Value, Importance & Tomatoes 🍅

I wrote something for today's Sunday Times. The theme won’t come as much of a surprise if you’ve read a few of my other recent pieces here: that solving the current energy crisis and for that matter hitting net zero is a lot more complicated (and interesting!) than you might have thought.

And if you follow me on Twitter you will probably already be familiar with my slight obsession with tomato growing (thread about that here 👇)…

It goes back to the points I was trying to make when I wrote about the Industrial “re-revolution”: since so much of what constitutes modern civilisation depends on innovations we came up with and then refined during the 19th and 20th century, and since so many of them emit carbon emissions (or rely on a lot of energy), “solving” the climate challenge isn’t simply a case of building enough power capacity.

That will certainly help, a lot. But we also need to re-imagine our industrial and chemical processes - or at the very least come up with a decent and economically-viable way of capturing their carbon emissions. And, given carbon capture is another one of those technologies which has yet to morph from “doable” to “done at scale” (see here for a lot more on that) we have a lot more work and thinking to do.

But there was another point I didn’t quite have the space to make in the column, and which I’d like to mention here, in part because, well, it’s more of a question than an answer.

I talked in the Sunday Times piece about how one of the “bugs” in conventional economics (to the extent that there is such a thing) is that people assume we can easily substitute away from one thing to another if need be - but that you can’t really substitute away from energy. But it strikes me there’s another, deeper bug which we’ve run smack bang into in recent years: that just because something is cheap doesn’t mean it isn’t important.

As you may be aware I’m in the middle of writing a book right now about some of the most important “ingredients” in modern civilisation. The striking thing about these materials - be they concrete or steel or indeed oil - is that most of the time they are not especially expensive. Indeed, on a labour and price-adjusted basis they have become cheaper and cheaper over time.

Yet the paradox is that, cheap as they are, they are important in a kind of life-or-death way. No concrete or steel and cities crumble. No copper and the electrical grid is gone. No energy and… well, we are beginning to answer that last one. Yet for the vast, vast majority of recent history there has been no way of reflecting this reliance and dependence in economic statistics.

Well, I say no way. There are a few obscure economic datapoints one can refer to: most obviously, the input-output tables that sit beneath national accounts data. But while in theory these input-output tables should allow you to get a sense of how one sector relies on another, in practice the categories national statisticians include in them are so broad it becomes incredibly difficult to disentangle, say, the extent to which a company like Facebook relies on steel manufacture or fibre optics. In practice it’s obvious that there would be no Facebook without these two things: you’d have no datacentres, for a start. Yet, there’s no telling this from any corner of national statistics I’ve encountered. If you have come across anything relevant here I would love to know (comment below or tweet me)!

Why is this? That modern economics spends so much time pondering value but not all that much time pondering importance? Is there some proxy measure of importance and dependence bound up in the price or the GDP data? Or is there something I’m missing? All thoughts welcome...