Australian ecological history - and future

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Consider the history of the development of Australian civilization over the past two centuries in terms of the various forms of tangible capital . That intangible capital based on money has had a major influence on the decisions that have been made but no impact whatsoever on what has actually happened in the substantial operation of the ecosystem so the influence of money is only marginally relevant to this examination. The operations of Australian civilization have, of course, been very dependent on natural income, like sunshine and rainfall, but only capital usage will be examined here. The income will be presumed to continue, as ever. The crucial point is that everything done and used by society entails the irreversible consumption of some of the natural bounty whether it is income or capital. Natural capital has been transformed inefficiently and temporarily into material capital but know how and tools have improved that to give industrial capital . Whilst natural capital and material capital are tangible deterministic materialistic structures, industrial capital is largely an abstraction. The worth of the construction is dependent on its contribution to the operation of society. A derelict skyscraper does not contribute to the operation of society so is worthless industrial capital although its construction entailed an appreciable depreciation of natural capital being transformed into material capital. The industrial capital being considered here is the construction, infrastructure, goods and services that make worthwhile contributions to the operation of society. Society has good reason to be proud of many of the achievements in building up industrial capital, as they have enabled a high material standard of living for many. Unfortunately the irrevocable eco cost has not been fully taken into account. At the same time, social capital had also increased, partly because automation has given people more time and energy for learning and other positive activities . But society now seems to have been spoilt by all this easy to unsustainably consume natural capital.

This figure roughly depicts what has happened. The major aspect of the development has been the construction of material capital at the expense of the natural capital, albeit inefficiently and only temporarily . The combination of the natural capital and the material capital has continually decreased due to wear and tear of the material capital combined with this inefficiency of the transformation and the operational costs involved. The industrial capital, however, has increased rapidly due to the increasing know how and improved technology enabling better use being made of the natural capital . Thus the worth advantage (WA) curve illustrates the ability of humans to make what may be deemed to be worthwhile use of the depreciation of natural capital entailed in building up civilization. This is the progress that society is encouraged to believe in. There is reason to believe that the increase in WA has slowed down in recent decades and it may well have peaked, as depicted in the figure. This is because so much effort has in recent decades gone into building up the edifice of civilization that is not really worthwhile while the foundations have been allowed to deteriorate . The use of the fossil fuels has enabled the construction of this edifice – and the initiation of climate change. So some of the non-worthwhile constructs have come at a grievous eco cost. A case can also be made that social capital in Australia peaked decades ago but that issue is not being considered here.
It can be argued that the increase in industrial capital in Australia in the past century roughly offsets the resultant decline in the natural capital. Know how and technology can be deemed to have offset the deleterious consequences of using the natural capital. In fact, many people would argue that the life style so many people enjoy in this country is well worth what has been done to the environment. That is a myopic view. It does not take into account the facts that the industrial capital will need to use natural capital in the future for maintenance as well as operation while its availability is declining.

The general expectation of society, fostered by governance and business, is to believe that industrial capital will continue to increase along the lines of the upper, future curve (a) in the figure. That is, what is regarded as the material standard of living will continue to increase even though some problems are emerging due to population growth and urbanization. That belief is a simple mistake. It is not possible. The natural capital curve for the future indicates why. Natural capital is declining at a rapid rate now but that rate cannot be sustained . The current slope is very high, due largely to the rapid use of the fossil fuels and fostered by population, consumption and infrastructure growth. The rapid increase in fiat money and the inappropriate use of credit has just speeded up this rate of use of the limited natural capital. This rate cannot be sustained as capital becomes scarcer, as the future trend to the limit indicates. It is bound to follow a trend like that indicated by the (b) curve . This means that the rate of industrial capital development will also decline, especially as problems coalesce. Improved understanding and technology may affect the trend indicated by the (b) curve slightly but the problems will be exacerbated as long as population and consumption growth continue. It is quite likely that the social capital will also decline quite rapidly as people find it hard to come to terms with what ‘progress’ really now means as ecological forces exert their control. WA is bound to decline too as resources have to be assigned out of the limited remaining capital to repair some of the crumbling infrastructure.

These curves roughly represent a stochastic situation, especially with respect to the future. The natural capital that has been used can be estimated quite accurately and the consequential material capital nearly as accurately. The industrial capital is even more stochastic as the definition of what is worthwhile or useful is quite subjective. The well off in the cities have very different views to the more realistic ones in rural communities. It can be argued that the remaining natural capital is particularly stochastic. For example, drillings off shore in the North West shelf may enhance Australia’s limited reserves of oil. That could shift the expected natural capital curve up slightly, (c), but this makes little difference to the nature of the prognosis. It may even inhibit the waking up to reality, so exacerbating the impact of other problems!

It would seem that the operations of society are being profitable if the rate of increase in industrial capital (the rate of return) exceeds the rate of decrease of natural capital (the eco cost). That is, the use of know how and technology amplifies the material capital increase rate sufficiently to make WA >> 1. There is a good case that current Australian civilization shows an accrued profit because the efforts of the community over time have far outweighed the irrecoverable costs of using natural capital. But this profit should be written down by the commitment to maintain the deteriorating infrastructure during its lifetime in combination with the loss of useful know how . The reality then is that the current profit is gross profit and the net is that left after the write down . Some time in the future there will be insufficient natural capital left to enable the operation and maintenance of the declining material, so industrial, capital . Eventually this capital will tend to zero as will the aggregated net profit . Australian civilization will then have been a blip on the evolutionary time line that operated through using up the limited natural capital available to it in combination with using natural income.

A natural question is what can society now afford with this view of the future reality. Know how and technologies in combination have enabled the construction of the infrastructure of civilization that has a high worth advantage by using up natural capital. This enables many of the population to have a high material standard of living by consuming natural capital at a high, unwise rate. The cost has been the depreciation of natural capital so the need is to make wiser use of what is left. Society will have to power down to do this but how much of the advantage has to be surrendered? How much of the worth of cities and associated infrastructure can be retained , bearing in mind that they have to be maintained as well as operated? The point is that people will not be able answer the question. It is ironical that civilization irresponsibly and unknowingly initiated an irreversible but unsustainable chain of events . Humans will now have to try and live with the consequences using blunted tools. Ecological forces are now belatedly taking control of the operation of the foundations of civilization. Economic forces have fostered the exuberant depreciation of the natural capital, so, ironically, the strengthening of the influence of the ecological forces . Civilization is running out of oil. It has already used over half of this natural bounty capital and adjusting to a declining supply will not be easy . The loss of climate familiarity and soil fertility will not help the necessary adjustment of food production for the loss of support provided by oil as population continues to grow. Pollution of land, sea and air will just exacerbates all the other problems, including the lack of potable water. The question that society should be addressing is what can be done to make the wisest possible use of the remaining capital, bearing in mind that natural forces really do control most of what will happen in the future. Will many of society be able to concentrate on using their particular skills because they can be confident that others can still meet their basic needs? That is very doubtful. The impact of the declining availability of natural capital is likely to trickle up so even the well off will become impotent in due course. It is ironical that for all its supposed value, money will continue to be impotent. It cannot change the course of the future although it can change the speed to destruction slightly. It has accelerated the rush to this destruction very much this century, with the Asian giants taking over from the Western powers in the race. Australia is just following this global trend as befits a faithful hound.