 years, has been computers, and my art works, computer programs. My fascination over those 45 years has been dynamic processes of various types, and my current fascination is an ecologically sustainable economy. So to be specific, as a volunteer, I tutor
Degrowth in the Americas 2 Profiles of a Sustainable Economy gifted students in the Econophysics Research Club at a local high school, and we are investigating sustainable economics. Over the past 23 months I have been writing an agent-based model which demonstrates a VERY SIMPLE sustainable economy, with the goal of discovering the necessary biophysical and commercial elements of a truly sustainable economy. I believe some very interesting insights are coming from this work, along with some graphs and charts that have a certain aesthetic appeal in their own right. This work is in progress, of course, but significant elements are now available to be demonstrated. An updated version incorporating some of Herman Daly s perspectives on steady-state economies with linear energy flows is in development, but not yet available. This presentation is based on the currently available version of the software, based on a cyclic flow of energy. The word model can have two meanings. Commonly it means an imperfect smaller copy of a real item. An example of this usage is model train. Less commonly, it means an idealized perfect example of something that is not possible in reality, like a Platonic ideal. The phrases model home, or a model prisoner are examples of this usage. The economies that I can produce are models in the second meaning of the word. They are simple abstracted idealizations of processes which are not intended to mimic reality. Rather, they are intended to provide a clear and uncluttered example of a working ideal which can be studied and understood. I, with the inspiration and support of my students, have managed to produce a sustainable model economy which we call the Perpetual Motion Machine (the PMM). Our goal was a most simple sustainable economy. What we found was an economy that displays a rich variety of emergent phenomena. I am not aware that any other person or group has completed a similar work. A caution about jargon - my models are analogies of reality, and NOT simulations of reality. To encourage the viewers to make the analogous connections, I use words drawn from reality, but to remind the viewer that the connection is highly abstracted, I often use un-natural contractions. So, for example, the following jargon is a necessary part of an explanation of the model sustainable economy: Agents in this agent-based process: o Prsn analogy of a person o Corp analogy of a corporation o EMgr estate manager analogy of a central municipal financial manager o MMgr material manager analogy of a central municipal resource manager Other jargon used: o PMM perpetual motion machine first imagined as a friction-free spinning wheel o Township analogy of a municipal region in which the economy is bounded o RbMu resource-based material unit (proxy for mass, raw resources, goods, waste) o WbMu work-based material unit (proxy for energy, infrastructure, health, leisure time) o Grants mechanism for redistribution of the wealth of agents who die without offspring ModEco is a software program by which a user can select the operating attributes of an agent-based desk-top demonstration economy, and then run the economy to see what happens. A ModEco-based economy functions at a physical (metabolic) level and at a commercial level. At the metabolic level, agents harvest food, eat, and dispose of the waste. At the commercial level, farmers hire people to work, sell produce to consumers, and buy waste to spread on the farm. A ModEco-based economy is the most simple, and yet complete, economy imaginable, functioning just above a barter system. One demonstration economy called the PMM (perpetual motion machine) will run forever. The ModEco software produces real-time graphs which let you see the performance of the economy as it progresses. It is also possible to generate micro- and macro-economic data which can be summarized in some interesting graphs. These graphs are both intriguing and insightful for the enquiring mind. Biography Garvin H Boyle, living in the village of Richmond, Ontario, has had a varied career as a federal bureaucrat, as a high-tech consultant, and as a high school teacher. Recently retired from teaching, and supported by his longsuffering wife, Annie, and his enthusiastic students, he devotes his time to tutoring and exploring sustainability using computer programs of his own design.
Degrowth in the Americas 3 Profiles of a Sustainable Economy Image 1 The Township et al. Comprising: a) The Township, b) The cash cycle, c) The mass cycle, and d) The energy cycle. See page 8 for a larger image. In part (a) we see a screen clip from the ModEco program showing the rectangular area called the Township. This is the arena in which the economy unfolds. The Township is divided into square lots. A lot can be occupied by a farm (a Corp) or by a residence holding up to four people (Prsns). Corps hire Prsns to harvest raw material and put it into inventory. They then sell the inventory to consumers (both Corps and Prsns). Consumers buy the inventory (food) and it becomes supplies in their pantries. They then eat the food, and sell the waste to the material manager, who, in turn, sells it to the farmers (Corps) to be recycled on their fields. Part (b) shows how money flows through the economy from store to store. For example, Corps hire Prsns to work on the farm and pay for that work. Then Prsns, as consumers, buy supplies from the farm. The cash flows in a cycle from Corp to Prsn and back to Corp. Of course, there are actually many Corps and many Prsns, so the actual flow is much more complicated. Similarly, the material manager (MMgr) acting as a garbage collector buys scrap from consumers, using cash he had received from the sale of recycled material to Corps. When agents (Corps or Prsns) perish without having reproduced, their assets are handed over to the estate manager (EMgr), whose job it is to redistribute them back into the private sector via various programs of municipal grants. The arrows labeled deaths and grants represent these flows. In order for the economy to function sustainably, all flows into and out of any store (elliptical form) must be, on average, equal. The design of a sustainable economy is the careful design of stores and flows. Part (c) shows how matter cycles through the economy. At times the resource-based material units (RbMus) are connected with work-based material units (WbMus) to form useful goods in the form of material units (Mus). Both RbMus and WbMus have intrinsic value based on human metabolic needs. Part (d) shows the WbMus cycle. WbMus are a proxy for energy, or added value, or health, or infrastructure. Note that in this most simple economy, WbMus are tightly associated with people working and eating. We work to earn money to buy food to eat so we can work to earn money to All ModEco economies are based on three conservation laws: mass, energy, and intrinsic value. At the user s option, cash can also be conserved. The Perpetual Motion Machine (PMM) is a special-caseeconomy in which all commercial transactions exchange equal value for equal value. There is no profit and no loss in any transaction. The three slides showing cycles portray the imagined friction-free spinning wheels of the perpetual motion machine, demonstrating the recycling and conservation of mass, energy and cash. In most unstable ModEco-based economies, the intrinsic value and the monetary value of goods tend to separate, leading to inflation or deflation. In the PMM the monetary value is always pinned to the intrinsic value which is closely tied to mass and energy.
Degrowth in the Americas 4 Profiles of a Sustainable Economy Image 2 The EMgr et al. Comprising: a) The role of the EMgr, b) The heartbeat of the economy, c) Sustainable health, and d) Youth mortality in the PMM. See page 9 for a larger image. In (a) we see how the estate manager (EMgr) plays a role in bringing the PMM to steady-state behaviour, and keeping it there. When the PMM is first launched it is not in steady state, and about 16,000 ticks of the ModEco clock are needed to allow it to reach steady-state. 16,000 ticks is the time it takes for 20 generations of agents to live, work, and cheerfully reproduce. As agents die in each generation, and assets are turned over to the EMgr, they are then handed out to needy but deserving agents as municipal grants. You can see that there is a steady demand for RbMus from the estates, but there is a definite generational cycle to the need for WbMus. There are times when agents need help, and times when they do not. The EMgr hoards food when times are good, and hands it out when times are bad. In (b) we see a rhythmic pulse of rising and falling populations, as the PMM cycles through a range of conditions. This data was collected after 6,000,000 ticks (7,500 generations) and it spans 8,000 ticks (10 generations). This is the PMM in steady-state operation. In (c) we see that, even though the financial conditions in the PMM rise and fall over time (the blue trace), nevertheless, the average state of health of the agents stays level (the pink trace). This is a fantastic view into life in the PMM during the same period as seen in part (b). We see that the average wealth of the population also waxes and wanes over time as the population rises and falls, following a jittery winding trail up and down a slope, moving from relative poverty to relative wealth and back again. However, the health of the population stays stable (moving back and forth along a relatively flat path) the whole time. Health and happiness in the PMM are NOT tied to the temporary fortunes of the economy, in the long run. The carrying capacity of the Township is a harsh reality in the PMM. Agents reproduce via fission (the simplest form of reproduction) and would, in an infinite world, double their numbers each generation. However, in a finite world, this cannot happen. In (d), a chart in which the number of agents is plotted against age at time of death, we see that deaths among the agents tend to be concentrated among the young. Why? Life in the PMM cannot be easy. Due to the effects of the carrying capacity of the Township, 50% of every generation must die without issue. You might think that the old and infirm would die, but the bulk of the deaths are among the young, immature agents. Each agent must consume food every day. A single day without food causes death by starvation. Each agent starts with half of the wealth of its parent, and accumulates wealth via the receipt of grants. The wealth of older more mature agents is greater and more liquid, and less likely to cause death.
Degrowth in the Americas 5 Profiles of a Sustainable Economy Image 3 Profile et al. Comprising: a) A profile of a Corp, b) The resultant partition of wealth plotted against total net worth, c) A breakdown of the previous image, and d) A cloud showing the effectiveness of one of the municipal grants programs. See page 10 for a larger image. In (a) there is a screen shot from the ModEco software showing a corporate profile with its business planning factors which control the Corp s business practices. This is one of the real-time charts and graphs that ModEco displays as the economy trundles along its course, and it consists of three bar charts. Here, the average characteristics of a Corp are displayed at a moment in time. The left-most bar shows the average age (black bar) of all Corps in a green box marked with two control values. ART is the age reproductive threshold. This is the age a Corp must attain before it is allowed to fission. Above that is ADT, the age death threshold. This is the age at which all surviving Corps die of old age. In every generation, 50% will reproduce at or above the age of ART, and 50% will die of starvation or old age. The next bar shows the average net worth (NW) of a Corp (black bar) in a green box which shows the net worth of the wealthiest Corp. The series of six bars on the right shows the partition of assets between the asset types that a Corp can own. These are cash (CoH), raw unharvested produce in the field in the form of RbMus (Raw), infrastructure in the form of WbMus (Infra), inventory in the form of whole Mus, containing produce harvested from the field and held for sale to consumers (Inv), supplies stored in the pantry for personal consumption (Sup), and scrap waste in the form of RbMus (Scrap). If the inventory falls below the Hire Prsn Factor (NPF) then a Corp attempts to hire a Prsn to harvest the produce in its field and convert it to inventory. If the supplies fall below the buy supplies factor (BSF) then the Corp attempts to refill its pantry by purchasing supplies for its own use. In (b) and (c) we see how the Corp manages its assets, and the effects of poverty. Poor Corps have difficulty maintaining planning levels of all assets, while wealthy Corps have clear partitioning of wealth. A wealthy Corp has more than sufficient inventory, infrastructure and supplies to participate in any and every commercial opportunity that arises. If any asset becomes depleted temporarily, over time it is replenished. The assets are liquid, in the sense that the net worth of the agent flows easily between asset types as need and opportunity arise. On the other hand, poor Corps often find their net worth to be concentrated in the wrong asset class when need or opportunity come along, causing a lack of liquidity. In the PMM, due to the lack of profit and loss in commercial transactions, an agent cannot ever become poor through bad business deals. However, if some fluctuation in levels of asset classes ever causes the pantry to run dry, it dies immediately of starvation. This fate awaits roughly 50% of every generation of agents. In (d) we see that hunger and lack of welfare grants are a consistent condition in the PMM. In this chart we see blue dots, each representing a generation of life. When a consumer goes shopping for food, and finds that it has insufficient cash to purchase enough food, it can apply to the EMgr (estate manager) for a municipal grant (like a food stamps program). In a world with infinite resources, every such request would result in a grant. Then all dots would land well above the line shown. But, reality in the PMM is harsh. The needs are great, and the available grants are small.
Degrowth in the Americas 6 Profiles of a Sustainable Economy Image 4 Wealth et al. Comprising: a) The Wealth distribution, b) A rising star, c) A profile of the RbMu grants program, d) A further profile of the RbMu grants program. See page 11 for a larger image. The graph shown in part (a) of this tableau is very topical, these days, for two reasons. First, it serves to explain the source of the great gap between the wealth of the very wealthy, and the very poor. Secondly, it is an example of a phenomenon of great interest to econophysicists, recently, as similar curves appear in both physics and in economics. In physics they are explained with reference to entropy and the second law of thermodynamics. In economics, they are explained, I believe incorrectly, with reference to the greed of the agents. The causes of the spread in wealth are quite profoundly interesting. Agents in the PMM are incapable of greed, as all are logical records in a computer data base. Yet the rich get richer and the poor die young. We see that a very small proportion of the agents are able to amass a very large proportion of the limited resources of the Township, just by luck, while the bulk of the agents remain very poor. In part (b) of this tableau we take a peek into the financial history of 25 selected agents, part of a cohort of agents that gave rise to one of the very wealthy. We see that one was born poor and died young, while another financial wizard benefitted dramatically from an early series of lucky increases in wealth. I speculate that the liquidity that this early wealth afforded this agent created more opportunity for it to increase its wealth. This agent, born among the poorest of its cohort, became by far the wealthiest of its generation. In parts (c) and (d) we examine one of the grant programs in some detail. In part (c) we have the number of Corp RbMu grants (grants given to farms to increase the harvest when workers are hired to harvest produce from the field) plotted against the net worth of the recipient. We see that the bulk of the grants go to Corps of small net worth. This confirms the description of the recipients as needy but deserving, but it also shows how some small portion of the grants nevertheless go to very wealthy agents. This leaves open the possibility of the meteoric rise of wealth of an agent like the one seen in part (b). In part (d) we plot the average size of the RbMu grant against the net worth of the receiving agent, and we see that, on average, the wealthier receive larger grants. This is truly an unanticipated and emergent property of the PMM, and has not been explained to date.
Degrowth in the Americas 7 Profiles of a Sustainable Economy Image 5 Collapse et al. Comprising: (a) Kaleidoscopic display of variability in the partitioning of wealth in an unsustainable economy, (b) Kaleidoscopic display of variability in the partitioning of wealth in an unsustainable economy, (c) The collapse of an economy due to deflation, and (d) The collapse of an economy due to inflation. See page 12 for a larger image. In this tableau I depart from the focus on the PMM, and show some graphs drawn from some non-sustainable economies designed by my students. I include these graphs in this tableau because of their visual appeal, and because of their dramatic thought-provoking features. Part (a) shows the partitioning of net worth among asset classes for a population of Corps in a nonsustainable economy. In this non-pmm economy, every commercial transaction has a price-value gap enabling profits and losses, and cash is no longer a conserved quantity. The monetary value of a good follows a price index, while the intrinsic value, based on metabolic needs, does not vary. Compare part (a) of this tableau with part (b) of Image 3. Note the clear partitioning of net worth among asset classes for Corps in the PMM, as compared to the wild freedom displayed here. Part (b) shows a similar partitioning of net worth, but for Prsns, in the same economy, but this time the monetary values of asset classes are used instead of intrinsic values. Unsustainable ModEco-based economies can suffer both inflation and deflation. Most collapse with dramatic deflation. I set a task for myself, to design one of each kind, one that collapses in inflation, and one that collapses in deflation, and to profile each. Parts (c) and (d) are the results of those efforts. In part (c) note the amount of mass, energy and cash are conserved, but the deflated value of assets hampers commercial activity until assets start to pile up in the central coffers. In part (d) we see the central MMgr doing deficit spending, going deeper into debt, as it props up the commercial activity, but the gap in net worth of the Corps and Prsns spreads until the economy fails. There are some potentially insightful analogies at work here.
Degrowth in the Americas 8 Profiles of a Sustainable Economy Image 1 The Township et al.
Degrowth in the Americas 9 Profiles of a Sustainable Economy Image 2 The EMgr et al.
Degrowth in the Americas 10 Profiles of a Sustainable Economy Image 3 Profile et al.
Degrowth in the Americas 11 Profiles of a Sustainable Economy Image 4 Wealth et al.
Degrowth in the Americas 12 Profiles of a Sustainable Economy Image 5 Collapse et al.