Georgescu-Roegen: A complex individual

It is difficult to do justice to a figure like Georgescu-Roegen, as his legacy is both profound and complicated, and his scholarly work arcane and difficult. Georgescu-Roegen is famously remembered as the entropy-pessimist, a scholar, who in attempting to reimagine economics from a physical perspective, postulated the inevitable “running down” of the economy as a consequence of the second law of thermodynamics. I term him the genius pessimist as his work is both incredibly novel and insightful, and rather gloomy. From my readings of his magnum opus, I think one should also recognize his more abstract and perhaps lesser-known contributions to philosophical matters. I call him a philosopher of process as he goes to great length to discuss some relatively esoteric mathematical concepts in order to make deeply insightful points about how we understand and perceive the world. In this post, I hope to shed some light on several of his lesser-known but immensely intriguing ideas. I begin with a quick biographical sketch.

Neoclassical economics

Georgescu-Roegen is an intriguing figure in economic history, as he seems like an unusual outcome. He twice spent time at Harvard University (before and after WWII), associating with such giants as Joseph Schumpeter and Wassily Leontief. Some of his early work lay in the deeply neoclassical field of utility theory. After his second stint at Harvard, he obtained a faculty position in the department of economics at Vanderbilt University. During this period, neoclassical economics was at the height of its own mathematical transformation, and yet Georgescu-Roegen’s highly unorthodox views would bring him down a completely different path.

The genius pessimist: Economics and the Entropy Law

In 1971, he published his magnum opus The Entropy Law and the Economic Process. This rather incredible book is arguably one of the founding texts of the discipline of ecological economics and spans material from Aristotle to statistical mechanics. The major takeaway is that the economy is “doomed” to eventually run down. This is, to my understanding, a heat-death of the universe scenario but only on a local scale. Needless to say, this is a contentious point and perhaps a misinterpretation of thermodynamics itself. Entropy does not apply to macroscale matter and cannot be used as justification for material run down. One can discuss entropy in the context of ideal gasses and derive probabilities by counting microstates, but what works for gas particles does not necessarily work for materials in general. Georgescu-Roegen very much disliked the discipline of statistical mechanics and wrote the following:

“The very existence of this discipline is a reflection of the fact that, in spite of all evidence, man’s mind still clings with the tenacity of despair to the idea of an actuality consisting of locomotion and nothing else”.¹

His interpretation of entropy, distaste of statistical mechanics, and his eventual proposition of the so-called “fourth law of thermodynamics”, which is not accepted, are part of his complex legacy and a warning of the pitfalls of transdisciplinarity. He himself notes in the beginning of The Entropy Law that he is entering the territory of physics as a determined amateur and that it is necessarily a dangerous journey; this is an important lesson for all of us who seek to blend the natural sciences with the arts to imagine a new economics.

Despite his complex legacy, Georgescu-Roegen and his Entropy Law have been deeply influential in the development of the field of ecological economics and the degrowth movement. Though he made some theoretical mistakes, his work is nothing short of inspired genius for linking two previously distinct theoretical disciplines, thus creating the new field of ecological/biophysical economics. Unfortunately, he has essentially disappeared into obscurity in the mainstream field of economics; I never heard his name during either of my two economics degrees. In neoclassical economics, Georgescu-Roegen has been relegated to obscurity.

The philosopher of process

Though much attention is paid to his gloomy entropic predictions, relatively little is said about his other philosophical contributions. The Entropy Law is replete with fascinating discussions into the nature of how the abstract notion of “process” is understood and described mathematically. What is Georgescu-Roegen’s take on “qualitative change” and the inherent difficulty in representing it analytically?

An easy example of qualitative change is the increasing complexity of the universe over time from its initial mostly homogenous state; the evolution of species and the evolution of economies are other useful examples. In terms of process, Georgescu-Roegen would state that the phenomena under study are undergoing qualitative variation. Let us now consider the economic notion of capital in the context of a simple activity such as digging a hole. If digging a hole in which to place a sapling requires only a small garden shovel; what then does excavating an open pit mine require? If the answer is either many thousands of garden shovels or one enormously scaled up garden shovel then the “capital” in this example is not truly subject to qualitative change. In reality, we know that digging an open pit mine employs complex machinery that is qualitatively distinct from the simple garden shovel; in scaling the size of the activity the notion of capital is forced to undergo qualitative change. This is a lesson lost on many economists who posit an abstract capital variable taking on values of real numbers.

Georgescu-Roegen discusses the problem of using “cardinal variables” (integers, real numbers, etc.) to describe processes undergoing qualitative change. Quite simply these variables do not undergo any qualitative change as they arise from strict axioms. One hundred is simply “1” summed many times whereas excavators cannot be so simply derived from garden shovels. If this seems relatively obvious or even unimportant, one need only consider that economics (my own work included) is based on these exact simplifications. Capital, labour, land, energy, etc. are all represented in various ways by mathematical constructs (usually real numbers) that are not themselves capable of expressing qualitative change. What then are we to make of the representation of processes undergoing qualitative change by cardinal variables? Georgescu-Roegen provides a way to answer this but it is well beyond the scope of this post to address it; the interested reader can look up his discussion of the qualitative residual.²  The genius of this and the many other tangents on the notion of “process”, found in the Entropy Law is quite difficult to describe. What is evident, however is that Georgescu-Roegen was as capable a philosopher of arcane mathematical issues as he was an economist. That this is less often mentioned is, I believe, a shame.

Georgescu-Roegen today

I hope to have illuminated a few interesting aspects of a foundational and difficult figure in the history of ecological economics. Georgescu-Roegen’s unwavering, if occasionally controversial, foray into transdisciplinary thinking should be held up as an excellent example for the student of ecological economics. Today economics is undergoing a slow but incredible transformation through embracing of the physical sciences; Georgescu-Roegen’s life and work are an inspiring and cautionary tale to educate those who are taking part in the transformation. Though his work has been forgotten by neoclassical economics, it holds a rightful place in the pantheon of great texts in ecological economics.

Reference:

Georgescu-Roegen, N. Entropy law and the economic process. Cambridge, MA, 1971.  p 6, 101

Martin Sers is an E4A graduate student at York University. With a background in mathematics and economics, he is motivated by the question of how to think about macroeconomics for a world defined by planetary boundaries.