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Home > Business Ethics Thinkers > Nicholas Georgescu-Roegen

Business Ethics Thinkers

Nicholas Georgescu-Roegen

The first ecological economist

Timeline

1906
Born in Constanţa, Romania.
1926
Graduated in mathematics from the University of Bucharest.
1930
Received a PhD in statistics and economics from the University of Paris.
1930
Studied at University College London.
1932
Appointed professor of statistics at the University of Bucharest.
1934
Studied at Harvard University.
1948
Fled from Communist-controlled Romania.
1950
Appointed professor at Vanderbilt University, Tennessee.
1966
Publication of Analytical Economics.
1971
Publication of The Entropy Law and the Economic Process.
1976
Publication of Energy and Economics Myths: Institutional and Analytical Economic Essays.
1994
Died in Nashville, Tennessee.

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Life and Career

After taking his undergraduate degree in Romania, Nicholas Georgescu-Roegen studied in the United Kingdom, France, and the United States before returning to Romania and lecturing at the University of Bucharest. After World War II he held a variety of government posts and was involved in postwar negotiations with the Soviet Union. In 1948 he fled Romania with his wife to avoid arrest by the Communist regime, returning to the United States and becoming a professor at Vanderbilt University, where he stayed until his retirement in 1976. It was there that his work evolved away from neoclassical economics to developing his groundbreaking studies on entropy and ecological economics.

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Key Thinking

  • Georgescu-Roegen was the first to formally examine the connection between economic activity and physical laws, demonstrating the thermodynamic foundations of the economic process.

  • He is best known for his book The Entropy Law and the Economic Process, which proposed that the second law of thermodynamics—the law of entropy—governs economic processes and systems and suggests that an economy faces limits to growth for much the same reasons that useful energy is dissipated.

  • In it he also argued that the economic process transforms natural resources into waste—that is, transforms matter/energy from a state of low entropy into a state of high entropy.

  • This significant contribution to economics was a building block for his later theories on bioeconomics and ecological economics.

  • Analytical Economics presents many of the essays that gained him recognition as a pioneer in successfully combining the fields of economics, mathematics, and statistics.

  • He helped to formulate a critique of neoclassical production functions and is known for discovering the nonsubstitution theorem and the Hawkins–Simon condition.

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In Perspective

  • Georgescu-Roegen was a mathematician, statistician, and economist who helped reunite economics with its biophysical foundations.

  • His work is usually divided into two categories, his earlier work on consumer and production theory, such as the integrability problem, and his later focus on entropy and bioeconomics.

  • As a Rockefeller Fellow at Harvard in the 1930s, he studied under the economist Joseph Schumpeter, who turned him into an economist.

  • While at Harvard, he contributed to the theory of choice in “The pure theory of consumer’s behavior,” a paper that helped to launch his career.

  • In 1951 he contributed three important chapters to the renowned monograph by the Cowles Commission on linear programming and general equilibrium.

  • He examined problems of the hedonistic valuation framework of neoclassical economics, the conflict between social and hedonistic valuation, and the conflict between individual, social, and environmental values.

  • He later became highly critical of neoclassical economics, as he focused on issues of valuation, resource scarcity, and the distribution of economic output.

  • He developed a comprehensive theory of economy, society, and biophysical constraints, a new approach to bioeconomics that was based on an understanding of the biophysical and social context of consumption and production.

  • In Analytical Economics he developed his ideas on a new biological or evolutionary approach to economic theory.

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Quotation

“Only economists still put the cart before the horse by claiming that the growing turmoil of mankind can be eliminated if prices are right. The truth is that only if our values are right will prices also be so.”

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Further reading on Nicholas Georgescu-Roegen

Books:

  • Georgescu-Roegen, Nicholas. The Entropy Law and the Economic Process. Cambridge, MA: Harvard University Press, 1971. This classic text of ecological and evolutionary economics discusses the key role that the second law of thermodynamics plays in production theory, with implications for the sustainability of economic growth.
  • Mayumi, Kozo. The Origins of Ecological Economics: The Bioeconomics of Georgescu-Roegen. London: Routledge, 2001. This in-depth examination of Georgescu-Roegen’s career and theories, written by a protégé, explores his market models and theoretical approaches on the environment and consumer.

Article:

  • Gowdy, John, and Susan Mesner. “The evolution of Georgescu-Roegen’s bioeconomics.” Review of Social Economy 56:2 (Summer 1998): 136–156. Online at: dx.doi.org/10.1080/00346769800000016. This paper examines the development of Georgescu-Roegen’s writings on valuation, and the environmental and social policy recommendations that arise out of his bioeconomic framework.

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