Revised 24 May 2019


In this web publication the terms "inflow", "outflow" and "throughput" are used to describe the movement of energy and mass flows passing through our economic system. The formation, maintenance, and replacement of capital stock depends upon the inflows of energy and mass flows and outflows by the way of depreciation and waste, some of which can be recycled. 


Consider the analogy of a bathtub with a tap for inflows and a plughole for outflows.


In case (a) the bath tub starts out empty, the tap is fully turned on, and the plughole has no plug. The bath tub starts to fill up. Inflows are greater than the outflows as has been during the period of the industrial revolution. Capital stocks increases over time. Eventually the bathtub overflows. The top of the bathtub represents the carrying capacity which has been surpassed. 


In case (b) the bath tub starts out half full, the tap is partially turned on, and the plughole has no plug.  The inflows are less than the outflows and the level of water in the bathtub starts to sink. Capital stocks decline because depreciation is greater than investment in maintenance and replacement. 


In case (c) the bath tub is half full, the plughole has no plug, the tap is turned on, the level of water in the bathtub is monitored, and the tap is adjusted so that the level of water stays the same. Inflows and outflows are equal and capital stocks are sustained over time under conditions of steady state. 


The monitoring of the level of water in the bathtub cannot ever be precise, so the level of water in the bathtub is maintained well below the carrying capacity of the bathtub to allow room for fluctuations in the level. The chosen level of the bathtub is based on a safety margin because the carrying capacity of the bathtub cannot be known with precision.