Recently I listened to Nate Hagens's Podcast The Great Simplification where he is being interviewed by the economist Kate Raworth about the concepts he presents in the podcast, the purpose behind the podcast and his background (which he seldom shares, since he doesn’t want to focus on himself rather the world systems we live in). At one point he mentioned the “Mordor Economy”. As a Lord of The Rings fan, it grabbed my attention. That our current economic system might lead to destruction felt like a good metaphor, but how does the Mordor Economy operate? These were some thoughts that crossed my mind and I felt like I needed to dive deeper into the concept.
The concept is built on the fact that a larger share of our economy (GDP) is now used towards extracting and producing energy. It used to be as low as 5% now we are heading to a ratio of 15%. This is because what used to be cheap fossil fuels are getting harder to get. In other words, a larger share of GDP is about getting energy instead of giving benefits to society.
At the same time, as this energy is produced more environmental destruction occurs. Renewable energy needs materials and dirty fossil fuels need clean-ups. In other words, the cost of getting that energy increases because of the repair that needs to be done in order just to keep nature as intact as it is today. These two trends are not just hypothetical since we know that energy efficiency hasn’t decreased to match the increase in energy consumption.
GDP growth is 99% related to energy consumption and 100% relates to material use. In the Mordor Economy, 50% of the GDP is used for just getting energy and 50% is used just to take care of the damage that energy production created. Nothing is left for the society. We are trapped in Mordor.
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