Entropy Economics: The Living Basis of Value and Production

Economists dream of equilibrium. It's time to wake up. In mainstream economics, markets are ideal if competition is perfect. When supply balances demand, economic maturity is orderly and disturbed only by shocks. These ideas are rooted in doctrines going back thousands of years yet, as James K. Galbraith and Jing Chen show, they contradict the foundations of our scientific understanding of the physical and biological worlds. Entropy Economics discards the conventions of equilibrium and presents a new basis for thinking about economic issues, one rooted in life processes—an unequal world of unceasing change in which boundaries, plans, and regulations are essential. Galbraith and Chen's theory of value is based on scarcity, and it accounts for the power of monopoly. Their theory of production covers increasing and decreasing returns, uncertainty, fixed investments over time, and the impact of rising resource costs. Together, their models illuminate key problems such as trade, finance, energy, climate, conflict, and demography. Entropy Economics is a thrilling framework for understanding the world as it is and will be keenly relevant to the economic challenges of a world threatened with disorder.

Table of Contents:
Preface: An Economic Theory Compatible with Life Processes and Physical Laws 1. Economics without Equilibrium 2. No Economy without Government 3. Theories of Value in Economics 4. Scarcity, Information, Entropy, and Economic Value 5. Resources and the Theory of Production 6. Elements of a Biophysical Production Theory 7. A Biophysical Theory of Production in Mathematical Form 8. Life in a World without Equilibrium Acknowledgments Notes References Index

About the Author :
James K. Galbraith is professor at the University of Texas at Austin. Jing Chen is assistant professor at the University of Northern British Columbia.

Review :
"Entropy Economics makes the case for an economic model that embraces entropy, aligning economic theory with life processes and physical laws—something that has real implications for how we understand markets, power, and regulation." "Galbraith and Chen [present] an economic theory that is consistent with life processes and physical laws, focusing on how a biophysical approach can guide us to simple mathematical expressions that describe value and production and are highly consistent with reality." "For most readers, the book will be a step into the unfamiliar...Nonetheless, readers should persevere. They will be enriched by this provocative perspective." “Old theories die hard, especially in economics. Galbraith and Chen offer an elevated understanding of value and production for a world that is anything but steady. Entropy Economics is an essential, critical work for twenty-first-century economics.” “Neoclassical economics has failed, and the call for a paradigm shift seems to pop up everywhere. But to truly move to a new approach to economics, an alternative theoretical foundation needs to be built from the bottom up in full knowledge of what came before. Few are willing, let alone equipped, to take on this task. Galbraith and Chen have done a masterful job by laying out an economics without equilibrium that starts from life processes and physical laws.” “Entropy Economics is an eloquent call for the abandonment of the equilibrium fetish that characterizes mainstream economics and an exposition of a nonequilibrium economics, grounded in the laws of thermodynamics, with an objective measure of value based on entropy and scarcity. Galbraith and Chen will be part of the foundation for the new economics that we desperately need.”