Enerconics is the use of energy as a gold standard of economics. The reason this works is because there is a very close relationship between (inflation adjusted) GDP and world energy consumption (including sources like wood).
The easiest way to understand the concept is to pick up an English ten pound note, and they ought** to say:
“I promise to pay the bearer on demand the sum of ten pounds”.
Now imagine if you will a country with one electricity supplier who issues a token with something written on it like:
“I promise to supply the bearer on demand one thousand KWH”
Obviously, if this promise is good you can present it to the electricity company and they will deliver the energy. But also, if someone else needed electricity (and almost everyone does), then they could accept the token for 1000KWH in part payment. And because everyone needs electricity, then the token is almost of equal value to all ordinary consumers.
However … unlike a traditional pound note, dollar or whatever, the “enercon” as you might call it, has one huge advantage over other forms of currency … it doesn’t suffer inflation. Or to me more precise, it’s value is fixed by one or if not the most widely used commodity in society.
The Enerconic Multiplier
The enerconic multiplier is simply the ratio of energy “value” used in society to the amount of actual energy both direct and indirect being used. Practically what it represents is the sum of all economic transactions (including purchase of energy) divided by the number of transactions in which energy is used/purchase.
To explain, imagine an economy (like Scotland if we’d gone for “independence”) where the “Sturgeon” – the fake unit of money issued by the Scottish government had lost all credibility. And as a result, imagine the electricity suppliers had started paying their staff and suppliers partly in “Enercons” – that is a token to purchase back electricity. With the Sturgeon now being carried around in wheelbarrows, and the Enercon holding its value, very soon the staff and suppliers would find their own staff and suppliers were happy to accept Enercons rather than Sturgeons. Seeing what a success the Enercon has been, soon other energy suppliers (gas, coal, petrol, oil, etc) start issuing their own Enercon with a nominal KWH value to their own staff – which they in turn are happy to accept because they’ve seen that the only thing shops will now accept is the Enercon.
And the more people who prefer being paid in the Enercon (which could be redeemed for something real) against the Sturgeon (which almost no one else was accepting for payment) … the more the Enercon would become the de facto way of paying for anything irrespective of whether it was obviously connected to energy.
And very soon, just as cigarettes became a unit of currency in prisons, so the Enercon could replace the Scottish Sturgeon as the currency if we’d have been mad enough to go for (fake) independence.
But now, if we counted up the number of transactions in which the Enercon was used, and totalled their energy value, we’d find that the total KWH of Enercons transacted vastly exceeded the energy consumed by the society. In other words, for every KWH being consumed we get perhaps 4KWH’s worth of activity. But, to turn that around, for each 4KWH’s worth of economic activity, on average 1KWH of real energy will be consumed.
And here’s where I have to correct a mistake made earlier. In a previous article I suggested that if the price of electricity were twice as high that more energy was being consumed than produced. That was wrong. In fact, if the price of electricity is greater than the Enerconic Multiplier x the standard price, then no net energy is being produced.
**I said “Ought to say” … because living in Scotland we get notes issued by Scottish banks and I can’t easily check whether it changed.