We say the economic system works through flows: flows of resources, flows of capital, and flows of produced goods, which are all mostly exchanged through buying and selling, and then invested, saved, or consumed.
These flows can be measured in terms of money value. That's what the GNP and GDP are: dollar measures of the circular flow of a nation's economy over the time period of a year.
Think of life now. Life can't be measured by dollars because life includes a lot more than just humans and life has been around a lot longer than humans.
But life has circular flows too, flows of resources, flows of energy. And like an economy, life should have a balance between consumption and production.
Think of the Earth as an economy, a circular flow of resources with an input of high quality energy from the sun and output of low grade energy in the form of infra-red heat.
The Earth is a successful economy because it has life. It is life that is able to capture some of the sun's energy and maintain itself for countless generations in a continuous manner since its origins.
The Earth Economy is a lot bigger than the human economy and a lot lot older. In the Earth Economy carbon is the medium of exchange. In other words, carbon in the Earth Economy plays the same role as money does in the human economy. Carbon, like money gets cycled through the Earth Economy, but unlike money, carbon takes hundreds of millions of years to cycle through.
In the human economy money commands resources, goods and services. And money acts as a store of value. It can be saved and spent later. But money, unlike carbon, is conceptual, it only exists because we believe it has value. It ceases to exist when we cease to believe in it.
Money is really only a virtual reality. Ultimately, what makes all things work, all things go, and what makes living things alive is energy.
Energy flows, and like water, it always flows downstream. In the case of water, it flows downstream to the lowest point on Earth, which is the bottom of the oceans. In the case of energy, when we say it flows downstream we are talking about the “Second Law of Thermodynamics”.
Energy can be neither created nor destroyed. That's the first law. The second law has to do with what happens when energy is converted into work.
Living systems capture energy and convert it into chemical energy. The second law says that this must be a downhill process. You cannot reconvert chemical energy to electromagnetic energy (light) unless you add more energy from outside the system.
That's why a perpetual motion machine is impossible. Because whenever work is done, the energy used up, even though it still exists, cannot be used again to do the same amount of work. It gets degraded, or disorganized in doing work. In this sense it always flows downstream.
On Earth, carbon plays the role of life's currency, life's means of capturing, utilizing, and storing the high grade energy, and getting rid of the low grade energy. Because it plays such a central role in life, carbon is a lot like the Greek god Atlas, holding up the sky.
Energy is necessary for life because if there's not enough of it then life's activities stop. But too much energy raises the temperature too high and life can burn up.
Over vast scales of time the carbon cycle has had a huge influence on the flows of energy and the overall temperature of Earth's surface. And during those same spans of time, life has had a large influence on the carbon cycle, and hence on Earth's temperature.
Like goods and services in the smaller human economy, energy flows and circulates amongst living things. First, to the Producers: bacteria, diatoms, algae, and plants. Producers take in carbon dioxide and give off oxygen. Producers utilize photosynthesis and carbon dioxide from the atmosphere to capture solar energy and store it in carbon compounds.
. Next, the energy, in the form of carbon compounds, flows to the Consumers: the bacteria, protists, fungi, and animals that feed on plants and on each other. Consumers breathe in oxygen and breathe out carbon dioxide.
When there is a balance between Producers and Consumers Earth Economy is as healthy as it can be. If there is too many Producers and not enough Consumers, then too much of the plants and algae die without decomposing and more carbon gets locked into sedimentary rocks. Then the available supply of carbon decreases and Earth's temperature decreases. This is just one of, but not the only causes of ice ages.
We can call ice ages “Depressions” in the Earth Economy because just as in depressions when there's not enough money to buy everything the economy freezes, during an ice age there's less carbon available to capture the energy needed to drive life. Some of the great extinction events such as the Permian - Triassic extinction 250 million years ago are thought to have been caused by ice ages.
If there is too many Consumers and not enough Producers we get too much carbon available. Remember, Consumers breathe out carbon dioxide, so the more Consumers there are and the more that they consume, the more carbon dioxide there will be in the atmosphere. The amount of available carbon becomes so high that Earth's surface temperature climbs. We can call this “Inflation” .
For thousands of years the human economy was just an insignificant fraction of Earth Economy. But then we discovered fossil fuels – coal, and oil. These are forms of carbon that were saved long ago when for various reasons, plant life was not consumed by other life forms, but eventually was subducted underground. There it was converted by the heat and compression of Earth's techtonic forces into coal and oil.
By tapping into this stored form of ancient sunlight, we have been able to extract both biological and mineralogical resources at an accelerating rate. This is a situation akin to hyperinflation in human economy, where the circulation velocity of money (carbon) has increased at the same time as vastly greater quantities of money (carbon) are available.
The result is an overheating of Earth Economy and a new mass extinction event. We call this “Global Warming”.
