Eco Nomos: The Laws of Nature
What is Economics?
From the American Heritage Dictionary:
Is Economics a science with a "social" qualifier? The famous University of Chicago Department of Economics does demur within the confines of the Division of Social Sciences but with little in common and agreement with the other departments. The second part seems analogous with scientific terms of general dynamic systems but is missing the important function of accumulation. The last part falls into a circular definition where we chase the meaning of "economies" back to economics. Perhaps the etymology of the word can give us clues:
From Etymonline.com
This still seems contrived or derivative. Why does Eco mean "house" in this instance but normally means "nature" as in Ecology? Why does nomos mean manager here but the more classical definition of "laws" is used for Astronomy (the laws of the stars) and Taxonomy (the laws of classification). Why doesn't Economics mean "Pertaining to" (ic) the "laws" (nomos) of "nature" (eco)? Where did the disconnect with "nature" occur? Why is the study of economics governed by "managing" and not the establishing of laws which might guide management? Certainly, there are laws in economics, such as Say's Law of Supply and Demand, but it does seem to me that economics is plagued by a dearth of basic laws. Economic theory also seems to struggle with environmentalism, mainly because the emphasis has been on man and not a holistic view which includes his "house".
Can Economics be extended to nature and are there rules that govern it?
More appropriately, what are the laws of nature which we might use to build a base of knowledge and understanding? The classical three laws of thermodynamics govern the flow of energy in closed systems. Energy, simply put, is the potential to do work. For instance, a battery holds energy which I can use to turn a fan or illuminate a light bulb for so many minutes. Turning the fan and illuminating the light bulb are the useful acts of work we seek. Energy allows us to do that work. Work in the human economy is simply labor.
The three laws are:
1) Energy must be conserved
2) Energy flows irreversibly from a high potential to a low potential
3) Absolute Zero is -273.15 Celsius
Before we can restate these laws in economic terms, we must state certain axioms and corollaries which require not so much a change from classical economics but rather a different view. These explain the role of money that sometimes indicate the flow of energy in man's ecosystem.
Axiom 1: Money only has value in its ability to purchase energy. Which would you rather have, money or the products it buys? If you were given a trillion dollars but could never spend it, would it have any value? Money, strictly speaking, is an indicator of the flow of energy. This principle requires a slight change in classical thinking. A specific unit of money is able to buy a specific unit of energy.
Axiom 2: Money is exchanged only for labor. There is no difference between goods and services. They both are work or labor. When you buy an apple, you're not paying the apple or the tree that produced the apple. You are actually purchasing the labor of individuals: farmers, fruit pickers, truck drivers, grocery store managers, etc. The apple is a product which has had value added to it in successive stages of labor or human work. Money flows to individuals in the opposite direction of work. It is, thus, an indicator of the flow of energy.
In macroeconomic terms, we are not equating the traditional divisions of labor (Agricultural, Manufacturing and Service). On the contrary, each form of labor adds different value to the product. The picker puts it in the basket, the truck driver takes it to the market. We merely note that, as far as the Econogineer is concerned, they are all forms of labor that add value to products. More radically perhaps, these distinctions are frowned upon as unnecessary since they may give the impression that different types of labor have different values outside the value assigned in their exchange rate or pricing.
The key point is that the flow of money does not extend to raw materials or basic products, only to the labor which first acts on those basic products. However, the basic laws expounded above encompass all forms of energy, man made and natural.
The first law can now be restated in economic or business terms (remembering that we are dealing with closed systems).
1) The accounts must balance. The typical accounting equation is assets=liabilities+equity. We must insist that each of these accounts be expressed in real absolute energy value. Since money is an indicator of energy, we can use it as long as we index. This provides a basis for evaluation between competing systems where money is not a valid measure. Where money is the measure, we keep track of it but only as a means of keeping track of energy.
2) No transaction of energy is without irretrievable loss. There is, as a matter of immutable law, no avoiding wastage. This is not a result of man's economy. It is simply how nature operates and man is no exception. The amount of energy absorbed by the tree to grow an apple is more than the calories in that apple. The transport to market will mean more loss in spoilage. A person buying the apple will not consume all of it, some will be thrown away. We don't avoid wastage, we measure it and understand its implications. Efficiency describes the amount of energy that is passed through a process. A process is any place where labor or work is acted on some product. Net Efficiency is a very important concept. It refers to the total amount of energy output from a process divided by the energy input. This is probably the most critical point of understanding for the Econogineer.
3) There is an absolute end. At -273.15 all atomic activity stops. For man, who would long cease functioning before reaching that temperature, this means very little in practical terms. In thermodynamics, the second law states that energy flows from a high potential to a low potential. Absolute Zero is the lowest that energy can flow. So considering the universe is still here and we're not all frozen in some primordial ice, there must have been or must be some source of energy. In the past, some have used the second and third laws to declare the end of the world. We see nothing of the sort. The third law is there to remind us that nature is an immutable force. It gives absolute weight to the first two laws.
It's theological implications are left to the reader and not at all discouraged. The Econogineer is a spiritual being.
From the American Heritage Dictionary:
ec·o·nom·ics (noun)
(used with a sing. verb) The social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems.
Is Economics a science with a "social" qualifier? The famous University of Chicago Department of Economics does demur within the confines of the Division of Social Sciences but with little in common and agreement with the other departments. The second part seems analogous with scientific terms of general dynamic systems but is missing the important function of accumulation. The last part falls into a circular definition where we chase the meaning of "economies" back to economics. Perhaps the etymology of the word can give us clues:
From Etymonline.com
Economy c.1530, "household management," from L. oeconomia, from Gk. oikonomia "household management," from oikonomos "manager, steward," from oikos "house"+ nomos "managing," from nemein "manage". The sense of "manage the resources of a country" (short for political economy) is from 1651. Hence, economic (1835) means "related to the science of economics," while economical (1780) retains the sense "characterized by thrift." Economist is 1586 in the sense of "household manager," 1804 meaning "student of political economy."
This still seems contrived or derivative. Why does Eco mean "house" in this instance but normally means "nature" as in Ecology? Why does nomos mean manager here but the more classical definition of "laws" is used for Astronomy (the laws of the stars) and Taxonomy (the laws of classification). Why doesn't Economics mean "Pertaining to" (ic) the "laws" (nomos) of "nature" (eco)? Where did the disconnect with "nature" occur? Why is the study of economics governed by "managing" and not the establishing of laws which might guide management? Certainly, there are laws in economics, such as Say's Law of Supply and Demand, but it does seem to me that economics is plagued by a dearth of basic laws. Economic theory also seems to struggle with environmentalism, mainly because the emphasis has been on man and not a holistic view which includes his "house".
Can Economics be extended to nature and are there rules that govern it?
More appropriately, what are the laws of nature which we might use to build a base of knowledge and understanding? The classical three laws of thermodynamics govern the flow of energy in closed systems. Energy, simply put, is the potential to do work. For instance, a battery holds energy which I can use to turn a fan or illuminate a light bulb for so many minutes. Turning the fan and illuminating the light bulb are the useful acts of work we seek. Energy allows us to do that work. Work in the human economy is simply labor.
The three laws are:
1) Energy must be conserved
2) Energy flows irreversibly from a high potential to a low potential
3) Absolute Zero is -273.15 Celsius
Before we can restate these laws in economic terms, we must state certain axioms and corollaries which require not so much a change from classical economics but rather a different view. These explain the role of money that sometimes indicate the flow of energy in man's ecosystem.
Axiom 1: Money only has value in its ability to purchase energy. Which would you rather have, money or the products it buys? If you were given a trillion dollars but could never spend it, would it have any value? Money, strictly speaking, is an indicator of the flow of energy. This principle requires a slight change in classical thinking. A specific unit of money is able to buy a specific unit of energy.
Axiom 2: Money is exchanged only for labor. There is no difference between goods and services. They both are work or labor. When you buy an apple, you're not paying the apple or the tree that produced the apple. You are actually purchasing the labor of individuals: farmers, fruit pickers, truck drivers, grocery store managers, etc. The apple is a product which has had value added to it in successive stages of labor or human work. Money flows to individuals in the opposite direction of work. It is, thus, an indicator of the flow of energy.
In macroeconomic terms, we are not equating the traditional divisions of labor (Agricultural, Manufacturing and Service). On the contrary, each form of labor adds different value to the product. The picker puts it in the basket, the truck driver takes it to the market. We merely note that, as far as the Econogineer is concerned, they are all forms of labor that add value to products. More radically perhaps, these distinctions are frowned upon as unnecessary since they may give the impression that different types of labor have different values outside the value assigned in their exchange rate or pricing.
The key point is that the flow of money does not extend to raw materials or basic products, only to the labor which first acts on those basic products. However, the basic laws expounded above encompass all forms of energy, man made and natural.
The first law can now be restated in economic or business terms (remembering that we are dealing with closed systems).
1) The accounts must balance. The typical accounting equation is assets=liabilities+equity. We must insist that each of these accounts be expressed in real absolute energy value. Since money is an indicator of energy, we can use it as long as we index. This provides a basis for evaluation between competing systems where money is not a valid measure. Where money is the measure, we keep track of it but only as a means of keeping track of energy.
2) No transaction of energy is without irretrievable loss. There is, as a matter of immutable law, no avoiding wastage. This is not a result of man's economy. It is simply how nature operates and man is no exception. The amount of energy absorbed by the tree to grow an apple is more than the calories in that apple. The transport to market will mean more loss in spoilage. A person buying the apple will not consume all of it, some will be thrown away. We don't avoid wastage, we measure it and understand its implications. Efficiency describes the amount of energy that is passed through a process. A process is any place where labor or work is acted on some product. Net Efficiency is a very important concept. It refers to the total amount of energy output from a process divided by the energy input. This is probably the most critical point of understanding for the Econogineer.
3) There is an absolute end. At -273.15 all atomic activity stops. For man, who would long cease functioning before reaching that temperature, this means very little in practical terms. In thermodynamics, the second law states that energy flows from a high potential to a low potential. Absolute Zero is the lowest that energy can flow. So considering the universe is still here and we're not all frozen in some primordial ice, there must have been or must be some source of energy. In the past, some have used the second and third laws to declare the end of the world. We see nothing of the sort. The third law is there to remind us that nature is an immutable force. It gives absolute weight to the first two laws.
It's theological implications are left to the reader and not at all discouraged. The Econogineer is a spiritual being.
posted by Geoffrey Armone at
3:39 PM
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