Universität zu Köln

Kummel, Reiner and Lindenberger, Dietmar (2020). Energy, Entropy, Constraints, and Creativity in Economic Growth and Crises. Entropy, 22 (10). BASEL: MDPI. ISSN 1099-4300

Full text not available from this repository.

Abstract

The neoclassical mainstream theory of economic growth does not care about the First and the Second Law of Thermodynamics. It usually considers only capital and labor as the factors that produce the wealth of modern industrial economies. If energy is taken into account as a factor of production, its economic weight, that is its output elasticity, is assigned a meager magnitude of roughly 5 percent, according to the neoclassical cost-share theorem. Because of that, neoclassical economics has the problems of the Solow Residual, which is the big difference between observed and computed economic growth, and of the failure to explain the economic recessions since World War 2 by the variations of the production factors. Having recalled these problems, we point out that technological constraints on factor combinations have been overlooked in the derivation of the cost-share theorem. Biophysical analyses of economic growth that disregard this theorem and mend the neoclassical deficiencies are sketched. They show that energy's output elasticity is much larger than its cost share and elucidate the existence of bidirectional causality between energy conversion and economic growth. This helps to understand how economic crises have been triggered and overcome by supply-side and demand-side actions. Human creativity changes the state of economic systems. We discuss the challenges to it by the risks from politics and markets in conjunction with energy sources and technologies, and by the constraints that the emissions of particles and heat from entropy production impose on industrial growth in the biosphere.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Kummel, Reiner UNSPECIFIED UNSPECIFIED UNSPECIFIED Lindenberger, Dietmar UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-316436
DOI:	10.3390/e22101156
Journal or Publication Title:	Entropy
Volume:	22
Number:	10
Date:	2020
Publisher:	MDPI
Place of Publication:	BASEL
ISSN:	1099-4300
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language POWER; CONSUMPTION; POLICY; COST Multiple languages Physics, Multidisciplinary Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/31643