Resource Balanced Economy

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* Report: The Resource Balanced Economy to meet the twin challenges of phasing out fossil fuel energy and self-sufficient supply of raw materials. By Simon P. Michaux. BSR Policy Briefing 2/2023


This paper proposes an evolution of the Circular Economy, the Resource Balanced Economy.


"The task to phase out fossil fuels is at hand. The current society and its industrial systems are heavily dependent on fossil fuels, oil in particular. Yet the oil and petroleum supply may soon become unreliable. It is possible peak oil is in our past in November 2018, and costs of production of petroleum products are rising. The proposed Green Transition has a series of logistical challenges which make it impractical. One of those challenges is a shortfall in mineral supply. Natural resources of all kinds will soon become much more valuable.

Society is now required to develop a plan to transition away from fossil fuels and become more self-reliant for the supply of raw materials. We are required to develop a new relationship with energy, minerals, economics, technology, the environment, and each other. The conventional Circular Economy won’t work as hoped because it is thermodynamically out of balance."



Simon Michaux:

"The proposed restructure of the Circular Economy is a Resource Balanced Economy (RBE) with the harmonious integration of statistical entropy coupled with material flow analysis of each resource. A Resource Balanced Economy is that of a system where gross industrial output and gross domestic product, is mainly derived from natural resources, but is limited in scope and action by exergy thermodynamics. The objective metrics of this RBE converge around long term sustainability of all stakeholders. Systems network theory is proposed to be the mathematical foundation of the development this form of Resource Balanced Economy (Kossiakoff et al 2011 and Dennis et al 2009). The proposed Resource Balanced Economy is an evolution of the Resource Based Economy, with the integration of exergy as a limit derived decision tool.

The original concept of the Resource Based Economy was popularized by the Venus Project (, and its founder Jacque Fresco (Fresco 2018) in the year 2000. Since then it has been through several generations of development. Later, the Zeitgeist Movement ( and its founder, Peter Joseph also popularized this concept. The original concept of the Resource Based Economy is the development of a system over time, where all resources, technology and services are available to everyone in the human population. This would be deployed without the use of money, credit, barter, or servitude of any kind, while maintaining basic human rights like privacy and free speech. For this to be attained, all resources must be declared as the heritage of all humans in a global context. All resources are defined as existing valuable commodities subject to mining, and the waste side stream secondary resources. The proposed Resource Balanced Economy is an evolution of this, which includes a thermodynamical exergy term as a limiting metric to produce a practical system.

A shift in paradigm in how society sees that natural environment is also required. That natural environment allows the long term habitation of our society and should be maintained accordingly. At the same time, all resources that support our society come from that environment. We must change our paradigm, so we see ourselves as part of the planetary environment, not consumers of it (the current Linear Economy paradigm). What is proposed here is a fundamental restructuring of our entire industrial ecosystem, starting with an evolution of the social contract. The current system is in a state of stress, and much of the planet’s leadership are making decisions that could be described as panic based. To meet this challenge of change at a time of stress, it is proposed that the principles of science guided by philosophy is engaged on a scale not seen historically. What is proposed is an unprecedented mobilization of scientific and technical alliances towards problem solving, without the interference of money or politics (implying a replacement system). How do we develop a system that will converge on a methodology to meet the spectrum of human needs taking into account the most efficient and sustainable processes? The final outcome should be a symbiotic relationship with the natural environment is developed at a planetary scale. The proposed system is geared to maximize economic efficiency and true sustainability together, where the current Linear Economy only maximizes economic efficiency.

There are seven dominant considerations that could be developed as structural parts of the economic system.

1. Resource accounting

2. Embodied energy consumed vs. strategically useful outcome accounting

3. Management of dynamic equilibrium

4. Strategic design

5. Statistical entropy coupled with material flow analysis of each resource

6. Biophysical signatures

7. Technology application evolution/devolution over time."




Simon Michaux:

"The source, quantity and form of energy is the guiding principle dictating the complexity, size, and architecture of any system (Graedel & Allenby 2010, Stevens 1976). This is true for any biological organism, industrial system, or human society.

The sequence of influencing structures in a crude form could be as follows:

1. Power generation systems for heat and electricity generation will be constructed to harvest energy from a natural source. That natural source will take the place of fossil fuels. What ever this is will dictate what is possible for all other developments in an industrial society.

2. Industrial nodes and clusters will reorganize around the available power generation sources, based on their ability to deliver reliable electricity, heat and/or fuel. Where oil, gas and coal energy systems dictated industrial activity, now non-fossil fuel energy systems will be that controlling influence. This will include manufacture, and the sourcing of raw materials from recycling and mining.

3. Human population centers would then reorganize around industrial centers for employment. For example, the maritime port in the city of Rotterdam is the source economic activity and employment for much of the city. It gives the city a reason to be.

4. Food production would transform from its current form, where much of it is produced geographically remotely, to a more local and regional system. It is recommended that small scale organic food production is integrated into the population centers where possible. Food production would be tied to where human populations centers geographically are.

This could influence the carrying capacity of the region in how many people could live in these population centers. While the sequence of influence s would go in order (1 to 4), if at any time something in this sequence is impractical, then either that impracticality bottleneck will have to be innovated away or the whole sequence would have to be redeveloped from first principles. Figures 8 and 9 show how this might evolve. The people developing their local supply chains will go through these loops multiple times until an equilibrium is reached. The future will be non-linear and unequally distributed. Each geographical region will have its own opportunities and challenges. The stabilized equilibrium outcome will be different for each geographical region. Thus, each region will have different products to trade. Another way to approach how this might evolve is to use the Maslow Hierarchy of Needs (Maslow 1943) as a mapping tool in an unconventional context. Maslow’s hierarchy of needs is a psychological model where a human individuals’ most basic needs must be met before they become motivated to achieve higher-level more complex needs. Usually this is a social sciences tool. Consider now if this tool was used but now in context of an industrial task. Figure 10 shows a possible mapping of priorities for industrial activity using the Maslow concept. A factory for example needs material feedstock and energy to function. Material feedstock could be stockpiled for a time.

Energy cannot be stored easily; it must be used as it is produced. Thus, energy is the priority to secure in the list of needs for industrial manufacture. This same principle could then be applied to other sectors. The sectors themselves could be linked together in the same analysis.

Possible sectors to consider in this form:

• Power production of electricity, heat, and fuel from energy sources • Food production • Heating of buildings • Sanitation • Raw material supply "



Simon Michaux:

"All historical human systems of resource management and governance (socialism, capitalism, feudalism, fascism, communism, tribalism etc.) have been based on the concept of growth, either through conquest or economic production. This has been dependent on an increasing consumption of energy. That is now likely to reverse for the first time ever, and available energy for society will contract. An entirely new way of doing things is now needed. We either choose to work together, or we will turn on each other as a consequence of a scarcity of resources. We need to value things differently, where we value each other and not material things. As a civilization, it is time to grow up or fade away. The social contract that is implied could be made up of elements of all past human societies, producing something not seen before. What this will look like is unknown. As a fundamental issue will be a general lack of resources, elements of a top-down socialism architecture could be used to share resources to different regions. For this to work, each and every one of us must understand that we must share or go to war over resources. However, this system has always failed in the past, so it would require some differences. The human spirit requires the state of self-determination for what the future holds. History shows us that free market capitalism is the most effective an efficient way of progressing society. So, a bottom-up free market capitalism architecture could be used by each region to use those resources to produce useful goods. How this will develop or even if this would work depends on the choice for society to communicate with open minds and hearts.

As a society, we have to decide who we are and what kind of world we wish to live in. In terms of data collection for the consumption of resources, Figure 15 shows a concept map, where the consumption of resources is tracked at the node point. A node is a device or data point in a larger network. In networking a node is either a connection point, a redistribution point, or a communication endpoint (Kossiakoff et al 2011). In this context, a node refers to a goods distribution point where society can access resources. For example: a supermarket for food, a fuel station for fuel, a power station for electricity, etc. The consumption of all resources in and out of each node could be matched against the population catchment the node serves. It is recommended that the network is structured using Fuzzy Logic and/or Neural Network theory. In doing so, uncertainty can be embraced and gives the network greater flexibility in modelling the flow of resources."



Resource Accounting

Simon Michaux:

"Resource accounting The human population currently administers the global industrial ecosystem as if there are unlimited natural resources. In reality, the planet is a finite dynamically self-regulating system that has been relatively stable for time periods best measured in geological eras. The industrial eco-system has grown very quickly in size and complexity since the start of the first industrial revolution (IR1). The industrial paradigm has only a very limited perspective of approximately 250 years. So, the global industrial ecosystem habitats a finite closed (mostly) biosphere, and it consumes finite non-renewable natural resources (metal, energy, materials) and renewable resources (sourced from flora and fauna). Logically, to sustain the environmental habit for future generations, maximizing the use of each and every resource as effectively as possible, is required to leave resources for our descendants. This is the effective and sustainable management of the Carrying Capacity of the planetary environment. It is recommended that all resources streams are characterized and managed in context of biophysical signatures.

The field of biophysical science deals with the application of physics to biological processes and phenomena. This approach could be used to merge non-renewable resources like metals with renewable resources like trees, and industrial resource consumption into a single coherent system. What is required, is the quantification of the global (and all subregions like Europe and the Nordic Frontier) natural resources in all their forms. We need to understand exactly what our industrial ecosystem requires and in what form. In parallel to this, an understanding on what these resources are needed for and in what applications. A new methodology of resource classification is now needed, as part of routine mapping, there is a dynamic system based link between what resources we have, what they are needed for and where they are needed. The total global resources need to be mapped in various levels of precision (reserves & resources, etc.). A more sophisticated standard of resource classification is now appropriate where the following needs to be mapped for all useful raw materials. These resource mapping parameters need to be in a form where they can be used in an exergy industrial entropy analysis (Reuter et al 2006)."



Simon Michaux:

" Exergy is uniquely suited to use as a global, strategic indicator of the sustainability of mineral resources as it allows direct comparison between all metals, minerals, and fuels. Exergy is the application of thermodynamics to the accounting of natural resources and material fluxes. It examines the real energy costs, that is, the replacement costs, relative to a standard reference environment (RE). Therefore, one can compare in the same units the costs of different industrial operations in context of natural resources: Exergy (in Joules, J). In thermodynamics, the exergy of a system is the maximum useful work possible during a process that brings the system into equilibrium with a heat reservoir, reaching maximum entropy (Rant 1956). The maximum fraction of an energy form which (in a reversible process) can be transformed into work is called exergy. The remaining part is called anergy, and this corresponds to the waste heat (Honerkamp 2002). Using an exergy standard states makes it possible to express these enthalpy and entropy data as Exergy by using for example the methodology and standard states expressed in Szargut (2005).

When the surroundings are the reservoir, exergy is the potential of a system to cause a change as it achieves equilibrium with its environment. Exergy is the energy that is available to be used. After the system and surroundings reach equilibrium, the exergy is zero. Determining exergy was also the first goal of thermodynamics. The term “exergy” was coined in 1956 by Zoran Rant (1904–1972) by using the Greek ex and ergon meaning “from work” (Rant 1956 and Grubbström 2007). Energy is neither created nor destroyed during a physical process, but changes from one form to another (as per the 1st Law of Thermodynamics). In contrast, exergy is always destroyed when a process is irreversible, for example loss of heat to the environment (As per the 2nd Law of Thermodynamics).

This destruction is proportional to the entropy increase of the system together with its surroundings. The destroyed exergy has been called anergy (Honerkamp 2002). "


More information

Video: Simon Michaux on the Transition Towards a Resource Balanced Economy

an excellent recent conversation between Nate Hagens and Simon Michaux, recorded April 5, 2023.

"In this episode, Simon Michaux returns to discuss his new paper “A Resource Balanced Economy”, which outlines an alternative economic and social system. This conversation builds off of his two previous episodes on The Great Simplification, unpacking the ideas and tools that will be helpful in planning for an unknown future with more energy and material constraints. How can we be more intentional about the design of our technology to make products that are longer lasting and easier to reuse? How can we organize society to create resilient communities based around actual human needs, rather than endless efficiency geared towards growth? Can an ‘Arcadian Blueprint’ emerge, and at what scale, and by whom?"

From the same author:

Michaux, S. P. (2021c): Restructuring the Circular Economy into the Resource Balanced Economy, GTK Open Work File internal report, Report serial, 3/2021, ISBN 978-952-217-412-3, https://tupa.gtk. fi/raportti/arkisto/3_2021.pdf

Michaux S.P. (2023): Scope of replacement system to globally phase out fossil fuels, GTK Bulletin Michaux S.P. (2023): Quantity of metals required to manufacture one generation of renewable technology units to phase out fossil fuels, GTK Bulletin

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Dryden, H., Dryden, D. and Duncan, C. (2021): Climate regulating ocean plants and animals are being destroyed by toxic chemicals and plastics, accelerating our path towards ocean pH 7.95 in 25 years which will devastate humanity, Global Oceanic Environmental Survey Team (GOES), ENVIRONMENTAL SCIENCE eJOURNAL Vol. 1, No. 28: Jun 17, 2021

Hall, C., Lambert, J., and Balogh, S., (2014) EROI of different fuels and the implications for society, Energy Policy 64, 141–152