Nicholas Georgescu-Roegen - An Atypical Economist

2009

If there is any takeaway from 1971's The Entropy Law and the Economic Process, it's this: beneath every intersection of the supply and demand curve, there's a slow, but steady, process of environmental degradation. Try as you will to recycle waste materials, the book argues-this process cannot be reversed. A formulation of economics backed with this insight was the life vision of Nicholas Georgescu-Roegen, whose work on environmental economics has recently received a new round of academic scrutiny. But one might ask, why wasn't Georgescu well received the first time around, during his time? This paper explores that topic.

Inputs of low entropy resources into the economic process and outputs of high entropy waste from it are two unavoidable flows of our economic activities as long as we remain as bioeconomic beings on the earth. The true problem consists in the choice for the suitable speed of increase in entropy in the long run. The tremendous speed of increase in entropy is one of the most troublesome characteristics of modern technological systems with respect to the resource and environmental constraint menacing the existence of humans on the earth. The main purpose of this study is to clarify this characteristic both in terms of two types of physical efficiency and in terms of four variations of the law of diminishing returns. Georgescu-Roegen's emphasis on matter as well as energy and his Fourth Law of Thermodynamics will be reinforced by these concepts. Georgescu-Roegen's theory will be also compared with Tsuchida's water cycle theory which emphasizes the openness of the earth with respect to energy. The implication of these two theories for the steady state of the earth is also discussed. Final section gives some implications of this study for our future economic system.

Development and Change, 2009

Recent concern for 'sustainability' has attracted attention to the comprehensive theory of economic development, institutional change and biophysical constraints developed by Romanian-born economist, mathematician and statistician Nicholas Georgescu-Roegen. However, his seminal and pathbreaking contributions have still not received the attention they deserve from mainstream economists. Georgescu-Roegen's early work on consumer choice theory and his innovative critique of Leontief dynamic models have never been incorporated into standard economic theory or into current behavioural and biophysical critiques of that theory. His theory of economic development is a serious critique from within the conceptual edifice of economic thought which he himself helped build. His theoretical innovations provide essential clues for a fundamental analysis of sustainability, at the level of theory as well as of policy. Nicholas Georgescu was born in Constanta, Romania, in February 1906. He graduated from the mathematics department of Bucharest University in 1926 with the highest grade: foarte bine. On the advice of Traian Lelescu, a prominent Romanian mathematician, he went to study statistics at the University of Paris and obtained his PhD in 1930 with the dissertation 'On the problem of finding out the cyclical components of a phenomenon'. Having learned from the French mathematician George Darmoi some of the contributions of Karl Pearson, Georgescu-Roegen went to University College in London to study with him for two years. In 1932, he returned to Romania and became Professor of Statistics at Bucharest University. After obtaining a Rockefeller Fellowship in 1934, he went to the Harvard University Economic Barometer. Unfortunately for Georgescu-Roegen, he found that this organization had been disbanded soon after Black Tuesday-29 October 1929-because just the week before the crisis, it had predicted that all was in perfect order! This bad luck, however, brought Georgescu-Roegen the fortuitous opportunity to work with Joseph A. Schumpeter.

Ecological Economics, 1995

Nicholas Georgescu-Roegen's criticisms, added to those of physicists and philosophers, result in a definitive refutation of Boltzmann's claim that his H-theorem derives the Second Law of Thermodynamics solcly from Newtonian Mechanics. Some authors using Boltzmann's Statistical Mechanics go so far as to claim that perpetual motion machines are feasible in principle; this is also incorrect. Modern approaches by Ilya Prigogine and by the "Astrophysical School" to build thermodynamics on a basis that avoids Georgescu-Roegen's objections are surveyed. These conclusions have both epistemological and technological importance for economics; this paper emphasizes the former. The epistemological argument is: (1) The entropy law is an evolutionary law. (2) Modern neoclassical economics is arithmomorphic. (3) Arithmomorphic laws cannot capture evolutionary changes. (4) Hence neoclassical economics cannot incorporate the entropy law's implications for the economic process. (5) If one can show that modern physicists use evolutionary laws despite their non-arithmomorphic nature, then maybe (6) economists will become accepting of evolutionary laws. (7) This would be good because the entropy law, which is" evolutionary (point 1), has important implications for economics. This paper primarily treats the most unfamiliar point for non-physicists, point 5.

2000

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Ecological Economics, 1990

Khalil, E.L., 1990. Entropy law and exhaustion of natural resources: Is Nicholas Georgescu-Roegen's paradigm defensible? Ecol. Econ., 2: 163-178.

2016

This article deals with the notion of entropy in its applicability to economics. Briefly, it regards some classical cases of such a use as the labour concept of Podolinsky and the bioeconomics of Georgescu-Roegen. This article also attempts to apply the concept of entropy to the analysis of market structures in the example of the perfect competition model. Thus, the article asserts that if we compare different entropy concepts with the main characteristics of a market with perfect competition, we must conclude that the latter is a structure with the maximum level of entropy. But maximum entropy means the system’s death. So, as a system or a structure, a perfectly competitive market cannot exist. When analysing such a model, economists recognise its impossibility in real life from an empirical point of view. However, the application of the entropy concept helps us to repeat this approval also as a methodological one. The use of the entropy concept as a methodological instrument helps...

Journal of Heterodox Economics, 2016

This article deals with the notion of entropy in its applicability to economics. Briefly, it regards some classical cases of such a use as the labour concept of Podolinsky and the bioeconomics of Georgescu-Roegen. This article also attempts to apply the concept of entropy to the analysis of market structures in the example of the perfect competition model. Thus, the article asserts that if we compare different entropy concepts with the main characteristics of a market with perfect competition, we must conclude that the latter is a structure with the maximum level of entropy. But maximum entropy means the system’s death. So, as a system, a perfectly competitive market cannot exist. Despite economists recognise the unreality of such a market from an empirical point of view, the application of the entropy concept helps us to repeat this approval also as a methodological one. The use of the entropy concept as a methodological instrument helps to question some other economic models, too.

Accounts of Nicholas Georgescu-Roegen’s career as an economist usually focus either on the brilliance of his pioneer contributions to mathematical economics during the 1930s, or more frequently, on his later conversion to a critical approach to economic theory anchored on the centrality of the entropy law in a dynamic setting. These two disparate moments, however, were connected by Georgescu-Roegen’s strong attraction to the study of the problems afflicting underdeveloped societies. This began with his work on the agricultural economy of his native Romania, produced under the auspices of Harvard’s Russian Research Center in the late 1940s. Thenceforth, he embarked on a journey that spawned his early interest in Leontief-type linear models, an extended tour of Southeast Asia commissioned by Vanderbilt University’s Graduate Program in Economic Development, and several visits to Brazil during the 1960s to assist in the development of academic economics in the country. The paper highlights these lesser-known aspects of Georgescu-Roegen’s intellectual trajectory, while using his case to illustrate some of the paths open for inquiry during the heyday of development economics.

Entropy, 2020

The aim of this paper is to examine the role of thermodynamics, and in particular, entropy, for the development of economics within the last 150 years. The use of entropy has not only led to a significant increase in economic knowledge, but also to the emergence of such scientific disciplines as econophysics, complexity economics and quantum economics. Nowadays, an interesting phenomenon can be observed; namely, that rapid progress in economics is being made outside the mainstream. The first significant achievement was the emergence of entropy economics in the early 1970s, which introduced the second law of thermodynamics to considerations regarding production processes. In this way, not only was ecological economics born but also an entropy-based econometric approach developed. This paper shows that non-extensive cross-entropy econometrics is a valuable complement to traditional econometrics as it explains phenomena based on power-law probability distribution and enables econometri...