Until now, the formula for productivity gains - that is, an increase in production for a given investment - has been
(e + t) / l, where
e = energy inputs,
t = technique, and
l = labour costs.
Based on this formula, there are three ways to raise productivity: increase
e, innovate with
t, and reduce
l (often merely by moving production to places with lower wages).
This was possible as long as the supply of cheap, abundant energy continued to grow - either to increase
e or to pay for relocating
l. Once our energy supply slides into decline, however, this formula will come under increasing pressure.
There are limits to how much we can improve productivity by changing technique without increasing energy use. When we actually have to reduce our overall energy use steadily, the pressure to innovate techniques will reach a crisis even as our capacity to innovate is constrained by our falling energy inputs.
The fact is that most of our efforts at innovation up to this point have been about finding ways to raise productivity by increasing energy flow.
In the future, we're going to have to start learning how to increase the productivity of human-powered work, a long-neglected innovation path.
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