Lessons from Science: Need for a Rethink of Concepts in Economics
Economic and Political Weekly, Forthcoming
Posted: 6 Sep 2014 Last revised: 16 Oct 2014
Date Written: August 5, 2014
The recognition of two important concepts in science, namely the assimilative capacity of nature (resilience) and the entropy of law of thermodynamics enables the formulation of an alternative framework for factor-utilization in economics. This framework, which explicitly includes environmental capital (KN) as a factor, enables the illustration of the entropy law being the driver of diminishing marginal returns and the limited ranges of substitutability between factors. Such revisions have profound implications for policy formulation. Stabilizing KN becomes an important instrument of policy at all levels.
Keywords: Entropy, Resilience, Production
JEL Classification: Q50
Suggested Citation: Suggested Citation