The housing market is heavily dependent on two main factors; supply and demand. Both play a major role in determining an equilibrium price for both sellers and buyers in the real estate market. 

Map of Geoffrey M Hodgson's 2015 Conceptualizing Capitalism book summary pdf  with other ideologies added sept 2021 from new politics website

Microeconomic measures can produce counterintuitive 'emergent' effects at the macro or systemic level. The commendable act of saving money by individuals during uncertain economic times has the perverse macroeconomic effect of making a recession  worse: in aggregate there will be less money available for spending, suppressing demand for goods and services. Economists call this effect 'the paradox of thrift'. Similarly, logical efforts by companies in such conditions to reduce their wage bill or their postponement of investment decisions will reduce spending in the economy  and deepen the economic downturn.

What can be done to counteract this harmful dynamic? The missing spending can be replaced by government spending: governments have it within their power to effectively counter economic downturns!

The causal loops are presented to transfer values from Economic values in Capitalism to Community values in the new economy

Explanation of the Model

Economic capital growth in a system constrained by a non-renewable resource, Figure 37 from Thinking in Systems by Donella H. Meadows

A simple model of economic growth where a government taxes the economy, and spends it on capital and revenue goods.

The World3 model is a detailed simulation of human population growth from 1900 into the future. It includes many environmental and demographic factors.

Use the sliders to experiment with the initial amount of non-renewable resources to see how these affect the simulation. Does increasing the amount of non-renewable resources (which could occur through the development of better exploration technologies) improve our future? Also, experiment with the start date of a more environmentally focused policy.

The statement that there can be no economic activity without  energy and that fossil fuels are finite contrasts with the fact that money is not finite and can be created by governments via their central banks at zero marginal cost whenever needed.

An important fact about COAL, GAS and OIL (especially when produced via fracking) is that their net energy ratios are falling rapidly. In other words the energy needed to extract a given quantity of fossil fuels is constantly increasing. The falling ratio 'EROI' (Energy Return on Energy Invested ) provides yet another warning that we can no longer rely on fossil fuels to power our economies. In 1940 it took the energy of only one barrel of oil to extract 100. Today the energy of 1 barrel of oil will yield only 15. We cannot wait until the ratio falls to 1/1 before we invest seriously in alternative sources of energy, because by then industrial society as we know it doday will have ceased to exist. An EROI of 1:1 means that it takes the energy of one barrel of oil to extract one barrel of oil - oil production would simply stop! 

Like previous models, this model shows the operation of a simple economy, the influence of changes in the consumption rate, and the effect of government intervention. In addition, this model shows changes in the hypothetical general price level. It gives an idea of changes in price trends based on changes in the quantity of money. NOTE: No general price level exists. Prices provide information for the exchange of individual economic goods.

This simple model describes wealth accumulation. The value in income is described by the following simple equation:

A simple budget planning system.  What additional complexities can you add?

Plan for CCP project completion see IM-102242  for WIP detail of the structures of the related models

Economic capital growth model, Figure 27 from Thinking in Systems by Donella H. Meadows

Butterfly Effect
Sensitivity To Initial Conditions
(sensitive dependence on initial conditions)
Navier Stokes Equations
Lorenz Attractor
Chaos Theory, Disorder and Entropy



If M is the state space for the map , then  displays sensitive dependence to initial conditions if for any x in M and any δ > 0, there are y in M, with  such that

This model demonstrates the intertwining relationship between the economic contribution of industrial logging and that of adventure tourism (dominated by mountain biking).

In terms of the revenue from industrial logging at Derby, it is driven by demand of timber and the timber price. However, the forest resources are limited, which will put constraints on the expansion of industrial logging due to regrowth rate and existing forestation.

The tourism can bring economic benefits to Derby from hospitality and selling tickets to local adventure activities. The hospitality income can be determined by the average length of holidaying at Derby and average local pricing for accommodation, food and beverages and related essentials. Tickets sales are largely affected by the similar factors such as average expense per activity and average number of activities that tourists usually choose. Having explained the streams of possible income from the tourism, the key driver for tourism income is the desire or demand to travel. Unlikely logging, tourism is renewable and perpetual. However, logging can be conceived as a major constraint on attracting as many tourists as the economy so desires.

This is because deforestation caused by logging will diminish the natural scenery at Derby and in turn, the tourist operations and attractions based upon natural scenery. Loss of forest resources is likely to make Derby less attractive to visitors.

In short, the tourism and logging both provides economic benefits to Derby but in a competing relationship. However, the sustainability possessed by tourism cannot be rivaled by industrial logging in long term. Logging revenue reveals its advantage at inception of observed time period. Such advantage wears out over the time due to reduction in resources and sluggish regrowth. Eventually. the tourism income turns into the major player. To understand how they co-exist, please simulate the model. 

IM-168155 Summary of Ch 27 of Mitchell Wray and Watts Textbook see IM-164967 for book overview with simplified Mike Radzicki's 2003 Evolutionary Economics history article added

In this Insight I focus on the demand site of the Market and Price model, leaving the supply side out.

To maintain economic wealth (roads, hospitals, power lines, etc.) power needs to be consumed. The same applies to economic activity, since any activity requires the consumption of energy. According to the Environmental Protection Agency, the burning of fossil fuels was responsible for 79 percent of U.S. greenhouse gas emissions in 2010. So whilst economic activity takes place fossil fuels will be burned and CO2 emissions are unavoidable - unless we use exclusively renewable energy resources, which is not likely to occur very soon. However, the increasing CO2 concentrations in the atmosphere will have negative consequences, such droughts, floods, crop failures, etc. These effects represent limits to economic growth. The CLD illustrates some of the more prominent negative feedback loops that act as a break on economic growth and wealth.  As the negative feedback loops (B1-B4) get stronger, an interesting question is, 'will a sharp reduction in economic wealth and unavoidable recession lead to wide-spread food riots and disturbances?'

The term 'work' has been  used in this model in the sense of economic activity to include not only work done by people but also by machines. The model shows 8 positive feedback loops that reinforce work and the need to work. From the perspective of physics, civilisation can be described as a MECHANISM FOR USING ENERGY AND DOING WORK.  

Work, however, has some unavoidable consequences. The second law of thermodynamics tells us that any ‘work’ requires the use of energy and that DOING WORK entails the generation of WASTE HEAT. The laws of physics also tell us that CO2 emissions from burning fossil fuels will cause global warming. These unintended and unavoidable consequences are highlighted in the model by prominent arrows.

Can the structure of this system be changed to avoid a foreseeable collapse of civilisation?

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