The economy is inextricably linked to the physical world.

Economic inputs – labor and capital – require natural resources to operate. Economic output impacts the natural environment.

You might think this is common sense, but most economists, politicians and business leaders have disassociated the world of commerce and government from nature. Instead, they believe humanity can outsmart physics with ingenuity and innovation.

The modern economic system is constructed using the assumption that price mechanisms are enough to stimulate commodity supply responses. It fails to incorporate finite limits. It also fails to model the true costs of negative externalities, like pollution. Consequently, economists and politicians have a flawed understanding of climate change destruction in a language they understand – money.

This is the root of our current biosphere crisis, and its origins began centuries ago.

If you’d like a deeper background to this, watch Nate Hagens interview Steve Keen below. Alternatively, skip down to keep reading.

“Labor without energy is a corpse.
Capital without energy is a statue.”
– Steve Keen

The average person could be excused in thinking human prosperity is primarily driven by our ingenuity. Humans have invented many life-altering technologies over the past couple centuries: electricity, the washing machine, cars, planes. But what many don’t realize is that each progressive development is simply a new means to convert finite natural resources, labor and stored energy into economic output. The whole system remains dependent on Mother Nature.

This paradigm has existed since the Industrial Revolution, so it’s not surprising the models are widely accepted. Moreover, with natural resources plentiful and nature virgin, for many years economic models could ignore these factors. It’s only over the past couple decades that physical reality began catching up to the old ways of thinking.

Scientists are shouting from the rooftops about rising global temperatures and climate destruction. Meanwhile, economists and policy makers have been led astray by old world thinking. Mother Nature’s contribution as an input and the negative externalities of our production are both systematically underestimated by the mainstream economics profession. This underestimation also works in reverse.

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