book_cover_big.gifIn an earlier blog[1] I wrote about the connection between the Second Law, the economy  and the problem of a sustainable society. Of course the most important inputs on this topic were provided by Nicholas Georgescu-Roegen is his book  in 1971 entitled: The Entropy law and the Economic Process[2]. Georgescu-Roegen stated that the entropy law applies to everything we do, and that with every action that degrades energy (it is never really “used up”) entropy is produced, leaving a smaller entropy budget for future generations. In other words, he made us aware of the entropic constraint on all economic activity. The entropy law simply prevents us from creating a kind of perpetual cycle that would miraculously restore natural resources. Georgescu-Roegen’s main complaint about  economists is that they ignore this fact, and assume that everything in the economic process is cyclic in nature, and that in any case technology will provide us with solutions. However, it can be shown that often each new technology tends to accelerate the entropy production even more.

Interesting in this respect is a very recent publication by the Economics Web Institute: Innovative Economical Policies for Climate Change Mitigation[3]. About 30 economists, managers, consultants and technologists have gathered to describe 20 approaches to mitigate the climate change. Three key transitions (as they coin it) are needed: 

1) Transitions in market structures and firm behaviour

2) Transitions in consumer lifestyles and purchasing rules

3) Transition in government policy making

They argue that economical aspects must play a much stronger role climate change mitigation and that the neoclassical economical model (that reduces all entities to prices and quantities but neglects for instances the extinction of the human race) needs a major revision. Instead they believe that climate mitigation not necessarily must be considered as just a cost factor but merely as an opportunity for innovation, business growth, profit and employment.

The entire book counts more than 350 pages, I will in upcoming blogs zoom in on a few of the articles. In the mean time have a look at the web site of the Economics Web Institute (www.economicswebinstitute.org) as it contains tons of interesting articles, data and tables.

@ 2009 Copyright John Schmitz


[1] http://secondlawoflife.wordpress.com/category/entropy-and-economy/

                   [2] Georgescu-Roegen, Nicolas, The Entropy Law and the Economic Process, Harvard University Press, Cambridge, Massachusetts (1971)

[3] Innovative Economic Policies for Climate Change Mitigation

Piana V. (ed.), Aliyev S., Andersen M. M., Banaszak I., Beim M., Kannan B., Kalita B., Bullywon L., Caniëls M., Doon H., Gaurav J., Karbasi A.,  Komalirani Y., Kua H. W., Hussey K., Lee J., Masinde J., Matczak P., Mathew P. , Moghadam Z.  G., Mozafary M. M., Rafieirad S., Romijn H., Oltra V., Schram A., Malik V. S., Stewart G.,  Wagner Z., Weiler R. (2009), www.economicswebinstitute.org/innopolicymitigation.htm,  Economics Web Institute, Lulu.com.

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