NYT: New School of Thought Brings Energy to 'the Dismal Science'

[GliderGuider]

New School of Thought Brings Energy to 'the Dismal Science'

SYRACUSE, N.Y. -- The financial crisis and subsequent global recession have led to much soul-searching among economists, the vast majority of whom never saw it coming. But were their assumptions and models wrong only because of minor errors or because today's dominant economic thinking violates the laws of physics?
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A small but growing group of academics believe the latter is true, and they are out to prove it. These thinkers say that the neoclassical mantra of constant economic growth is ignoring the world's diminishing supply of energy at humanity's peril, failing to take account of the principle of net energy return on investment. They hope that a set of theories they call "biophysical economics" will improve upon neoclassical theory, or even replace it altogether.

But even this nascent field finds itself divided, as evidenced by the vigorous and candid back-and-forth debate last week over where to go next. One camp says its models prove the world is headed toward a dramatic economic collapse as energy scarcity takes hold, while another camp believes there is still time to turn the ship around. Still, all biophysical economists see only very bleak prospects for the future of modern civilization, putting a whole new spin on the phrase "the dismal science."

Last week, about 50 scholars in economics, ecology, engineering and other fields met at the State University of New York's College of Environmental Science and Forestry for their second annual conference on biophysical economics. The new field shares features with ecological economics, a much more established discipline with conferences boasting hundreds of attendees, but the relatively smaller number of practitioners of biophysical economics believe theirs is a much more fundamental and truer form of economic reasoning.

"Real economics is the study of how people transform nature to meet their needs," said Charles Hall, professor of systems ecology at SUNY-ESF and organizer of both gatherings in Syracuse. "Neoclassical economics is inconsistent with the laws of thermodynamics."

The sharpest difference between biophysical economics and the more widely held "Chicago School" approach is that biophysical economists readily accept the peak oil hypothesis: that society is fast approaching the point where global oil production will peak and then steadily decline.

More at the link.

[Rabrrrrrr]

1. Good - I'd like to see that old economics thrown away in favor of a more healthy view.

Hell, even I knew years ago that you can't design an economic system in which "success" or "health" is measured solely in terms of it having expanded in the last year.

Economic success should mean that the majority, if not all, of the people in the system are able to eat and provide shelter for themselves, have some savings, and have their needs met.

And so even corporations (and their shareholders) should be rating themselves on whether they made a profit, not whether they made more profit than they did the previous quarter, or whether they built more stores (even if they had to borrow money they can't afford to do it).

Constant growth is unsustainable, and it's an unrealistic and stupid way to judge a corporation's financial success.

[hunter]

2. It's about damned time.

I don't think anyone should be called an economist without a solid background in the life sciences, most especially those sciences dealing with ecosystems.

The current "science" of economics is for the most part a very intricate game of fantasy football.

[AlecBGreen]

3. someone once said...

Our system of capitalism liquidates savings and calls it profit. I.e. we are selling off all the accumulated natural wealth and calling it profit. stupid.

[Nihil]

7. That's a good way to put it ...

> we are selling off all the accumulated natural wealth and calling it profit.

:-(

[pscot]

4. Soul searching economists?

There's a novel idea, as is the notion that economics is governed by the laws of physics. Until I clicked on the link, I thought this must be from the Onion.

[joshcryer]

5. The anarchists have known and understood this for over 100 years.

All strains of prevailing economics rely on fundamental rules that violate reality and only exist via the force exerted by the socio-political systems in place to maintain them.

The current system will indeed, assuredly, fail. It is simple mathematics.

http://www.youtube.com/watch?v=F-QA2rkpBSY

[glitch]

6. The NYT takes the relativity of the word "new" to a new level.

Or maybe it's just new to them.