Cooking the Books 1:Don’t ask Jevons

Last November’s Monthly Review carried an article by John Bellamy Foster, Robert Clark and Richard York on “Capitalism and the Curse of Energy Efficiency. The Return of the Jevons Paradox” (www.monthlyreview.org/101101foster-clark-york.php). They recounted how in his presidential address to the British Association for the Advancement of Science in 1863 the leading capitalist (and arms manufacturer) Sir William Armstrong raised the question “as to whether Britain’s world supremacy in industrial production could be threatened in the long run by the exhaustion of readily available coal reserves”. The authors went on:

“In response, William Stanley Jevons, who would become one of the founders of neoclassical economics, wrote, in only three months, a book entitled The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines (1865). Jevons argued that British industrial growth relied on cheap coal, and that the increasing cost of coal, as deeper seams were mined, would lead to the loss of ‘commercial and manufacturing supremacy,’ possibly ‘within a lifetime,’ and a check to economies growth, generating a ‘stationary condition’ of industry ‘within a century‘. Neither technology nor substitution of other energy sources for coal, he argued, could alter this.”

Jevons (1835-1882) is known to students of Marxian economics but only as bit of a joke for his view that economic crises were caused by sunspots but also for his theory that prices were determined by their marginal utility to consumers.

H. M. Hyndman called his 1884 lecture defending the labour theory of value “The Final Futility of Final Utility” (www.marxists.org/archive/hyndman/1896/economics/7-futility.htm). In it he also took a sideswipe at Jevons’s theory of crises saying that “Jevons’ Commercial Crises and Sun Spots may be left to gather dust on its neglected shelf, until some writer, with nothing better to do, thinks it worth while to publish a monograph on ‘the Strange Hallucinations of Professors of Political Economy’.”

Jevons was of course just as wrong about coal becoming exhausted as he was about crises being caused by sunspots. Coal in Britain is not exhausted even today, only not mined as much as it once was, due to the relative cheapness of oil and gas as alternative sources of energy.

The “Jevons Paradox” that Foster and the others were interested in says that economies in the use of some material aimed at reducing its consumption will in fact, by making it cheaper to use, actually increase this. This is why they called energy efficiency a “curse” today. Economies in the use of oil and coal under capitalism, they said, will lead to more not less being consumed, and so not reduce the threat of global overwarming.

This is a problem only because under capitalism the competitive struggle for profits to accumulate as more capital that is built-in to it forces enterprises to use the cheapest methods and materials so as to keep the price of their products as low or lower than those of their rivals. It’s called “being competitive” or “maintaining competitiveness”.

In a socialist society energy efficiency would not have this perverse effect. It really would cut the consumption of coal and oil (and, similarly, for other non-renewable resources) as neither the imperative to accumulate capital, nor profit-seeking nor economic competition would operate.