energy is the ultimate currency

A year ago I wrote a piece called Capitalism Is a Temporary Condition. Buried in it was a thought:

An investor in an age of acceleration watches as commodity prices, real things, hover in familiar territory while “future cash flows discounted” reward attention — in some cases because of optimistic stories, in some cases because the company exchanges cash for BTC (an act which adds no economic value), and in some cases for nostalgic lolz.

Today, it’s embarrassing to think of actual value. The most basic form is stored energy**. An obvious example is oil. Slightly more abstract —a building is a collection of atoms that took energy to arrange and provides utility. It’s proof of work. Same with a good reputation.

The ** footnote:

I increasingly think that a durable concept of a risk-free or least-risky rate is more likely to come from Vaclav Smil than U Chicago.

I knew about Smil from a profile piece that celebrated his suffer-no-fools rigor in making sense of the world.

I’m finally getting around to How the World Really Works, and I dig how quickly it’s zeroing in on what I anticipated to be the biggest muscle movement of all. I’ll let it unfold as he does the book’s intro.

Smil asks us to imagine an alien probe watching Earth, programmed to wake up whenever something important changes in the way energy is captured or used.

For a very long time, it sleeps.

Then life figures out photosynthesis: sunlight can be captured and stored as chemical energy. Much later, humans learn to control fire. Then agriculture. Draft animals. Wind and water.

The gaps are enormous. Billions of years. Millions. Thousands.

Then they start collapsing.

Coal gives humans access to immense stores of ancient solar energy. You can see a parallel to wealth in that phrase alone. Steam will turn that energy into mechanical work, replacing what he calls prime mover energy (human and animal labor). Oil makes enormous amounts of energy portable while electricity makes it transmissible and almost infinitely adaptable.

Smil puts numbers on this.

In 1800, the world had access to roughly 0.05 gigajoules of useful energy per person each year. By 1900 it was 2.7. By 1950, about 10. By 2000, 28. By 2020, roughly 34.

In a little over two centuries, useful energy per person increased nearly 700-fold.

The average person today commands roughly the energy equivalent of 60 adults working continuously, day and night. In affluent countries, the equivalent is closer to 200–240 permanent laborers.

And the averages hide enormous differences.

Measured in primary energy, someone in one of the world’s poorest countries may use less than 10 GJ a year. India is around 20–30. The global average is roughly 75–80. China is above 100. Western Europe and Japan generally sit around 120–160. The United States is closer to 250–280.

It sounds a lot like how GDP per capita is distributed. We measure GDP in dollars, but money can be printed, thus distorting its exchange rate versus the stored value of work. In that sense, energy may be civilization’s only uncorruptible currency.

If we continue pulling on the thread, wealth might be thought of as an account from which we can spend to hold entropy at bay.

• A 72-degree house in Scottsdale.
• Mango salad in during a Minnesota January.
• Clean water pumped up the Hollywood Hills.
• A sterile operating room.
• Skyscrapers defying gravity.
• Data centers (I couldn’t resist).

Much of the AI commotion revolves around what it means for humans to directly turn electricity into intelligence. That the product is intelligence which can recursively accelerate knowledge instinctively unsettles us because it violates our sensibilities around balance. Like energy is somehow not being conserved, leading to the type of divergence we associate with chain reactions.

I’m actually struggling to put my finger on the right analogy, which validates another point Smil makes. He argues that at precisely the moment when we have become capable of commanding extraordinary quantities of energy, most of us have become almost completely detached from how any of it happens.

Smil calls this our “comprehension deficit.”

Modernity is a black box. Light comes from a switch, and meat comes from a carton lined with a maxi pad. It’s all so effortless. Students of economics read I, Pencil to appreciate how capitalism’s profit-motive and competition actually lead to complex chains of cooperation. The side effect of the story is a (demoralizing?) inference that the world is so invisibly complicated now that you should feel good in your choice of major because it’s strategic to be a symbol-pusher since details are hopelessly infinite. (Sorry, did I go to far here? I’m an econ major, so it’s kind of like Chappelle using the n-word. Kinda? Nevermind.)

Smil’s punchy take on specialization:

You could meet real Renaissance men on Florence’s Piazza Signoria in 1500, but not for too long after that…By the middle of the 18th century, Diderot and d’Alembert could still assemble a group capable of summing up much of their era’s knowledge in the Encyclopédie…In 1872, a century after the appearance of the last volume of the Encyclopédie, any collection of knowledge had to resort to the superficial treatment of a rapidly expanding range of topics…today, it is impossible to sum up our understanding even within narrowly circumscribed specialties…experts in particle physics would find it very hard to understand even the first page of a new research paper in viral immunology …Highly specialized branches of modern science have become so arcane” that many practitioners must train into their thirties “in order to join the new priesthood.

All I’ve done is read the introduction to the book, but the “comprehension deficit”, which he’s fixin’ to remedy with respect to how the world works (at least from a physics/chemistry macro point of view), is just a fascinating idea of its own. Before the printing process and hyper-connectedness, it was hard to learn much of what was a relatively small body of knowledge, but since then, even though you could learn more in a lifetime, it was a smaller percent of what could be known.

But that I can sit here in an air-conditioned house on a 90-degree day typing contemplations about abstractions like how wealth is really the temporary abatement of nature’s randomness and how the accounting of such wealth should be denominated in units of work, which is traditionally measured by money and its continuously leaking exchange rate to said work is itself a wild collective achievement fueled by eons of carbon remnants from lives I never knew.

I guess I feel like I owe it to the universe to be curious about its ways even if it’s a Sisyphean fantasy to close the comprehension deficit. Looking forward to continuing: