The Ecological Keynesian: Energy, Money, and Oil Cycles in the Global System

by

Jalel Marti Sager

Doctor of Philosophy in Energy and Resources

University of California, Berkeley

Professor Richard B. Norgaard, Chair

This dissertation focuses on energy-centered great power nations in the 20th and early 21st centuries—the United States, Great Britain, and China—and the economic waves created by their changing rates of energy production. Its goal is a better explanation of energy’s entanglement with global production, trade, and monetary systems, and of the crises linking them in the 1970s and 2000s. The post-Bretton Woods monetary-energy regime receives special attention, as does its future, given trajectories of key nations and the need to move toward low-carbon energy sources.

I proceed by integrating ecological economic and political economic thought, focusing on work of William Stanley Jevons and John Maynard Keynes that addresses key integrated macroeconomic-resource questions. I adapt natural resource linkages made by Keynes and Jevons—especially the influence of harvest fluctuations on the economy, and the investment cycles that transmit them—to investigate oil’s effect on US internal/external balances after Bretton Woods. In doing so I identify a clear signal of an “oil harvest cycle” regulating those balances.

The oil harvest cycle provides provisional answers to important unresolved questions, such as the exact channels through which oil price shocks affect the economy (“Bernanke’s Puzzle"). I also describe how the oil price functions as an adjustment method for sterilized US external balances in the “disequilibrium system” entrenched in the 1970s. Finally, I relate these mechanisms to the “pulsing paradigm” of ecosystems proposed by Eugene and Howard Odum, arguing that an analogous signal appears in the economy via its key natural resource cycles.