From Bioeconomics to Degrowth

Georgescu-Roegen's 'New Economics' in Eight Essays

Nicolas Georgescu-Roegen, Mauro Bonaiuti, Mauro Bonaiuti

• Publisher: Routledge
• Year: 2011
• ISBN:
  9781136822155
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

Nicolae Georgescu-Roegen (1906-1994) is considered today as perhaps the chief founder of the transdisciplinary field today known as Ecological Economics, but that he defined himself as Bioeconomics. In his later years Georgescu-Roegen intended to write a book of this title that would systematize what he considered to be the most significant results of his work. This project intends to resume this project, publishing a collection of the most relevant Georgescu-Roegen essays on Bioeconomics, including previously unpublished papers.

1 The Entropy Law and the Economic Problem (1970)

Nicholas Georgescu-Roegen

I

A curious event in the history of economic thought is that, years after the mechanistic dogma had lost its supremacy in physics and its grip on the philosophical world, the founders of the Neoclassical school set out to erect an economic science after the pattern of mechanics—in the words of Jevons, as “the mechanics of utility and self-interest.”¹ And while economics has made great strides since, nothing has happened to deviate economic thought from the mechanistic epistemology of the forefathers of standard economics. A glaring proof is the standard textbook representation of the economic process by a circular diagram, a pendulum movement between production and consumption within a completely closed system.² The situation is not different with the analytical pieces that adorn the standard economic literature; they too reduce the economic process to a self-sustained mechanical analogue. The patent fact that between the economic process and the material environment there exists a continuous mutual influence which is history-making carries no weight with the standard economist. And the same is true of Marxist economists, who swear by Marx’s dogma that everything nature offers man is a spontaneous gift.³ In Marx’s famous diagram of reproduction, too, the economic process is represented as a completely circular and self-sustaining affair.⁴

Earlier writers, however, pointed in another direction, as did Sir William Petty in arguing that labor is the father and nature is the mother of wealth.⁵ The entire economic history of mankind proves beyond question that nature, too, plays an important role in the economic process as well as in the formation of economic value. It is high time, I believe, that we should accept this fact and consider its consequences for the economic problem of mankind. For, as I shall endeavor to show in this paper, some of these consequences have an exceptional importance for the understanding of the nature and the evolution of man’s economy.

II

Some economists have alluded to the fact that man can neither create nor destroy matter or energy⁶—a truth which follows from the Principle of Conservation of Matter-Energy, alias the First Law of Thermodynamics. Yet no one seems to have been struck by the question—so puzzling in the light of this law—“what then does the economic process do?” All that we find in the cardinal literature is an occasional remark that man can produce only utilities, a remark which actually accentuates the puzzle. How is it possible for man to produce something material, given the fact that he cannot produce either matter or energy?

To answer this question, let us consider the economic process as a whole and view it only from the purely physical viewpoint. What we must note first of all is that this process is a partial process which, like all partial processes, is circumscribed by a boundary across which matter and energy are exchanged with the rest of the material universe.⁷ The answer to the question of what this material process does is simple: it neither produces nor consumes matter-energy; it only absorbs matter-energy and throws it out continuously. This is what pure physics teaches us. However, economics—let us say it high and loud—is not pure physics, not even physics in some other form. We may trust that even the fiercest partisan of the position that natural resources have nothing to do with value will admit in the end that there is a difference between what goes into the economic process and what comes out of it. To be sure, this difference can be only qualitative.

An unorthodox economist—such as myself—would say that what goes into the economic process represents valuable natural resources and what is thrown out of it is valualess waste. But this qualitative difference is confirmed, albeit in different terms, by a particular (and peculiar) branch of physics known as thermodynamics. From the viewpoint of thermodynamics, matter-energy enters the economic process in a state of low entropy and comes out of it in a state of high entropy.⁸

To explain in detail what entropy means is not a simple task. The notion is so involved that, to trust an authority on thermodynamics, it is “not easily understood even by physicists.”⁹ To make matters worse not only for the layman, but for everyone else as well, the term now circulates with several meanings, not all associated with a physical coordinate.¹⁰ A recent edition of Webster’s Collegiate Dictionary (1965) has three entries under “entropy.” Moreover, the definition pertaining to the meaning relevant for the economic process is likely to confuse rather than enlighten the reader: “a measure of unavailable energy in a closed thermodynamic system so related to the state of the system that a change in the measure varies with change in the ratio of the increment of heat taken in the absolute temperature at which it is absorbed.” But (as if intended to prove that not all progress is for the better) some older editions supply a more intelligible definition. “A measure of the unavailable energy in a thermodynamic system”—as we read in the 1948 edition—cannot satisfy the specialist but would do for general purposes. To explain (again in broad lines) what unavailable energy means is now a relatively simple task.

Energy exists in two qualitative states—available or free energy, over which man has almost complete command, and unavailable or bound energy, which man cannot possibly use. The chemical energy contained in a piece of coal is free energy because man can transform it into heat or, if he wants, into mechanical work. But the fantastic amount of heat-energy contained in the waters of the seas, for example, is bound energy. Ships sail on top of this energy, but to do so they need the free energy of some fuel or of the wind.

When a piece of coal is burned, its chemical energy is neither decreased nor increased. But the initial free energy has become so dissipated in the form of heat, smoke and ashes that man can no longer use it. It has been degraded into bound energy. Free energy means energy that displays a differential level, as exemplified most simply by the difference of temperatures between the inside and the outside of a boiler. Bound energy is, on the contrary, chaotically dissipated energy. This difference may be expressed in yet another way. Free energy implies some ordered structure, comparable to that of a store in which all meat is on one counter, vegetables on another, and so on. Bound energy is energy dissipated in disorder, like the same store after being struck by a tornado. This is why entropy is also defined as a measure of disorder. It fits the fact that a copper sheet represents a lower entropy than the copper ore from which it was produced.

The distinction between free and bound energy is certainly an anthropomorphic one. But this fact need not trouble a student of man, nay, even a student of matter in its simple form. Every element by which man seeks to get in mental contact with actuality can be but anthropomorphic. Only, the case of thermodynamics happens to be more striking. The point is that it was the economic distinction between things having an economic value and waste which prompted the thermodynamic distinction, not conversely. Indeed, the discipline of thermodynamics grew out of a memoir in which the French engineer Sadi Carnot (1824) studied for the first time the economy of heat engines. Thermodynamics thus began as a physics of economic value and has remained so in spite of the numerous subsequent contributions of a more abstract nature.

III

Thanks to Carnot’s memoir, the elementary fact that heat moves by itself only from the hotter to the colder body acquired a place among the truths recognized by physics. Still more important was the consequent recognition of the additional truth that once the heat of a closed system has diffused itself so that the temperature has become uniform throughout the system, the movement of the heat cannot be reversed without external intervention. The ice cubes in a glass of water, once melted, will not form again by themselves. In general, the free heat-energy of a closed system continuously and irrevocably degrades itself into bound energy. The extension of this property from heat-energy to all other kinds of energy led to the Second Law of Thermodynamics, alias the Entropy Law. This law states that the entropy (i.e., the amount of bound energy) of a closed system continuously increases or that the order of such a system steadily turns into disorder.

The reference to a closed system is crucial. Let us visualize a closed system, a room with an electric stove and a pail of water that has just been boiled. What the Entropy Law tells us is, first, that the heat of the boiled water will continuously dissipate into the system. Ultimately, the system will attain thermodynamic equilibrium—a state in which the temperature is uniform throughout (and all energy is bound). This applies to every kind of energy in a closed system. The free chemical energy of a piece of coal, for instance, will ultimately become degraded into bound energy even if the coal is left in the ground. Free energy will do so in any case.

The law also tells us that once thermodynamic equilibrium is reached, the water will not start boiling by itself.¹¹ But, as everyone knows, we can make it boil again by turning on the stove. This does not mean, however, that we have defeated the Entropy Law. If the entropy of the room has been decreased as the result of the temperature differential created by boiling the water, it is only because some low entropy (free energy) was brought into the system from the outside. And if we include the electric plant in the system, the entropy of this new system must have decreased, as the Entropy Law states. This means that the decrease in the entropy of the room has been obtained only at the cost of a greater increase in entropy elsewhere.

Some writers, impressed by the fact that living organisms remain almost unchanged over short periods of time, have set forth the idea that life eludes the Entropy Law. Now, life may have properties that cannot be accounted for by the natural laws, but the mere thought that it may violate some law of matter (which is an entirely different thing) is sheer nonsense. The truth is that every living organism strives only to maintain its own entropy constant. To the extent to which it achieves this, it does so by sucking low entropy from the environment to compensate for the increase in entropy to which, like every material structure, the organism is continuously subject. But the entropy of the entire system—consisting of the organism and its environment—must increase. Actually, the entropy of a system must increase faster if life is present than if it is absent. The fact that any living organism fights the entropic degradation of its own material structure may be a characteristic property of life, not accountable by material laws, but it does not constitute a violation of these laws.

Practically all organisms live on low entropy in the form found immediately in the environment. Man is the most striking exception: he cooks most of his food and also transforms natural resources into mechanical work or into various objects of utility. Here again, we should not let ourselves be misled. The entropy of copper metal is lower than the entropy of the ore from which it was refined, but this does not mean that man’s economic activity eludes the Entropy Law. The refining of the ore causes a more than compensating increase in the entropy of the surroundings. Economists are fond of saying that we cannot get something for nothing. The Entropy Law teaches us that the rule of biological life and, in man’s case, of its economic continuation is far harsher. In entropy terms, the cost of any biological or economic enterprise is always greater than the product. In entropy terms, any such activity necessarily results in a deficit.

IV

The statement made earlier—that, from a purely physical viewpoint, the economic process only transforms valuable natural resources (low entropy) into waste (high entropy)—is thus completely vindicated. But the puzzle of why such a process should go on is still with us. And it will remain a puzzle as long as we do not see that the true economic output of the economic process is not a material flow of waste, but an immaterial flux: the enjoyment of life. If we do not recognize the existence of this flux, we are not in the economic world. Nor do we have a complete picture of the economic process if we ignore the fact that this flux— which, as an entropic feeling, must characterize life at all levels—exists only as long as it can continuously feed itself on environmental low entropy. And if we go one step further, we discover that every object of economic value—be it a fruit just picked from a tree, or a piece of clothing, or furniture, etc.—has a highly ordered structure, hence, a low entropy.¹²

There are several lessons to be derived from this analysis. The first lesson is that man’s economic struggle centers on environmental low entropy. Second, environmental low entropy is scarce in a different sense than Ricardian land. Both Ricardian land and the coal deposits are available in limited amounts. The difference is that a piece of coal can be used only once. And, in fact, the Entropy Law is the reason why an engine (even a biological organism) ultimately wears out and must be replaced by a new one, which means an additional tapping of environmental low entropy.

Man’s continuous tapping of natural resources is not an activity that makes no history. On the contrary, it is the most important long-run element of mankind’s fate. It is because of the irrevocability of the entropic degradation of matter-energy that, for instance, the peoples from the Asian steppes, whose economy was based on sheep-raising, began their Great Migration over the entire European continent at the beginning of the first millennium. The same element—the pressure on natural resources—had, no doubt, a role in other migrations, including that from Europe to the New World. The fantastic efforts made for reaching the moon may also reflect some vaguely felt hope of obtaining access to additional sources of low entropy. It is also because of the particular scarcity of environmental low entropy that ever since the dawn of history man has continuously sought to invent means for sifting low entropy better. In most (though not in all) of man’s inventions one can definitely see a progressively better economy of low entropy.

Nothing could, therefore, be further from the truth than the notion that the economic process is an isolated, circular affair—as Marxist and standard analysis represent it. The economic process is solidly anchored to a material base which is subject to definite constraints. It is because of these constraints that the economic process has a unidirectional irrevocable evolution. In the economic world only money circulates back and forth between one economic sector and another (although, in truth, even the bullion slowly wears out and its stock must be continuously replenished from the mineral deposits). In retrospect it appears that the economists of both persuasions have succumbed to the worst economic fetishism—money fetishism.

V

Economic thought has always been influenced by the economic issues of the day. It also has reflected—with some lag—the trend of ideas in the natural sciences. A salient illustration of this correlation is the very fact that, when economists began ignoring the natural environment in representing the economic process, the event reflected a turning point in the temper of the entire scholarly world. The unprecedented achievements of the Industrial Revolution so amazed everyone with what man might do with the aid of machines that the general attention became confined to the factory. The landslide of spectacular scientific discoveries triggered by the new technical facilities strengthened this general awe for the power of technology. It also induced the literati to overestimate and, ultimately, to over-sell to their audiences the powers of science. Naturally, from such a pedestal one could not even conceive that there is any real obstacle inherent in the human condition.

The sober truth is different. Even the lifespan of the human species represents just a blink when compared with that of a galaxy. So, even with progress in space travel, mankind will remain confined to a speck of space. Man’s biological nature sets other limitations as to what he can do. Too high or too low a temperature is incompatible with his existence. And so are many radiations. It is not only that he cannot reach up to the stars, but he cannot even reach down to an individual elementary particle, nay, to an individual atom.

Precisely because man has felt, however unsophisticatedly, that his life depends on scarce, irretrievable low entropy, man has all along nourished the hope that he may eventually discover a self-perpetuating force. The discovery of electricity enticed many to believe that the hope was actually fulfilled. Following the strange marriage of thermodynamics with mechanics, some began seriously thinking about schemes to unbind bound energy.¹³ The discovery of atomic energy spread another wave of sanguine hopes that, this time, we have truly gotten hold of a self-perpetuating power. The shortage of electricity which plagues New York and is gradually extending to other cities should suffice to sober us up. Both the nuclear theorists and the operators of atomic plants vouch that it all boils down to a problem of cost, which in the perspective of this paper means a problem of a balance sheet in entropy terms.

With natural scientists preaching that science can do away with all limitations felt by man and with the economists following suit in not relating the analysis of ...