The global financial crisis and the threats of climate change are symptoms of the same cause.
That cause is the dinosaur-like structure of economies that grew out of the Industrial Revolution and avoided the cost of fixing heavy pollution of smokestack industries by exporting them around the globe to others keen to get rich too.
The smoke and mirrors model that makes money and pretends waste disappears has now turned full circle, and come up against itself at the Copenhagen climate change conference.
The ongoing meeting of 192 parties will be the first time all nations, side-by-side, have had to face the reality that there is nowhere left to pollute - and nowhere else to borrow from.
Until now science has seemed esoteric compared to the pragmatism and rationality of the market. Every time a new crisis occurred, the same mantra was chanted: "markets will adjust".
Well, the markets adjusted disastrously in September last year, and economists' solution for the US is to print 8 billion $100-paper bills.
Climate change can be a more disastrous market adjustment. Catastrophic geographic scenarios cannot be papered over with money. That financial accounting has become unhinged from the real economy is already obvious.
The crux of the oversight in economics is that the term "product" is only part of what is called product in chemical formulae.
Now science has to come to the fore, and economics has to listen, and it will hurt.
In 2009, Copenhagen parties have to acknowledge, and take home to each country, that there is nowhere left to dismiss "externalities". There are economists, politicians and administrators who react to the concept, biosphere, as if it were some arcane deep-science abstract. It is that thin layer of land, sea and air around the globe where we farm, mine, build, travel, live and love.
For all practical purposes, it is 10 km above and below the sea level. Draw a circle of 60 mm radius for the globe and if the line is 0.2-mm thick that represents our biosphere. Now we have a global economy choking the global environment.
Copenhagen will fail if the next step in the new paradigm is not acknowledged.
In the physically finite biosphere, when chemicals react, if you assess what is produced, you are always worse off. This is the irrefutable Second Law of Thermodynamics, and until now economic processes make profits by not counting the waste.
In a simple economic parable, if you pay $20 for a ton of sand, total processing costs is $70, and it is sold as a ton of glass for $100, that is a $10 profit. If under a new "Copenhagen Protocol", an environmental accountant tells you to be responsible for carbon capture and storage, and that costs $10, the entrepreneur will go out of business.
The unspoken fact looming over references to emissions is that human nature demands guaranteed sustenance today before worrying about potential disasters in the future.
National leaders may be swayed by or proactively sway, any set of data that is not firm, in an effort to guarantee jobs, income and welfare for their constituents during their term in office.
Substance flow analysis infallibly asserts the First Law of Thermodynamics.
Every atom can be tracked, from a mine, to processing, to manufacturing some product, sale to consumer, then as waste or recycling.
The global financial crisis would not have occurred if requests for finance were assessed against actual material projects by applying substance flow analysis. When financial wizards inspirit a giant subprime loan, they would behave like Dracula fronted with a burning cross if asked to put matter where the money number was.
One reason for the financial crisis - why the big four auto companies in the US were broke and bailed out - is that they could no longer hide the downside of their heavy-handed economic processes and the products (leviathan vehicles sucking in gas and spewing emissions). Dinosaurs cannot be saved by steroids. Public opinion started to get a feel for the Second Law of Thermodynamics. Financiers were the only ones living in the past.
The author is an Australian researcher collaborating with Chinese academic and commercial institutions.
(China Daily 12/10/2009 page9)