eco thermodynamics economics and the second law the laws of physics especially the first and second laws of thermodynamics have significant implications for economic theory the major implications of the first law conservation of mass energy are straightforward and have been discussed at length elsewhere in brief raw material inputs to economic processes are not consumed having been extracted from the environment in the first place they eventually return to the environment as wastes the economic implications of the second law entropy law are far more subtle there is considerable literature initiated by the work of georgescu roegen on the supposed constraints on economic growth imposed by the fact that economic processes utilize low entropy raw materials fossil fuels and high grade metal ores and discard high entropy wastes however as a practical matter the flux of available low entropy energy exergy from the sun is extremely large and certainly adequate to sustain economic activity in the solar system indefinitely even though fossil fuel and metal ore stocks may eventually be exhausted it is argued in this paper that the real economic significance of the second law lies in the fact that exergy is i not conserved and ii is a useful common measure of resource quality as well as quantity applicable to both materials and energy thus exergy can be used to measure and compare resource inputs and outputs including wastes and losses this is potentially important in itself moreover since exergy is not conserved it is truly consumed i e used up in economic processes hence exergy is no less a factor of production than labor or capital this fact has strong implications for economic growth theory especially with regard to assessing the role of technical progress

contingent commodities and implementation abstract in this note we study the relevance of using contingent commodity allocations when states are not directly contractible in such a setting a contingent commodity allocation takes the form of a social choice function and the question is whether this function is implementable using only very mild assumptions on the rule for selecting contingent commodity allocations we derive a strong negative result which proves to be robust with respect to different solution concepts employed for implementation these findings have interesting implications for the interpretation of arrow debreu economies

contrast explanation in economics its context meaning and potential in this article we place tony lawson s account of contrast explanation in context lawson s development of it is given meaning both by the roots of the approach in his work on social ontology and the state of economics that provides the grounds for the critique contained in that social ontology this is important because such an approach to explanation is not new most notably van fraassen and garfinkel have developed it in particular ways and for particular purposes within the philosophy of science and social theory setting out the different ways in which the contrastive approach has been developed is useful for identifying what is different about lawson s approach its potential and limits lawson s proposal is more modest and focusses on causal investigation in a manner that flows from his approach to social ontology contrast explanation provides a substitute for controlled experiments and facilitates identifying social mechanisms it also enables exploration of the manifold presuppositions of our explanatory questions we argue that this is a useful and important contribution to overcoming some of the many problems economics faces

energy aesthetics and knowledge in complex economic systems it is argued that the fact that economic systems are dissipative structures must be taken fully into account in economics if we are to understand the nature of the economic ecological interface and how to deal with emergent environmental problems such as global warming such problems are a product of economic growth which is widely accepted to be the outcome of the acquisition and application of knowledge drawing upon disparate literatures within and outside economics it is argued that economic growth should be more properly viewed as the outcome of a co evolutionary process that involves the autocatalytic interaction of new knowledge and access of increasing amounts of free energy to do increasingly specialized forms of work specifically the relevance of the energy hypothesis associated with erwin schrodinger and more recently revived by eric schneider and his collaborators is assessed this hypothesis states that all dissipative structures have as their primary objective the reduction of accessible free energy gradients it is concluded that such a hypothesis cannot be rejected in the context of economic behaviour and that this opens up an important research agenda for economists

information order and knowledge in economic and ecological systems implications for material and energy use abstract ecological and economic systems are open systems that require energy to change the thermodynamic states of materials from naturally occurring to more valued forms these changes are accompanied by information flows and changes in the order of systems and their surroundings in this paper thermodynamics is used to assess these system changes and relate them to the knowledge present in a system particular emphasis is given to 1 the fundamental relationships among material energy and information flows and changes in order and knowledge 2 the role of equilibrium and non equilibrium thermodynamics in assessing system change 3 the increasing role of material and energy flows through economic systems and 4 the necessity for improved societal valuation of these flows

incomplete contracts and strategic ambiguity why are observed contracts so often incomplete in the sense that they leave contracting parties obligations vague or unspecified traditional answers to this question invoke transaction costs or bounded rationality in contrast the authors argue that such incompleteness is often an essential feature of a well designed contract specifically once some aspects of performance are unverifiable it is often optimal to leave other verifiable aspects of performance unspecified the authors explore the conditions under which this occurs and investigate the structure of optimal contracts when these conditions are satisfied copyright 1998 by american economic association

a biophysical analysis of the energy real gdp ratio implications for substitution and technical change abstract this paper quantifies the factors that caused the energy real gdp ratio to change during the post war period in france the federal republic of germany japan and the united kingdom econometric results indicate that changes in the types of fuel used changes in the energy consumed by the household sector changes in the types of goods and services produced and changes in energy prices account for most of the variation in this ratio price elasticities estimated from these results are lower than those estimated by neoclassical economists and indicate that the system boundaries used by neoclassical economists overestimate the amount of energy saved by substitution analysis of the error term from the regression results indicates that energy saving technical change has had little effect on the amount of energy used to support economic activity

a reexamination of the role of thermodynamics for environmental economics abstract as the discussion about the role of thermodynamics in environmental economics has not led to a conclusion yet a more fundamental approach seems to be necessary which also takes into consideration the relationship between economics and the natural sciences in general to this end value theory is chosen as a starting point because it is the centerpiece of every economic theory it is shown that neoclassical environmental economics suffers from serious deficiencies because of its value concept heedlessly copied from classical mechanics thermodynamics can be expected to be helpful to redress these defects because the economy can be thought of as a dissipative structure dependent on its environment the obvious way to integrate thermodynamics consists in the formulation of thermodynamic constraints to complement neoclassical environmental economics but this approach remains unsatisfactory because the neoclassical mechanical hardcore is incompatible with the entropy law and its implications evidently the neoclassical paradigm and its value concept have to be given up but the alternative of the energy theory of value must be rejected because its determinism cannot be reconciled with the richness of human behaviour as thermodynamic analogies offer no solution either there is a dilemma between the necessity and the apparent impossibility of adequately integrating thermodynamic concepts it turns out that a normative inconsistency is responsible which is due to the demand for intergenerational justice therefore the integration of thermodynamics into environmental economics hinges on a meta economic value decision if sustainability is adopted as the guiding principle the insights of thermodynamics call for a macro economic environmental policy setting absolute limits to the economy but this macro policy is incompatible with neoclassical economics so that a social reconstruction of economics based on a social theory of value becomes necessary in sum thermodynamics is important for environmental economics besides fulfilling a general heuristic function it also fulfils a decisive conceptual and an analytical function insofar as it helps to justify sustainability and to operationalize macro economic environmental policy

what is this school called neoclassical economics what is this school called neoclassical economics does it exist should it where does the term neoclassical economics come from and is there any connection between any of the current interpretations of the term and its original meaning how do we make sense of competing current interpretations is there a sustainable formulation these and related questions are raised and answered in an attempt to bring clarity to ongoing economic discussion and debate thereby to under labour for a more relevant academic economics discipline

energy growth and evolution towards a naturalistic ontology of economics 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

ontology and the study of social reality emergence organisation community power social relations corporations artefacts and money the conception of social reality i have previously defended and here extend positing features such as social relations positions and powers is thoroughly naturalistic and even consistent with modern interpretations of quantum field theory it also serves to ground a social science that can be scientific in the sense of natural science this is the thesis defended here central to the argument is an emphasis on a strong form of emergence and the category of organisation in process to bring out various salient features of the position defended i take the opportunity to compare aspects of it with relevant components of the contribution of john searle whose ontological conception appears at once to be both very similar yet also very different copyright the author 2012 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

what s in a name tony lawson on neoclassical economics and heterodox economics in this article i respond to tony lawson s what is this school called neoclassical economics lawson s paper is provocative because it reformulates neoclassical economics based on veblen s original intent as a mismatch created by recognising the value of an evolutionary approach to the economy whilst remaining over reliant on elements of a taxonomic approach for lawson many heterodox economists may be neoclassical under this description i argue that there is clearly a case to be heard but that the reformulation of the neoclassical raises a number of issues there are issues concerning the specific critique of the current usage of the term neoclassical regarding genealogy and meaning there are specific issues regarding the further development of the new old veblen definition of the neoclassical how clear is the definition in a practical context as a way to identify a neoclassical group based on the commitments of the critique and the definition what does it mean to be more realistic and what is the strategic value of such a provocation for heterodoxy i argue that the combination of these are reasons for more consideration of issues of social ontology not less insofar as the terms of the argument are incomplete and this invites both lawson and those he is criticising to progress the argument particularly on method

developments in the throughput income relationship theoretical and empirical observations abstract it has been suggested that the relationship between income and the associated environmental pressure in terms of derived materials inputs and pollution levels may take an inverted u shape indicating a delinking of environmental pressure from economic growth in relation to rising per capita incomes the likelihood of such a relationship being persistent is discussed in the context of a simple macro model of industrial metabolism and the possibility of relinking clearly emerges data on specific indicators of environmental pressure i e the throughput of materials energy and the volume of transport in 19 countries have been used to investigate patterns of delinking the results suggest that delinking may not be persistent already some advanced economies may be entering a new period of relinking the relationships between environmental pressure and welfare in the medium long term may be n shaped rather than inverted u shaped

energy and the long cycles abstract the hypothesis is submitted in this paper that energy directly or indirectly had much more to do with the generation of the long kondratiev cycles than generally recognized an attempt is made to test this and it is suggested that the next upturn may also be energy related

debt as money money is positioned bank debt this is a thesis i have previously defended in this journal in the current paper i elaborate the thesis and provide further grounding for it especially in the light of criticism by others in so doing i examine how positioned bank debt as money works and how in one case at least it originally emerged

the constitution and nature of money i take the opportunity to elaborate and clarify the positioning theory of money in response to the critique of it provided by geoffrey ingham

applied economics contrast explanation and asymmetric information the purpose of this paper is to illustrate the workings of an explanatory method for applied economics it is a method that is rarely explicitly examined or defended in the discipline but which i believe has a lot of promise for the sorts of contexts that economists must address my strategy is to show that and how the method in question effectively underpins at least one study already widely regarded as explanatorily successful copyright the author 2008 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

from microscopic to macroscopic theories entropic aspects of ecological and economic processes abstract the paper discusses the relevance of thermodynamics and related theories to ecological economics it is argued that it is not useful to apply the entropy term directly to economic processes physical entropy terms defined on a microscopic level for isolated systems are quite far from economic and ecological reality only theories that deal with the development of open systems far from thermodynamics equilibrium provide the important link between entropy and evolution towards higher complexity major new impulses for ecological economics come especially from evolutionary ecological theories these quite recent theoretical approaches incorporate the knowledge of far from equilibrium thermodynamics and explain dynamic changes in ecosystems on a macroscopic level from a thermodynamic perspective thermodynamic approaches provide a heuristic base for the analysis of economy environment interactions important implications of these approaches concern time irreversibility ecological efficiency and the interdependencies of environmental problems and evolution

social positioning and the nature of money the question of the nature of money is pursued drawing on results generated in the field of social ontology as well as on observations from history the conception of the nature of money found in this manner to be the most sustainable is compared to various other prominent if usually held to be mutually incompatible theories

implementation with incomplete information in exchange economies in this paper we analyze the problem of designing incentive compatible mechanisms in pure exchange economic environments when agents have incomplete information the equilibrium concept employed is bayesian nash equilibrium and the notion of implemantation is full implementation which is stronger than the more commonly employed notion of truthful implementation an allocation rule is truthfully implementable if there exists a direct mechanism to which truth telling is an equilibrium and which yields the allocation rule as its truthful equilibrium outcome an allocation rule is fully implementable if there exists mechanism which yields the allocation rule as its unique equilibrium outcome more generally a set of allocation rules or a social choice set is fully implementable if there exist a mechanism whose equilibrium outcomes coincide with the set this stronger notion of implemention avoids the well known problems of multiple equilibria which arise in direct revelation games we develop a condition termed bayesian monotonicity which we show is necessary for full implementation an incentive compatibility condition is also necessary we prove that bayesian monotonicity and a slightly stronger incentive compatibility condition are sufficient for full implementation when there are at least three agents we present several examples of allocation rules which do and do not satisfy our condition one example is that of an allocation rule which is fully inplementable by an indirect mechanism but for which every equivalent direct mechanism has multiple equilibrium outcomes

nuclear energy policy in the united states 1990 2010 a federal or state responsibility this paper examines from a policy perspective nuclear energy policy in the united states us from 1990 to 2010 and questions whether it is or has become a federal or state responsibility the present study as befits policy research engages with many disciplines for example in particular law and politics and hence the contributions move beyond that of nuclear energy policy literature and in particular to that on nuclear new build and other assessments of large infrastructure projects several examples at the federal level are identified that demonstrate that the nuclear industry has evolved to a stage where it requires a focus on the power of actions at a more localised state level in order to re ignite the industry the research concludes that there remains a misunderstanding of the issue of project management for complex construction projects and it is highly arguable whether many of its issues have been resolved further the research asserts that the economics of nuclear energy are not the most influential reason for no nuclear new build in the us

innovations externalities and the problem of economic progress in modern industrial societies innovativeness is seen as a source of economic growth and welfare increases following this assessment economic research presently focusses almost exclusively on the question of how to elicit innovations yet innovative economic activities have always also meant losses sometimes even hardship to some members of society and incalculable risks the present paper tries to develop a more balanced picture by acknowledging these less pleasant implications whether and under what conditions the permissive regime which modern societies have adopted towards innovations can be justified is discussed within the framework of a contractarian approach

self organization and sustainability energetics of evolution and implications for ecological economics abstract in the 1920s alfred lotka suggested that evolution results both in an increasing total energy flow through the biosphere and in increasing energy efficiency of biological processes later authors attempted to generalize lotka s conjectures and to transform them into general evolutionary laws these laws are derived from the laws of thermodynamics and it is frequently argued that they also apply to the development of economic systems in the present paper an alternative interpretation of the lotka principles is suggested which starts from the self organization of dissipative structures self organization concepts from ecological and evolutionary economics are integrated on this basis energetic regularities in evolutionary processes are interpreted as emergent properties of competitive self organization given the close relationship between energy dissipation in economic processes and various environmental problems thermodynamic effects of economic evolution are of practical policy relevance the evolutionary perspective taken here implies that policy measures toward sustainable development will primarily have to affect the kinds of innovative behavior triggered in competitive processes

money ontology and deception money is a status function this article works out the implications and consequences of that fact there are ten functions and features of money and a number of common mistakes and deceptions in the institution of money the most important of deceptions is the illusion that money in order to function must be backed by something

the application of contrast explanation to energy policy research uk nuclear energy policy 2002 2012 abstract this paper advances the application of the methodology contrast explanation to energy policy research research in energy policy is complex and often involves inter disciplinary work which traditional economic methodologies fail to capture consequently the more encompassing methodology of contrast explanation is assessed and its use in other social science disciplines explored in brief it is then applied to an energy policy research topic in this case nuclear energy policy research in the uk contrast explanation facilitates research into policy and decision making processes in energy studies and offers an alternative to the traditional economic methods used in energy research further contrast explanation is extended by the addition of contested and uncontested hypotheses analyses this research focuses on the methods employed to deliver the new nuclear programme of the uk government in order to achieve a sustainable nuclear energy policy three issues are of major importance 1 law policy and development 2 public administration and 3 project management further the research identifies that policy in the area remains to be resolved in particular at an institutional and legal level however contrary to the literature in some areas the research identifies a change of course as the uk concentrates on delivering a long term policy for the nuclear energy sector and the overall energy sector

toward a non linear dynamics of technological progress abstract the paper explores the characteristics of technological change from an historical perspective in particular it attempts to elucidate the nature of the pattern of successive breakthroughs followed by rapid improvement and scale up followed by maturation and an approach to configuration dependent physical limits followed by a new breakthrough the paper proceeds with the analysis of a number of specific cases of technological evolution several examples are presented that clearly exemplify the barrier breakthrough pattern but other important examples semi conductors and computers seem to offer alternative interpretations e g continuous breakthrough the paper concludes with a discussion of the notion of technological distance and some tentative generalizations that might prompt further research

heterodox economics history and prospects frederic s lee s collection of essays makes a substantial contribution to our understanding of the history of heterodox economics and to our sense of heterodox economics as a community this paper explores issues arising from the collection in relation to the characterisation of this history the understanding of heterodox economics itself and the nature and role of such a history from a historiographical perspective the paper concludes with a discussion of the future of heterodox economics and an argument for a pluralist strategy for its promotion copyright the author 2011 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

nash equilibrium and welfare optimality if is a set of social alternatives a social choice rule scr assigns a subset of a to each potential profile of individuals preferences over a where the subset is interpreted as the set of welfare optima a game form or mechanism implements the social choice rule if for any potential profile of preferences 1 any welfare optimum can arise as a nash equilibrium of the game form implying in particular that a nash equilibrium exists and 2 all nash equilibria are welfare optimal the main result of this paper establishes that any scr that satisfies two properties monotonicity and no veto power can be implemented by a game form if there are three or more individuals the proof is constructive

entropy structure and organisational change abstract the paper sets out a basis for rigorous thermodynamic characterisation of structural change and of organisational interdependencies between economic and environmental processes many attempts have been made to exploit entropy as a generic explanatory variable it has widely been proposed that entropy is a measure of the level of dis order of a system of how mixed up things are then as organisation is often thought synonymous with some notion of order it has been a small step to propose that increasing organisation is the converse of increasing entropy another suggestion has been that social system structure and change can be explained in terms of a tendency towards maximum entropy production the lotka principle of maximum energy dissipation all these notions must be rejected the putative entropy order connection has its inspiration in boltzmann s probabilistic interpretation of thermodynamic entropy as a measure of microscopic disorder this order principle is simply not applicable under conditions far from thermodynamic equilibrium prigogine conditions which prevail for all important economic and ecological processes under such conditions the relationship between entropy production and changes in structure or organisation is multi faceted and situation specific attempts to account for the specificity of societal activities in terms of a generic scalar measure of organisation or dissipation are largely after the fact and in no way do away with the need for analysis of institutional and ethical dimensions of human action in their own right when properly allied to institutional analysis however the far from equilibrium thermodynamics furnishes a rich impetus for a coevolutionary perspective in ecological economics with promise of incisive treatments of in particular issues of system environment codependency and of the time in determinacies of economy environmental change

the nature of heterodox economics heterodoxy serves as an umbrella term to cover the coming together of separate projects or traditions in answering the question what distinguishes heterodoxy from the orthodoxy the author argues that matters of ontology are central in answering the question how are the various traditions that make up the modern heterodoxy to be distinguished from each other the author defends criteria other than varying commitments to specific substantive theories policy measures or techniques or basic units of analysis