Georgesu-Roegen: His Thought

Georgescu-Roegen's economic thought was inspired by events of his own life. He was deeply inspired by his upbringing in the small of Constantza in Romania . While in his home country, Georgescu-Roegen lived through three dictatorships and four wars. Romania at that time was a struggling overpopulated peasant country. This apart he also held a senior post in the statistics department of Romania . All this instilled in him a deep philosophical reasoning and led him to question the claims of the academic disciplines especially that of economics, which at that time was developed in the capitalist world. He refused to accept the claims of the discipline that it could act as a representative guide to for all economic conditions.

As a Rockefeller fellow, Georgescu-Roegen worked on business cycles with Joseph Schumpeter at Harvard University . In this way he turned into an economist with a degree from ‘Universitas Schumpeteriana'.

During his early years , Georgescu-Roegen made a diligent contributed to academic theory as a mathematician and statistician. He was well known to have disproven many theorists; this included Vilfred Pareto, who Georgescu-Roegen considered a great economist but with poor mathematical skills (in Georgescu-Roegen, 1935).

Georgescu-Roegen believed that institutions played an important role in the development of a country. (He attributes this to Andrew Edson, the then Secretary of the US Legation in Bucharest who had once remarked to Georgescu-Roegen that Romania was a deficient economy because her institutions are silly). This Georgescu-Roegen believed that institutions were important for 'ordering the society'.

He refused to accept economic theories that originated in the capitalist world as these violated realities in his own economic world, which was largely a peasant economy . These included marginal pricing theories. He concluded that in an overpopulated country marginal pricing is the worst economic policy. He subscribed to the wisdoms of the Agrarians who had insisted on the merits of family farms despite that marginal productivity could even approach zero. (In case of India this is true when we talk about disguised labour). Till end he continued to believe in the belief in the efficiency of the family farm (see Georgescu-Roegen, 1976).

Georgescu-Roegen was a pioneer to make a connection between thermodynamics and ecology . He discarded the adoption of the mechanistic epistemology (that is based on complete reversibility from one equilibrium to another) by standard economics as a reflection of complete ignorance of the evolutionary nature of the economic process. He regarded the earth as a closed system with limited exchanges especially in terms of matter with the universe. From this he urged the importance of natural resources and called to recognize that these finite resources cannot be treated to be the same as labour and capital. Thus his verdict was that the earth was more like an hourglass than a mechanical pendulum (also see figure). He also opined that earth being a closed system that could exchange only energy with its environment the fourth law of thermodynamics also held true. The system would reach a point where the material entropy would ultimately reach a maximum and making the system unable to produce mechanical work forever at a constant rate.

Figure: Thermodynamic hourglass (inspired by Georgescu-Roegen, 1977)

His learning from personal experience led him to refute Keynes's thesis of planned inflation as a mere euphemism and a only new ‘invisible hand' that could be used for government spending, a spending that did not only pickpocket the contemporary generation but also future generations. Whereas he kept bay from monetary economic theory, he was of the strong opinion that the issue of intergenerational distribution pertains not only to natural resources (Georgescu-Roegen, 1971), but to money as well. This is especially relevant in context of underdeveloped countries, where increase in inflation would only imply that economic growth benefits the privileged classes of the nation.

Georgescu-Roegen's bioeconomics (inspired by Alfred Lotka) was mainly concerned about the long-run future of the exosomatic species viz. Homosapiens. His bio-economics can be seen as simple mantras of wisdom that urge us to behave as responsible global citizens by minimizing unnecessary consumption and urging government to extend help to poor countries and banish warfare.

He opined that ‘sustainable development' was the most saleable snake oil ever contrived. The debates and exultation around sustainable development had begun during his time with “academia selling it in global forums amply subsidized by enterprises of the highest rank”. He lamented at that sustainable development was a mere illusion and a denial of the entropic menace that hovers over the planet.

This note has primarily been compiled from Nicholas Georgescu-Roegen (2000). Other references include Georgescu-Roegen (1935; 1971; 1977)

Nicholas GEORGESCU-ROEGEN. (2000). In A Biographical Dictionary of Dissenting Economists. Retrieved from
http://www.credoreference.com/entry/elgardiss/nicholas_georgescu_roegen

Georgescu-Roegen (1935), Note on a Proposition of Pareto , Quarterly Journal of Economics, XLIX, pp. 706-14.

(1971), The Entropy Law and the Economic Process , Cambridge , Mass, Harvard University Press, pp. XVIII + 450.

(1977), The Steady State and Ecological Salvation: A Thermodynamic Analysis , Bioscience, Vol. XXVII, pp. 266-270.