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Energy & Money Integrating Social Metabolism into Economic Analysis Blair Fix Canadian Society for Ecological Economics Toronto November 2, 2013 Real GDP: A measure of our ignorance? A Quantity Measure of Output GDP Nominal = = Quantity× Price GDP Real × GDP Deflator GDP Nominal GDP Real = GDP Deflator Quantity of What? Quantification Requires Units 3 apples + 3 oranges = ? The Seven SI Base Units Defining 1 second: The duration of 9,192,631,770 periods of the radiation corresponding to the transition between the two hyperfine levels of the ground state of the cesium 133 atom. The Choice of Unity Affects Aggregate Quantity Apple : Orange Mass (kg) 1:2 Energy (J) 3:4 Price ($) 5:7 The fundamental problem with using price as a unit... Relative prices change all the time, meaning our unit ($) has no single definition! A Historical Example Measuring Changes in Quality? Hedonic Quality Adjustment “The practice of decomposing an item into its constituent characteristics, obtaining estimates of the value of the utility derived from each characteristic, and using those value estimates to adjust prices when the quality of a good changes.” US Bureau of Labour Statistics A Completely Different Approach to Output Dissipative Structures Society as a Dissipative Structure Social Metabolism Useful Work: A physically meaningful quantity measure of output. A Pecuniary Feedback GDP Nominal = Dissipative Pressure U Price Most Types of Useful Work Have No Price 1. Mechanical Drive 2. Heat (Low, Mid, High) 3. Light 4. Muscle Work 5. Electricity The Price of Electricity as a Proxy for the Price of Useful Work Dissipative Pressure = GDP Nominal /U Price GDP KWH = GDP Nominal / P KWH KWH Deflated GDP Japan United Kingdom United States Conclusions Rethinking Labour Productivity