[p2p-research] Scientific American: Does Economics Violate the Laws of Physics?

[Stan Rhodes]

Ryan,

The ideas being discussed aren't new--you're definitely right about that.
I've previously mentioned that I view economics as slowly merging with other
fields of behavioral science, with plenty of fuzziness, murkiness, and
pseudoscientific nonsense still clouding around them all.  It's a baby
science in a swimming pool of bathwater.

I don't understand your response, so two questions stemming from it:

Q1) If there is a reasonable argument that economics is ultimately a study
of thermodynamics, what is that argument?

If we ignore the supersensationalist claim in the article (that "today's
dominant economic thinking violates the laws of physics") and go with simply
the sensationalist claim ("Neoclassical economics is inconsistent with the
laws of thermodynamics"), then one must ask

Q2) How is neoclassical economic theory inconsistent with the laws of
thermodynamics?

Neoclassical growth theory is not just one thing.  The Solow model, for
example, is very simplified, and growth theory is a realm of much debate.
In science, the whole point of theory and modelling is to map the terrain of
reality.  It's hardly a surprise when theories are wrong--a map is always
simpler than the terrain it maps.  Good maps simply give us some predictive
power.  That's science.  However, that thermodynamics somehow invalidates or
disproves neoclassical growth theories is a far more specific claim, and
requires extraordinary evidence.  I can't even think how it would be
possible, which is why I asked these followups.

I don't know much about industrial ecology.  My basic understanding is the
field looks at all materials and energy cycles in our "closed" system:
essentially, the Earth.  So, it would try to define the boundaries of
possible material and energy flows on Earth.  However, a closed system is
not the same as an isolated one--Earth constantly receives energy, mostly
from the Sun, which will continue for a very long time.

I see Superfreakonomics much as I see Penn and Teller's BS: contrarian
trolling.

-- Stan

On Wed, Oct 28, 2009 at 2:07 PM, Ryan Lanham <rlanham1963 at gmail.com> wrote:

> Hi Stan:
>
> I actually did a bit more looking and find their approach very along lines
> long held by industrial ecologists at places like Yale that I admire.  In
> fact, I'd call it the same.  It is sensationalistic as presented by SA, but
> I tend to agree with them.  I think there is a reasonable argument to be
> made that economics is ultimately a study of thermodynamics and that
> neoclassical growth theories are simply wrong--scientifically.  Classical
> technocrats have made this argument since the 1930s (though they've suffered
> their share of outliers, too.  The ideas these guys are discussing aren't
> new so far as I can tell.
>
> On the other hand, Superfreakanomics is out now and the excerpts I have
> read are truly laughable on climate change.  It is ridiculously bad science
> policy and even worse economics.  Paul Krugman called the economics in it
> "simply wrong."  And the major scientist they quote says he was misquoted
> and categorically disagrees with the book's presentation of his views and
> their findings--and rebutted it in an interview with Yale360, not exactly a
> dodgy forum for rebuttle.  Climate Progress blog (which is often over the
> top in its own way) has a lot on it.  Interesting time in economics.
>
> Ryan
>
> On Wed, Oct 28, 2009 at 3:27 PM, Stan Rhodes <stanleyrhodes at gmail.com>wrote:
>
>> I read this before, and was amazed at how confused it was.  Reading it
>> again, I just think it's sensationalist nonsense.
>>
>> 1) Neoclassical theory and the resulting neoclassical synthesis, by any
>> stretch of the imagination, does NOT "violate the laws of physics" or "the
>> laws of thermodynamics."
>> 2) Peak oil, coal, and gas are not news to even "mainstream" "Chicago
>> economists."
>> 3) Energy is but one aspect of economics.  "Biophysical economists" ignore
>> the most important aspect: behavioral science, specifically, psychology +
>> sociology + anthropology.  That's the hard part, and the part that's vital
>> for creating or modifying multi-level systems that manage and sustain common
>> pool resources.
>>
>> "Of course I'm trying to send a message," said Joseph Tainter, chairman of
>> Utah State University's Department of Environment and Society. "I just don't
>> expect there's anyone out there to receive it."
>>
>> That sort of schlock is fine for The Huffington Post, but Scientific
>> American ought to be ashamed.
>>
>> -- Stan
>>  On Wed, Oct 28, 2009 at 12:13 PM, Ryan Lanham <rlanham1963 at gmail.com>wrote:
>>
>>>
>>> http://www.scientificamerican.com/article.cfm?id=does-economics-violate-th
>>>
>>> --
>>> Ryan
>>>
>>>
>
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