State Energy Transition

German and American Realities and Chinese Choices

Tong Zhu, Lei Wang

• Publisher: Palgrave Macmillan
• Year: 2019
• ISBN:
  9789813294998
• Topic: Business
• Subtopic: International Business
• Index: Business

This book places a current topic—energy transition—within the historical background of human social development and explores the value and significance of energy transition for economic transition in the course of economic growth. It sheds light on the basic logic and the distinguishing characteristics of energy transition by reviewing the history of energy transition development in order to provide a new perspective for understanding and analyzing China's energy transition considering lessons from the German and American energy transition experiences. This book will be of interest to environmentalists, economists, and journalists.

© The Author(s) 2020

T. Zhu, L. WangState Energy TransitionThe Great Transformation of ChinaChina's Economic Transformation, Innovation and Development https://doi.org/10.1007/978-981-32-9499-8_1

Begin Abstract

1. Energy Transition in Economic Growth

Tong Zhu¹ and Lei Wang¹

(1)

Chinese Academy of Social Sciences, Beijing, China

Tong Zhu (Corresponding author)

Lei Wang

Email: [email protected]

End Abstract

The role of energy is irreplaceable in human social activities. It serves not only as the foundation of human society, but also as a major driving force in support of economic growth. Throughout human energy utilization history, from primitive “firing by rubbing sticks” to gradual utilization of animal power, hydraulic power and wind power, replacement of fuelwood with coal, and replacement of coal with oil, every breakthrough of energy utilization technology and energy transition has profound positive impacts and facilitating functions on then social and economic progress. As a result, analysis on energy transition under the context of human economic growth not only helps comprehend the relation between energy transition and economic growth and transition, but also better shows the socioeconomic significance of energy transition.

1 Growth “Limit” and Breakdown in Pre-industrial Society

Though related to social development and human well-being, economic growth is not the necessary product in social development process. In quite a long historical period, human life and economic standard have been always in a cycle of rise and fall. In another word, there seemingly exists certain “growth limit” in human social economy. Sustained economic growth was not realized until industrial revolution in late eighteenth century when Britain took lead to break up the “cycle”.

1.1 Growth Mechanism in Pre-industrial Society: “Malthusian Cycle”

The alleged Malthusian cycle, also known as Malthusian trap, is a view about economic growth which evolves from the “population theory” proposed by British classical economist Thomas Malthus in Principle of Population in the eighteenth century.

The core idea of Malthus population theory could be generalized as “two series laws”, “two prohibitive means” and “one equilibrium outcome”. In the eyes of Malthus, population in human society experiences geometric growth, while means of subsistence adhere to “two series laws” of arithmetical series. As population growth is faster than the growth of means of subsistence all the time, contradiction between the two is irreconcilable. As a consequence, for prohibiting excessive population growth and balancing population and required means of subsistence, “two prohibitive means” should be implemented. On the one hand, preventive means such as no marriage, late marriage and infertility should be taken to lower population fertility rate. On the other hand, proactive prohibitive means such as poverty, hunger, sin, disaster and war should be taken to improve population mortality rate (Liang et al. 2005, p. 26). In another word, “the law of nature” will wipe out excess population so as to balance social population and provided means of subsistence.

Based on his “population theory”, Malthus raises the “law of diminishing land returns”. Classical economists represented by Petty, Quesnay and Smith have already noticed land returns diminishing phenomenon. Once the maximum limit of productivity is exceeded, land output will increase with the growth of labor. However, Malthus is the first to put forward the “law of diminishing land returns” and take it as the foundation of growth theory. Consequently, a mechanism is came up with to explain economic growth which alleges that economic growth is balanced by survival income. According to then scholars, “survival income” here refers to the income barely enough to sustain life. As pointed out by Robert Allen, such statement talked by classical economists is very flexible (Allen 2012, p. 38). Available statistics show that in the age of Malthus, economic growth in Western Europe had already solved basic food and clothing problems. Therefore, lots of economic historians led by David Landes (2007) and Clark (2007) stress that even though countries in pre-industrial revolution days scraped by, it does not mean that people were undernourished and dressed in rags then. It is up to per capita income in case of equal population mortality and fertility. When social income level goes up because of the progress of technology, population fertility will rise and mortality will decrease. Social population in such case naturally increases. Together with the slowdown of population growth, per capita income level gradually decreases until per capita income equals to survival income. If per capita income is below survival income, population decrease will recover per capita back to survival income. In this way, social income keeps fluctuating in the long run until reaching a balance between mortality and fertility.

The core idea of Malthus growth theory is generalized by later economists as the statement that “social technical progress may lead to the short-term increase in per capita income, but output increase brought about by technical progress will be necessarily counteracted by population growth so that per capita income is in low-level equilibrium state in the long run”. Obviously, in the eyes of Malthus, economic growth has a gloomy future as population regulatory mechanism will sustain public income and living standards in the stagnant state in the long run.

Interestingly, though Malthus’ view about his time (mid- and late eighteenth century to early nineteenth century) does not conform to then world economic growth, it well describes the growth in pre-industrial society. Some scholars even consider that “Malthusian cycle” reflects the growth logic of pre-industrial society. For instance, according to G. Clark, economic historian from University of California, Malthusian logic is the “natural law” about the operation of human social economy before 1800. Clark views the year 1800 as the demarcation point between world economic stagnation and economic takeoff. Before 1800, human socioeconomic growth had undergone a long-term low-level equilibrium stage. The income of people in the eighteenth century was barely the same with that in 500 B.C. In 1800, world population life expectancy was just 30 years old, much shorter than 35 years old in hunting and gathering society (Clark 2007, pp. 1–2).

As found by Clark in his research, during the nearly 3000 years from 1000 B.C. to 1800 B.C., production and life of human society were in Malthusian cycle. Over the centuries, per capita income slowly increased. The growth of income was gradually counteracted by population growth and slowly decreased upon reaching the peak.

The research on “world economy millennium history” developed by British economic historian Angus Madison in 2001 verifies this conclusion to some degree. Madison discovers that in 0–1000 A.D., economic growth in human society was basically in the stagnant state, and population compound average growth rate was about 0.02%. Despite the 1/6 growth of population, world per capita income was slightly reduced. In 1000–1820 A.D., economy entered the slow growth period. World per capita annual compound growth rate was increased to 0.17% and world per capita income annual compound growth rate was increased to 0.05%. It illustrates that there is a fourfold increase in world population, and per capita income is increased by 50% in this period (Madison 2003, p. 16).

However, population and income statistics in Madison’s research still belong to interval statistics without any starting point or emphasis. In addition, due to the long time interval, available statistics hardly reflect the long-term growth process characteristics. Professor J. Bradford de Long from University of California Berkeley follows the practice of Madison which takes 1990 international dollar as the benchmark and adopts purchasing power parity and international multilateral comparison method to estimate early income level of human society. It is thought to be the best computing method by far. J. Bradford de Long applies it in the estimation of world per capita GDP from 1 million B.C. to 2000 A.D. As shown by the research results, in the long history prior to industrial revolution, human socioeconomic growth indeed abode by Malthusian cycle logic. In order to better represent the volatility characteristics of Malthusian cycle in pre-industrial social growth, this paper selects world per capita GDP statistics in 1 million B.C.–2000 A.D. (Fig. 1).

Fig. 1

World per capita GDP statistics in 1 million B.C.–2000 A.D.

(Source J. Bradford de Long [1998])

In accordance with the estimate of Professor J. Bradford de Long, in the long time of human society from 1 million B.C. (the Old Stone Age) to 1650 A.D., world per capita GDP fluctuated between 92 and 150 international dollar (hereinafter referred to as “dollar”) with three high and low points of income. The three high points of income were respectively 143 dollar in 800 B.C., 133 dollar in 1000 A.D., and 150 dollar in 1650 A.D., while three low points of income were respectively 92 dollar in 100 million B.C.–25 million B.C., 94 dollar in 350 A.D. and 89 dollar in 1300 A.D. As for the average level, the average living standard of people in 1650 A.D. and 1000 A.D. was almost the same with that in 800 B.C. at a high level, while the average living standard of people in 1300 A.D. and 350 A.D. was almost the same with that in 100 million B.C. at a low level.

Strictly speaking, human society got rid of “Malthusian cycle” once world per capita GDP exceeded the historical high 143 dollar (800 B.C.) in 1650 A.D. It was 150 years earlier than 1800 A.D. proposed by Professor Clark. As indicated by world per capita income statistics before 1820 derived by J. Bradford de Long with Madison’s method, world economic growth jumped out of Malthusian cycle in 1650–1700 A.D., approximately over 100 years earlier than 1800 A.D. alleged by Clark. The reason lies in the fact that J. Bradford de Long takes the statistics about the fixed relation between population and GDP after 18...

Table of contents

• Cover
• Front Matter
• 1. Energy Transition in Economic Growth
• 2. History and Logic Analysis of Energy Transition
• 3. German Practice in State Energy Transition
• 4. American Practice in State Energy Transition
• 5. Characteristics of China’s Energy Transformation
• 6. Difficulties and Restrictions in China’s Energy Transformation
• 7. Progress, Issues and Prospect of Energy Transition in China
• 8. Direction and Path of China’s Energy Transformation
• Back Matter