Module (3): Open system versus closed system economics
System theory
Entropy law
Economic paradigms
Technological perceptions
Environmental perceptions
A bit of system theory applied to material end energy flows....
3 types of systems:
According to flows outside the system:
1. Isolated systems
No flows
2. Closed systems
Only energy flows (Einput/output)
3. Open systems
Both energy and material flows
(Einput/output and Minput/output)
Einput
Minput
isolated
Einput
closed
Eoutput
open
Eoutput
Moutput
The economic system in the ecological economic system
Einput
work
Einput
Eoutput
$-wages, profit
Minput
families
businesses
Eoutput
Moutput
products
$-price
The conventional economic system
Our limited planet
The universe
Empty world and full world economics
Daly overhead
Defining ecological economics from its meaning
Eco - nomics: Oikonomia – “management of the house”
Eco- logy: “Knowledge of the house”
Ecological economics: “management of the house where you
know your house (limits, behaviour, coevolution)
“Study of price formation for gaining money” –
Crematistics (Aristoteles)
The economic system in the ecological economic system
Pag 64 wuppertal report
Laws of thermodynamics in ecological economics
The first law says that energy and matter conserve: neither you can create them, neither you
can destroy them.
So, what does the economic prcess? i.e “wealth creation”?
The secod law tells us: energy and matter change their state, from useful to useless,
increasing the disorder, in an irreversible way. This is a natural process and the economc
process accelerates it by absorbing and expelling energy and matter in its metabolism.
Example from the universe.
"The earth [is] a thermodynamically closed and non-materially-growing system, with the
economy as a subsystem of the global ecosystem. This implies that there are limits to
biophysical throughput through the economic subsystem." (Getting Down to Earth, p. 2)
We can look at the economic system as part of a closed system that works according to the
entropy law. Example from natural resources.
The point of view of energy studies: how to look at the economic system in terms of energy.
The concept of Emergy: embodied energy (Odum).
The point of view of metabolism
Laws of thermodynamics in ecological economics
Ecological economics is trans-disciplinary (see module 4); historically its
foundations are in the work of Georgescu-Roegen, and have a base in physics,
from the second law of thermodynamics
Multidisciplinary = divisions between disciplines are respected (EIA report)
Interdisciplinary = individual experts know also the other discipline (env. econ. of
greenhouse gas emissions)...but maintaining their first discipline’s mental frame
Transdisciplinary = generates new concepts and mental structures
economic growth paradigms
Open system versus closed system economics (Daly)
Can we achieve infinite economic growth?
The issue: quantitative growth (impossible in a closed system) versus qualitative
growth (possible in a closed system)
Daly: steady state economics –see overhead
Dematerialization is the solution....
The theory behind: Environmental Kuznet Curve and dematerialization
The facts: while environmental awarness is increasing in richer countries (See
module 7), dematerialization is not happening.
Emergy of new technologies
technological perceptions
Is technology the solution to environmental problems?
Technological optimism versus prudent pessimism (Costanza: What is ecological
economics?)
The cosmological perception of the western culture 1: the idea of progress
Example of climate change and iron fertylization of the oceans (“Gli apprendisti
stregoni del clima”, Le Monde Diplomatique, July 2002)
environmental perceptions
Is nature a problem or the solution?
The cosmological perception of the western culture 2: alienation and protection from
the natural world (example from Hollywood films)
Other cultures have a different concept. No split. Nature = home
The complexity within natural systems (see Module 8)
Technological improvements, emergy and the environment: physical problems
Readings
Ecological Economics (electronic journal) September 1997: special issue on the
work of Georgescu Roegen (especially pag. 261 to 273)
Boulding, K.: The economics of the coming spaceship Earth
Costanza, R.: What is ecological economics? In Ecological Economics, vol 1 issue 1
Daly, H: Ecological economics and the ecology of economics: essays in criticism
(Introduction and chapters 1 and 2) + (chapters 10-11-12)
Daly, H: The economic growth debate: what some economists have learnt but many
have not