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Nicholas Georgescu-Roegen: the harsh entropy law.

Economic thought (whether liberal or Marxist) completely separates the mechanism of the economic circuits from their material surroundings, and studies them by applying mechanistic models. Yet any economic process, like any process in which there is an exchange of energy, is entropic. Part of the entropy can be recovered in the form of information, of structure, in the final product or in the service provided, but not without degrading a part of the energy invested and producing waste. Paradoxically, by ignoring the material reality of economic processes, which are always treated in the abstract, economic science in the most materialist societies in history is, in fact, based on an idealization.

Economists' vision has reacted to the discovery of the First Law of Thermodynamics, i.e., the principle of the conservation of matter-energy. Some careful writers have even emphasized the point that man can create neither matter nor energy. But--a fact hard to explain--loud though the uproar caused by the entropy law has been in physics and the philosophy of science, economists have failed to pay attention to this law, the most economic of all the laws of physics.

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The mechanistic epistemology, to which analytical economics has clung ever since its birth, is solely responsible for the conception of the economic process as a closed system or circular flow. As I hope to have shown by the arguments developed in this essay, no other conception could be further from a correct interpretation of the facts. Even if only the physical facet of the economic process is taken into consideration, this process is not circular but "unidirectional." As far as this facet alone is concerned, the economic process consists of a continuous transformation of low entropy into high entropy, that is to say into "irrevocable waste," or to use the topical term, into pollution. The identity of this formula with that proposed by Schrodinger for the biological processes of a living cell or organisms vindicates those economists who, like A. Marshall, have been fond of biological analogies and have even contended that economics is a branch of biology broadly interpreted.

The conclusion is that, from a purely physical viewpoint, the economic process is entropic: it neither creates nor consumes matter or energy, but only transforms low into high entropy.

The Entropy Law and the Economic Process, Chapter 10.1. Harvard University Press, Cambridge, Mass (1971)

Reproduced with the publisher's permission from The Entropy Law and the Economic Process, by Nicholas Georgescu-Roegen, Cambridge Mass.: Harvard University Press

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Publication:Encyclopedia of the Biosphere
Article Type:Excerpt
Geographic Code:1USA
Date:Nov 1, 2000
Words:414
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