TPF : Ecological Economics

[Gnomon]

Steve Keen, Economics, the environment and thermodynamics.

Classical economics breaches the first and second laws of thermodynamics by treating the economy as a closed system that increases in order. — Banno

Classical economic theory also assumed rational individual actors and minimal government interference. Thermodynamics may be logical (rational), but the regulation (natural laws) is inherent in the system. The human factor in economics is a wild card. And, I suppose it's also an irrational element in Earth-based thermodynamics, resulting in global warming. Fortunately for us, over the long haul, the erratic path of both systems, tends to balance-out at a moderate mean. Let's hope, anyway. We don't really want to eradicate humans from the planet, do we?

[Gnomon]

The assumption of continuity is one the physics undermines - tipping points and phase changes, rather than smooth curves. — Banno

Of course. Short term economic or evolutionary paths tend to look like the first chart below. But Long-term paths typically vary around a fairly constant mean -- maybe even sloping upward, as in chart 2. Although global warming currently looks like a hockey-stick, over 10,000 years the system has balanced itself well enough to keep Life alive. But now, it seems that a little global government intervention/regulation may be necessary to get us back on track. Dystopian visions of economic/thermal/ thermo-nuclear apocalypse may be premature. Have a little faith in humanity -- we haven't bombed ourselves into oblivion yet . . .

1. SHORT TERM ECONOMICS
eu-ge-201607-fig2.png
2. LONG TERM ECONOMICS
236px-GDP_per_person_in_the_United_States.png
3. GLOBAL WARMING UPS & DOWNS
easterbrook_fig41.jpg

[Gnomon]

There's a problem that is not part of the economist's calculation. They need to talk to a physicist. — Banno

I vaguely remember from long ago an economics book (New World of Economics, 1975 ???) that recommended an approach more like Physics. But the problem with such a model is that physical systems are better-behaved and more predictable than chaotic human groups. In fact, I suspect that some economists tried to make models based on physics, and failed to get reliable results. Yet again, their Bell-curve models didn't fit the messy realities of collective and individual human nature.*1

In Freakonomics (2003) the authors said "Why the conventional wisdom is so often wrong . . . How "experts" --- from criminologists to real-estate agents to political scientists --- bend the facts . . . Why knowing what to measure, and how to measure it, is the key to understanding modern life . . ." That almost sounds like a reference to physical measurements. But it would actually be more like the meta-physical measurements of Psychology. :joke:

*1. Note to self in front page of the book : "When the numbers (values) are removed from the mathematically derived chart, what is left is a pure logic diagram, showing abstract relationships. From this we can derive general principles which can be applied to specific cases and the numbers plugged back in". So young, so naive. Maybe they hadn't perfected Chaos Theory back then. Or Black Swan theory.

[Gnomon]

So, maybe it's an assumption that the market will take care of itself, and thermodynamics, in conclusion gets taken care of? — Caldwell

Interpersonal Market Economics, by contrast to Top-down Government Planning, is like Democracy : it assumes that erroneous or extreme ideas (irrational elements) will neutralize or normalize each other. And, as Winston Churchill once said “democracy is the worst form of government – except for all the others that have been tried.”

Monetary Economics is not a logical physical system, like Thermodynamics; it's a passionate Prey versus Predator ecosystem that sometimes gets out of balance due to selfish human interference. Fortunately, some altruistic humans are working to offset the imbalance by providing a targeted counter-force (e.g. reintroducing wolves into Yellowstone). But even that well-intentioned response may be based on incomplete information about the state & trend of the system. So, we may have to just get used to an imperfect & erratic Economy & Ecology, until Economists become omniscient, or Human monetary interactions become more predictable and controllable, like Physical energy exchanges.


“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages.” This quotation is used to illustrate the self-centeredness of men and thereby to motivate the market as the best allocation mechanism.
___Adam Smith
https://faces-online.nl/en/the-godfathe ... ve-quotes/