Comments on: Thermodynamic Roots of Economics

By: Mark Rego-Monteiro

Mark Rego-Monteiro — Mon, 15 Nov 2010 11:53:17 +0000

Unfashonomic states that no economicists have equated growth with an end to scarcity. The point made by Herman Daly in Beyond Growth, for example, and Jonathan Harris in a paper of his at the Tufts’ Global Development and Environment Institute concerns claims related to Hartwick’s Rule, which states that substitutibility between man-made capital and natural capital. That is, why worry about scarcity and the end of mineral or fossil fuel resources since our human technological ingenuity will always create alternatives?
One basic problem of such views is they demonstrate a compartamentalized philosophy that does not acknowledge limits of any kind, along with the various dimensions of ecological economics and whole cost accounting laid out so well by Herman Daly and others. Recycling for example, is a fundamental practice that acknowledges the costs of waste disposal and the pollution involved in the extraction of minerals. See Jared Diamond’s Collapse for an excellent discussion of mineral extraction, and the Publish What You Pay Coalition for non-profits concerned with other social dimensions as well.

By: Mark Rego-Monteiro

Mark Rego-Monteiro — Mon, 15 Nov 2010 02:57:43 +0000

Hi Prof. Daly,
Fantastic for me to find your blog here. I think your philosophical reflections on the thermodynamic laws to be interesting, read your collection in Beyond Growth with great interest, and am finding your text with Josh Farley to be simply holy though I have a ways to go yet in it.
Nevertheless, I think your philosophizing is unnecessarily disconnected from real world alternatives that illumine the important issues you raise. As a result, you leave a sense of despair I find.
Simple realities support your basic points, including the UNEP 2009 Year Book. As for immense sources of energy in ways which minimize sink impacts, we do have them in solar, wind, and biomass. I have just completed a work involving research of the development of the wind industry, but including the benefits of distributed generation/residential generation. Consider Mauenheim, Germany for example, Thisted, Denmark, or Navarre, Spain to name a few.
Meanwhile, emissions from fossil fuels are pumping the atmosphere full of the greenhouse gases that amplify the First Law’s basic point, conservation of energy and matter. Climate change glacial melting and the impacts of disappearing water sources and rising sea levels are the anticipated severe consequences in this system. Waste from nuclear power is no less a challenge since it does not magically disappear, again because of your basic point about the first law.
As for the second law on entropic energy flows, fossil fuels and nuclear waste produce wastes that can’t be recycled. Renewable energy hybrid systems avoid the entropic issues in the release of massive amounts of GHGs. In the case of biomass, it becomes carbon neutral if ecological systems are sustained. Ecological systems thus are an “innovation” of sorts, though basically by returning to common sense.
While the Harvard-MIT Mafia may largely ignore ecological realities, I would suggest it’s for reasons parallel to the bubble which has surrounded most polluting industries, from mining to petroleum. In other words, they have friends in high places. That’s a hard nut to crack, but from the 2008 crash to the 2005 Millenium Ecosystem Assessment, 2007 IPCC report, and 2009 UNEP Year Book, the green industries and environmentally and socially responsible business strategies are laying important groundworks. Michael Conroy is an economist who wrote Branded about certifications while Jared Diamond the biologist and ex-WWF wrote Collapse with similar discussions.
There are too many real world correlates to the problems and solutions implicit in your work, Prof. Daly. I’m eager to help illuminate those interconnections.
tap into solar energy flows in solar, wind, and biomass, and in the case of biomass relate to the biological cycles which take form an important demonstration of conservation principles in carbon neutrality. ,

By: Thermodynamic Roots of Economics « Economics Info

Thermodynamic Roots of Economics « Economics Info — Sun, 14 Nov 2010 16:58:16 +0000

[…] Source […]

By: Joe P

Joe P — Sun, 14 Nov 2010 12:36:21 +0000

Any economics book that does not define wealth in the first chapter and this definition of wealth should sustain life, is not worth reading. So far i have not seen any economics book that does this…..

By: Economen, grondstoffen en thermodynamica. « Cassandraclub

Economen, grondstoffen en thermodynamica. « Cassandraclub — Thu, 11 Nov 2010 07:40:55 +0000

[…] wachten is op de economen die het werk van Nicholas Georgescu-Roegen gelezen hebben. Zij weten, dat de economie wel degelijk beperkt kan worden door fysieke grenzen, […]

By: gp

gp — Wed, 10 Nov 2010 03:54:27 +0000

The first law of thermodynamics is conservation of energy only. Conservation of mass and energy is in Einstein’s Special Theory of Relativity, E=mc^2. If you just take energy, the limit is the rate of energy arriving from the Sun. Fossil fuels are stored energy from the sun. Nuclear energy is from E=mc^2.

By: Unfashenomic

Unfashenomic — Tue, 09 Nov 2010 06:46:27 +0000

You had me through the first paragraph — there are indeed interesting similarities between the laws of thermodynamics and some basic concepts of economics. After that though, the analogy just stopped making sense.

The true part: scarcity will always exist. By our very nature as humans we desire more than we can possibly have, and even if we had everything the time to enjoy it is limited. Scarcity is a fact of life.

The false part: this makes growth unsustainable, or not a desirable long-term goal (as Mr. Daly seems to suggest). Growth is ultimately built on the mutually beneficial nature of trade, which allows us to make the most of limited time and resources available. There are “entropic” factors, such as transaction costs, uncertainty in information, government intervention, and so on… but that’s where the physics analogy ends. Unlike inanimate objects, human beings have the capacity for reason and thought. That’s what makes innovation, new technology, and all the other good things which lead to growth possible.

Basically, Mr. Daly is thrashing a straw-man. No influential economists have claimed growth means “an end to scarcity.” Resources are by definition scarce; growth just signifies we are using those resources in increasingly productive ways, and finding ways to make previously useless items into new resources. That’s how growth is sustained.

I agree with MSM’s conclusion: “[Georgescu-Roegen] may have been ignored for academic political reasons, but that doesn’t make him right. There’s much more clear thinking out there on these topics.”

By: Mara

Mara — Tue, 09 Nov 2010 01:41:22 +0000

How does all of this relate to Classical Political Economic theories on Land Value Taxation aka Resource Rent / Ricardo’s Law?

By: Marc Hudson

Marc Hudson — Mon, 08 Nov 2010 22:23:45 +0000

Dear Herman,
about 10 years ago I sent you a little booklet that used lots of your ideas called “My first little book of Ecological Economics”. You wrote back with a very kind note. I just wanted to say how much your work has meant to me, and to many other people. Bravo!! I think we have fundamentally missed the chance to retain a habitable planet, but I might be wrong, so I had better keep going…

All best wishes to you

Marc Hudson

By: MSM

MSM — Mon, 08 Nov 2010 22:12:19 +0000

I just went over some of Georgescu-Roegen’s work as I had not really seen it before — toying with the intersection of economics and physics, especially thermodynamics, is a bit of a hobby of mine.

A retrospective of his work he wrote in the mid 1980s comes up at:
http://college.holycross.edu/RePEc/eej/Archive/Volume12/V12N1P3_25.pdf

He seems to do a reasonably good job of writing some mostly true (if banal) statements about thermodynamics, but in the end his ideas come across to me as a bit daft. With respect to thermodynamics, he does not seem to write from a solid foundation. (An early ‘tell’ for me was that he doesn’t seem to deal in terms of free energies, which encompass entropy and govern may ideas of mass and energy flows). After only a page or two he is musing/arguing such junk as:

“It is an elementary fact, I submit, that matter also exists in two states, available and unavailable, and that, just like energy, it degrades continuously [a]nd irrevocably from the former to the latter state. Matter, like energy, dissipates into dust, as is best illustrated by rust, by wear and tear of motors of automobile tires.”

(I gave up after that one.)

The connections he makes between his take on entropy/thermodynamics and economics seems more or less to boil down to asserting that it is so. This core seems to be dressed up with lots of not-necessarily-wrong references to old dead guys and a scattering of mathematical definitions and expressions.

My conclusion: He may have been ignored for academic political reasons, but that doesn’t make him right.

There’s much more clear thinking out there on these topics.