The Economy of Nature and the Economy of Human Society: A Unified Understanding

21 Pages Posted: 14 Nov 2010

See all articles by Jing Chen

Jing Chen

University of Northern British Columbia - School of Business

Date Written: November 12, 2010


Human activities are an integral part of the ecological system. Yet the current mainstream economic theory is largely detached from the physical resources that the human society builds on. In this work, we look at the human society from the fundamental thermodynamic laws and the chemical properties of the elements carbon and hydrogen. From the physical and chemical principles, we are able to derive some of the basic constrains to human society. While the investigation is mainly theoretical, some practical implications emerge from the discussion. First, we prefer high quality resources over low quality resources. As high quality resources, such as conventional oil, are seriously depleted, human society will gradually move toward a carbon based economy from the current mixed carbon and hydrogen economy. This contradicts the often dreamed hydrogen economy in the future. Second, the programs that supposed to help environment, such as carbon offset program, are decorative frills in a society. Empirical evidences show that decorative frills in all animals, including human beings, increase instead of decrease the burden to the environment. Third, increasing energy efficiency, which requires the increase of fixed cost, will increase total resource consumption. This was pointed out by Jevons more than a hundred years ago. Fourth, due to the levels of potential well, energy sources that are easy to use, such as electricity, are difficult to store. This is why it is so difficult to develop electric cars that can drive long distance without recharging. Fifth, systems that are efficient from intensity perspective are less efficient from extensity perspective. Since most human virtues are linked to “faster, higher, stronger”, resource consumption cannot be reduced without the change of culture.

Suggested Citation

Chen, Jing, The Economy of Nature and the Economy of Human Society: A Unified Understanding (November 12, 2010). Available at SSRN: or

Jing Chen (Contact Author)

University of Northern British Columbia - School of Business ( email )

Prince George, BC, V2N 4Z9
250-960-6480 (Phone)
250-960-5544 (Fax)


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