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 types of systems: 1.Isolated systems 2.Closed systems 3.Open systems According to flows outside the system: No flows Only energy flows (E input/output ) Both energy and material flows (E input/output and M input/output ) isolatedclosed E input E output open M input M output E input E output

The economic system in the ecological economic system familiesbusinesses $-wages, profit work products $-price The conventional economic system M input E input M output E output Our limited planet E input E output 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” “Study of price formation for gaining money” – Crematistics (Aristoteles) Ecological economics: “management of the house where you know your house (limits, behaviour, coevolution)

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 ) Daly, H: The economic growth debate: what some economists have learnt but many have not