Economics textbooks still begin with the circular flow diagram, where households demand goods, and in turn businesses create goods; thus, demand and technology create a virtuous cycle that exchanges money for stuff. This model ignores both the source and the sink of our economies—finite, cheap energy/resources, and Earth’s limited capacity to absorb our waste.

Global GDP is ~99% correlated with energy and material consumption. Even gains in energy efficiency get redirected back into the system to create more stuff.

Despite this, modern economic theory treats energy the same as any other commodity. $100 worth of gasoline is equivalent to $100 worth of cupcakes, crayons, or bike helmets. We conflate the dollar value of energy with the work value it provides—and don’t consider the impact of pollution at all.

The global human economy uses the equivalent of ~100 billion barrels of oil (in the form of coal, oil, and natural gas) every year. That’s the equivalent of ~400 billion human workers, whose labor is added to the five billion actual human workers on Earth.

Over the past few decades, this has supported an increasingly complex global supply chain whose functioning depends on the availability of cheap, abundant energy. As economically available energy depletes and is no longer able to support such complexity, a Great Simplification will inevitably occur.