Economic Surplus

Description

Claudio Cattaneo et al. :

"Humans with their work capture physical surplus from primary (solar) energy, including energy embodied in plants and animals. They apply this physical surplus – i.e., the net captured energy after the energy costs of extracting it - to produce the necessities that ensure their own (human) reproduction. What remains after the share lost to entropy is an economic surplus, which can be either spent without return (depense) or reinvested to make more physical or economic surplus.

Surplus can increase in two ways: by innovation and by domination. Mainstream economics focusses on the first, more benign set of options: innovating and improving the productivity of the means of production (Fig. 2) to expend less energy in the performance of a task (or perform more with a given quantity of energy). Energy-process innovations can increase the ‘exergy efficiency’ or EROI of energy extraction and delivery, increasing physical surpluses. Production innovations can improve the efficiency in the conversion of a given quantity of energy/work to final goods and services. Consider the invention of the wheel; it reduced friction and reduced the energy lost as heat in transporting goods and people. With the same amount of energy, one could transport more objects/people, faster and further. This exergy efficiency gain can be thought of as physical surplus. One can distinguish here between real increases in productiveness, i.e., doing more with a given amount of work/energy, as in the case of the wheel, and what is called ‘labour productivity’, which may simply involve the substitution of human by non-human energy, as, say, in the case of human farm labour substituted by animal-powered or fossil fuel-based agriculture (Ashford and Shakespeare, 1999). Real productiveness can increase by inventing new physical ‘technologies’, i.e., artefacts like the wheel, or say robots, which improve exergy efficiency and get more work out of a given quantity of energy. These technologies are physical embodiments of human knowledge, and science and research play an important role here. Productiveness can also increase by improving what economists call ‘human capital’, i.e., the capacity of workers to do things as they accumulate knowledge, training and skills. And finally, productiveness can increase by improving ‘social organization’, such as specialization and social division of labour; instead of everyone doing a little bit of everything, each specializes in specific tasks that they can do faster.

The second broad way of increasing surpluses is, however, by intensifying domination, i.e., by exploitation, appropriation, expropriation or cost-shifting (Fig. 2). Surplus here increases by decreasing the share of surplus spent for necessary production, i.e., for the reproductive needs of workers, non-humans and ecosystems. The less surplus goes to workers and nature, the more remains as economic surplus (and the less the surplus that goes to energy workers or to regenerating energy extraction sites, the more the physical surplus). Unpaid carbon debts, for example, that can be seen as an exergy penalty, are a way to shift costs temporally and increase physical and economic surpluses in the short term. What may appear also to a society in capitalism's core (i.e. in the US or the EU) as a surplus, may be a debt if extracted through unequal exchange or super-exploitation of the periphery. Indeed, shifted costs constitute unpaid debts - not only ecological in the strict sense, but historical and social debts owed by the colonizers to the colonized (Da Silva, 2022).

Economic surplus can be directed to improving the means of production or towards intensifying domination (e.g., investing in policing, means of violence and control, propaganda, etc.). When effective, these investments may further increase surplus. The other outlet is depense, that is, unproductive expenditure, privatized or collective, constructive or destructive.7 As noted, the line between depense and reproduction may be blurry - for example, workers, especially in the imperial core, and in the post-war period of growing surpluses were paid more than basic reproduction for forms of privatized depense (e.g., vacations/holidays) that are deemed necessities today.

A final part of the model consists of the socio-political mechanisms of distributing surplus between the ruling class and the working people, a distribution intermediated by the political system (in egalitarian societies, where working people in theory directly rule themselves, this tri-partite division collapses into one). The ruling class, pressed by competition and the need to spend surplus in ways that reproduce its position, strives to accrue as much of the economic surplus as possible. The state collects a share through taxes or own production that it can direct to the ruling class, or to working people. For the working people, the goal is their reproduction (if possible, at better standards), and their ability to sovereignly expend a share of the surplus themselves.

In this framework, therefore, physical surplus (net energy) provides the material possibility of an economy, while economic surplus (what remains after subsistence and ecological repair) is the social reality that is contested, partitioned into privatized and social shares (which we may call private and social surplus), and eventually either reinvested, used to augment subsistence/repair or unproductively expended.

Physical surplus, i.e., the net energy surplus drawn out from nature by human work, is applied to produce the necessary goods and services that reproduce humans. Waste and entropy are produced along the way and reduce the real surplus available. What remains over and above necessary production and waste/entropy is economic surplus and can be increased by innovation and/or domination. When a share of surplus is invested back to innovation and domination, growth of surplus is the result. When a share of the surplus is devoted to basic production or to protecting/regenerating ecosystems, then exploitation, appropriation, or cost-shifting may be reduced. A substantial share of surplus is dissipated into various forms of final expenditures (depense): privatized, collective and foregone, some socially beneficial, others potentially destructive. To the extent that the ruling class controls the political system, surpluses become private surpluses and are directed to more surpluses or to elite depense. To the extent that the working class can claim power through the political system, surpluses become social surplus and through social spending are directed to necessary production (reproduction and regeneration) and/or to more collective depense."

(https://www.sciencedirect.com/science/article/pii/S0921800926002302)