Economic Growth Modeling We Need: Insights from Consistently Merging Biophysical and Post-Keynesian Approaches in the HARMONEY Model

All economies require physical resource consumption to grow and maintain their structure.  This is no different than biological organisms, but the modern economy is additionally characterized by private debt. The Human and Resources with MONEY (HARMONEY) economic growth model links biophysical and monetary features using a stock and flow consistent framework in both physical and monetary units. Via this model, this presentation explores the interdependence of growth and three major structural metrics of an economy: (1) the relationship between resources (energy) consumption and GDP, or “decoupling”, (2) the relationship between wages and profits (or wage and profit shares) in the context of resources consumption growth and stagnation, and (3) the relative size of economic sectors in the economy. I compare HARMONEY model results to long-term trends in the global and U.S. economies. These comparisons indicate that the HARMONEY framework enables realistic investigation of the interdependence and constraints among growth, energy consumption, and economic distribution. These interdependencies are generally lacking in orthodox growth modeling (e.g., neoclassical growth). Thus, the HARMONEY model is potentially a more accurate framework to inform feedbacks from policies such as transitioning to a low-carbon energy system.

Relevant publications:
King, Carey (2021) The Economic Superorganism: Beyond the Competing Narratives on Energy, Growth, and Policy, Springer-Nature.

King, Carey W. (2022) Interdependence of Growth, Structure, Size and Resource Consumption During an Economic Growth Cycle, Biophysical Economics and Sustainability, volume 7, Article number: 1.

King, Carey W., An Integrated Biophysical and Economic Modeling Framework for Long-Term Sustainability Analysis: the HARMONEY Model, Ecological Economics, 169, March 2020, 106464,