World-System (1950-2100) How to Balance the World System

In an earlier post (here), I found that the US-MX-CA World Trading System could reach a Steady State in a number of ways.

Creating a Steady State in the World System, keeping Industrialization and Environmental Degradation in balance, involves mitigating the cascading effects of Collapsing Oil Markets and collapsing Agricultural markets.

This fictional future is controversial: (1) As long as population growth and technological change continue to increase, the Neoclassical Economic Growth model will never reach equilibrium (unlimited growth forever), (2) In World-Systems Theory, although we live in a World of interacting economic systems, because there is no World Government to legislate a Steady State, there is no governed World System** and (3) the IPCC Emission Scenarios (see the Boiler Plate and the BAU Scenario) envision a scenario where the World-System is eventually in a Steady State. Continued uncontrolled industrialization seems inevitable and, at the same time, inconsistent with environmental balance.

And, worse yet, the best scenario for the US-MX-CA Trading System (using the AIC to evaluate models) is growth-and-collapse (SSP2.0-6.0 in the IPCC Scenarios) when driven by the World System (here). In this post I will explore ways to create a Steady State in the World System because (1) the WL203 Model  is often, in my experience, a good input for country-level World-System models, (2) the IPCC Emission Scenarios are all conducted in terms of the World System, (3) Limits-to-Growth policy recommendations are directed at the World System and (4) I want to address the issue of how environmental balance is supposed to happen without World government.

 

The graphic above presents a number of experiments with the WL203 Model (you can run the experiments yourself here). These futures look a lot like the IPCC Emission Scenarios because growth of the entire World System produces emissions. 

There are three growth-and-collapse scenarios: WL20, F[1,2] = 0 and F[2,3]=0. The magnitude of collapse is increased by reducing the effects of feedback loops from Food Production (F[1,2]=0) and decreased by reductions in the feedback effects of Oil Production (F[2,3]=0). Reducing both feedback effects to zero produces a high-level steady state (F[1,2] = 0 and F[2,3]=0). Setting growth in the World System to a Random Walk produces an immediate steady state (F[1,1]=0). 

The counterfactual experiments are discussed more fully in the Notes below. But, what do the model results mean in a practical sense for policy action:

• Oil and food production (through the oil-driven Green Revolution) are essential for Industrial society. We typically don't think of oil markets and agricultural markets as historical feedback controllers, but they will become controllers when Peak Oil is reached (oil is a non-renewable resources). Electric vehicles, wind and solar energy serve to reduce feedback effects from Oil Markets.
• Current uses of oil (burning in combustion engines, making plastic bottles, medical devices, industrial fertilizers, etc.) will be restricted after Peak Oil. It would be prudent to reduce industrial growth rates and conserve existing supplies of all scare, non-renewable resources.

All of these policy measures are being attempted to some extent (but reducing growth rates seems to be the most difficult). My assumption is that the only way to motivate global action is from entering growth-and-collapse mode and then focussing political action, if it is not too late (result from the WL203 Model here suggest that there will be a rebound (see the Recovery Forecast below in the Notes) after 2115 and the World System could recover). Environmental Mitigation will most likely not be undertaken voluntarily.

Notes

** In World-Systems Theory, the hyphen between "World" and "System" indicates a world of systems. The term "World System" indicates a one-world system. The World System is typically used by the IPCC in Integrated Assessment Models (IAMS). The Contradiction here is that there is no World Government to manage environmental degradation.

The time plot above shows the dominant component from the WL203 Model. From 1950 to 2008, the blue line tracks the actual data. From 2008 to 2108, the different time paths are created by setting various elements in the WL203 Model System Matrix (F) to zero or one. Let me first describe how the state space is constructed and then describe the System Matrix (F) (more information about the models is available in the Boiler Plate).

The approximate state space is constructed using Principal Components Analysis (PCA). The PCA measurement matrix is presented above. The first component (W1) is the dominant component and explains 87.4% of the variation in the underlying indicators. The other two components (W2 and W3) are historical feedback controllers. 

The first component, W1=(Growth-LP), is overall growth compared to the Living Planet Index (LP), an indicator of the state of global biological diversity. Over time the LP Index peaks after 1975 and declines after that (see the graphic above). In the future, the (Growth-LP) historical controller might become more important but right now, the decline in global biological diversity will just continue.

The second component, W2=(LP+P.Wheat.-GWP-TEMP), is an historical feedback controller that links the LP index and the Agricultural market (P.Wheat.) to Gross World Product and Global Surface Temperature. For the period from 1970-2000, W2 was in positive territory. From 2000 to the present, W2 has become negative meaning that GWP and Global Temperature are not in balance with Biodiversity and Agricultural production.

The third component, W3=(P.Oil.-OIL-EF), is also an historical feedback controller for Oil Markets and the Ecological Footprint. From the graphic above, the Oil-Market-Footprint controller seems to be reaching a steady state (Peak Oil) but this can mean that  (1) Oil Prices will keep climbing as supplies dwindle or (2) Prices will decline as demand declines.

The System Matrix, F (above), shows the interaction between the three state variables (column [,4] is the constant term in the statistical model). The system is stable (ignoring the constant) and cyclical (periods and damping time over hundreds of years). 

Results of manipulating the System Matrix:

• WL20 In the graphic above, the dark black line is the basic model forecast: slowing growth in the present and collapse shortly after that.
• F[1,2] = 0 The coefficient -0.02519461 is the negative feedback effect of food production, W2. Without this feedback effect, collapse happens more rapidly.
• F[2,3] = 0 The coefficient -0.05250691 is the negative effect of the Oil-Market-Footprint W3, on food production, W2. Eliminating this feedback effect reduces the amount of collapse after 2050.
• F[2,3] = F[3,2] = 0 Eliminating the interaction between W2 and W3, leads to gradual growth and then a steady state after 2100.
• F[1,1] = 1 Finally, setting growth to a Random Walk, results in an immediate steady state.

What do these results mean in terms of balancing and controlling the World System? 

First, the World system has it's own feedback mechanisms that will limit growth. It should be no surprise that Peak Oil and damage to Agricultural production systems will put the World System in a growth and collapse mode. The two systems (Oil Production and the Green Revolution) are intimately linked and can fail together to provide energy and food for the Industrial Revolution. 

Second, a World Government would be helpful in minimizing the effects of collapse but I can't see nations agreeing to be governed before 2100 (current effects by the United Nations have been unsuccessful). 

Third, our current Integrate Assessment Models (for example, the DICE model) seem to have none of these feedback effects. 

Fourth, my results seem to align with the IPCC Emission Scenarios which makes sense because system growth, energy emissions and global temperature are intimately liked (I will do a more detailed comparison on a future post).

No one knows the future; all we have are projections from models. Politicians who claim that all the model projections are a hoax simply rely on their gut instincts to say that everything will be fine--a massive act of ignorance, denial and hubris before the fall.

Recovery Forecast

Since the WL203 model (here) is cyclical and stable, the prediction for the far-distant future (after 2130) is for recovery. But notice that the system does not reach the same level it had reached in 2000; Entropy takes it's toll.