27 October 2009

Biophysical Economics: A Different View

One of the things that I have felt for a while is that mainstream economics isn't really the best way to look at free software, or any of the other intellectual commons or - even more importantly - the environmental commons, since economics is really about consumption. And now, it seems, some academics are beginning to call into question basic assumptions about that consumerist, consumptive viewpoint:

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?

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.

Here's the heart of the problem:

Central to their argument is an understanding that the survival of all living creatures is limited by the concept of energy return on investment (EROI): that any living thing or living societies can survive only so long as they are capable of getting more net energy from any activity than they expend during the performance of that activity.

Great to see some new thinking in this area; I'm sure in time it will have knock-on consequences for the way we look at the commons, too.

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