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Energy, growth, and evolution: Towards a naturalistic ontology of economics

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  • Herrmann-Pillath, Carsten

Abstract

In recent years new approaches to the integration of economics and thermodynamics have been developed which build on the physics of open non-equilibrium systems, the so-called ‘Maximum Entropy Production Principle’. I review these contributions in the light of the implications for economic ontology, i.e. the question what the fundamental constituents of real world economic phenomena are. I argue in favor of the ‘naturalization’ of economic ontology, using the phenomenon of economic growth as my workhorse, and I explore the implications for the cross-disciplinary foundations of ecological economics. The paper shows how economic growth can be conceived as a ‘natural’ process that is driven by fundamental physical forces. The argument proceeds in three steps. After a short review of recent research on the linkage between energy and growth, I establish the connection with bioeconomic theories about evolution that allow restating the role of Lotka's Maximum Power Principle (MPP) as a property of open non-equilibrium flow systems with sufficient degrees of freedom of structural adaptation. The MPP is then related to the recent literature on Maximum Entropy Production (MEP), especially as deployed in the Earth Sciences. Economic growth can be seen as resulting from evolutionary adaptations of flow gradients in economic systems that increase throughputs of exergy and generation of work, and which thereby enhance the capacity of the Earth System to maximize entropy production. This framework offers fresh perspectives on a number of issues in research and policy, which I discuss in the conclusion.

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  • Herrmann-Pillath, Carsten, 2015. "Energy, growth, and evolution: Towards a naturalistic ontology of economics," Ecological Economics, Elsevier, vol. 119(C), pages 432-442.
  • Handle: RePEc:eee:ecolec:v:119:y:2015:i:c:p:432-442
    DOI: 10.1016/j.ecolecon.2014.11.014
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    4. Matutinović, Igor & Salthe, Stanley N. & Ulanowicz, Robert E., 2016. "The mature stage of capitalist development: Models, signs and policy implications," Structural Change and Economic Dynamics, Elsevier, vol. 39(C), pages 17-30.
    5. Leiva, Benjamin & Ramirez, Octavio A. & Schramski, John R., 2019. "A framework to consider energy transfers within growth theory," Energy, Elsevier, vol. 178(C), pages 624-630.
    6. Benjamin Leiva & Octavio Ramirez & John R. Schramski, 2018. "A theoretical framework to consider energy transfers within growth theory," Papers 1812.05091, arXiv.org.
    7. Yang, Honglin & Wang, Lin & Tian, Lixin, 2015. "Evolution of competition in energy alternative pathway and the influence of energy policy on economic growth," Energy, Elsevier, vol. 88(C), pages 223-233.

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    More about this item

    Keywords

    Economic ontology; Energy and growth; Maximum power principle; Evolution and entropy production; Maximum entropy production principle; Ecology and economy;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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