Economics + Entropy = A New Economics
An important key for a more successful future is a more realistic and more honest economics. Not the fantasy economics we have today that assumes that economics is both mechanistic and divorced from the laws of the natural world.
Why we have not developed a new economics that includes the laws of physics, and does not allow any externalities, is a curious thing. Specifically, we need an economics that incorporates an understands that entropy is at the root of all activity, including economics. That this has been done in most fields, but not yet economics, is puzzling.
Interestingly, the term Thermoeconomics has been around since 1962. But only seems to be bearing fruit now. [Any economic historians out there want ot contribute to this conversation?]
An excellent book on the topic of growth and entropy is “The Myth of Progress” by Tom Wessels [2006]. A seminal book that recognized the role of entropy in economics is “The Entropy Law and the Economic Process” by Georgescu-Roegen [1971]. From this flowed the Club of Rome study “The Limits to Growth” in 1972. So we have known about this problem for over 45 years, but the idea that growth is limited by entropy is apparently too startling and threatening to the status quo. It reveals that, as we can not all be equally wealthy, limits, then the distribution of wealth must be an important ethical and moral issue. This is, of course, a very inconvenient development.
In any case, the idea that economics must include entropy, which results in growth being limited, has been buried and never got any traction in the popular press nor has it been include in our political process.
Does the Transpartisan meme include an economics that fully incorporates entropy?
Friend Robert S. Steele has this to add:
The True Cost Meme as emergent from Natural Capital Institute and the World Index of Social and Environmental Responsibility (WISER) has taken over that intellectual field.
Example: a desinger cotton shirt contains as much as 4000 gallons of virtual water from growing the cotton to shipping to flushing the chemicals.
Example: A gallon of gas consting $3 also has $12 in externalized costs being passed on to future geneerations.
EarthGame will integrate this information, and I also anticipate that the same barcode ScanBack feature that allows cell phone users to get Amazon’s price, will be used to send out true value information.
and
John Bogle in The Soul of Capitalism suggests that Wall Street is finally getting it, but it is an uphill battle. See also the literature on Green to Gold, Natural Capitalism, Capitalism 3.0
Note: Thanks to Richard Bell for pointing me at Georgescu-Roegen.
permalink | Jock Gill | Community, Economy, Politics
[This comes from friend George Kamburoff.]
I have to reply that economics IS divorced from physics. This money stuff is not Newtonian physics, it is psychological.
If you talk to an economist, you’re talking to a theologian. In both cases, their world is self-constructed, and they just play mind games in this artificial system. We invented it, just like we invent gods - each of us have our own personal version, and proponents often defend their positions like armies. Yet, both ignore inconvenient facts of the real world, such as physical science in religion, and “externalities” and cause-and-effect in economics.
Let’s stop playing with ginned-up numbers based on someone’s desired worldview, and find a way to base a society on genuine needs, genuine cause-and-effect, and stop inventing convenient constructions of personal (and often selfish) benefit.
Just a personal observation from the sub-peanut gallery. I have neither the intelligence nor education to construct a positive alternative, unfortunately.
gk
[This comes from my brother Nick.]
http://en.wikipedia.org/wiki/Ecological_economics
“As the name suggests, the researchers in this field have a background in economics and ecology. An important motivation for the emergence of ecological economics has been criticism on the assumptions and approaches of traditional (mainstream) environmental and resource economics. Ecological economics presents a more pluralistic approach to the study of environmental problems and policy solutions, characterized by systems perspectives, adequate physical and biological contexts, and a focus on long-term environmental sustainability. Ecological economics can be regarded as a version of environmental science with much emphasis on social, political, economic and behavioral issues. Ecological economic science establishes the interdependence between economics and ecosystems.”
And
http://www.ecoeco.org/
“ISEE
The International Society for Ecological Economics
ISEE is a not-for-profit, member-governed, organization dedicated to advancing understanding of the relationships among ecological, social, and economic systems for the mutual well-being of nature and people.
Ecological economics exists because a hundred years of disciplinary specialization in scientific inquiry has left us unable to understand or to manage the interactions between the human and environmental components of our world. While none would dispute the insights that disciplinary specialization has brought, many now recognize that it has also turned out to be our Achilles heel. In an interconnected evolving world, reductionist science has pushed out the envelope of knowledge in many different directions, but it has left us bereft of ideas as to how to formulate and solve problems that stem from the interactions between humans and the natural world. How is human behaviour connected to changes in hydrological, nutrient or carbon cycles? What are the feedbacks between the social and natural systems, and how do these influence the services we get from ecosystems? Ecological economics as a field attempts to answer questions such as these.”
Nick
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