The Postwar Economic Order, Growth, and the Hydrocarbon Economy

Abstract

A recurring theme of this book is that economics should be approached both from a biophysical and a social perspective. This is especially important when viewing economics through the contours of history. For the vast majority of time humans lived off solar flow. For a very brief moment in time we have been able to appropriate fossil hydrocarbons to power our economy, and the result was a tremendous increase in productivity and the amount of material goods available to humans. Fossil fuels enabled the industrial revolution and beyond. At the same time, the increase in energy does not automatically determine the course of economic history. The industrial revolution consisted of more than simply more energy and more machines. It also entailed a fundamental reorganization of work and the general institutional arrangement of society. The economy of the early twenty-first century is not just a larger version of the economy of the early nineteenth century. It is fundamentally different. This chapter views the development of the American economy from the middle of the twentieth century through the financial crisis and recession of 2008. In 2008 Barack Obama was elected president of the United States with a great deal of optimism. But 2010 saw a conservative resurgence based on poor economic growth. We pose a question. Can the progrowth agenda that dominated the twentieth century withstand the biophysical limits that will be imposed by peak oil and climate change? To answer this crucial question we need to look carefully at the patterns of history as well as viewing carefully the scientific data, which we do with the remainder of this chapter.