by Summary:
The "Rebuilding Macroeconomics" project established by the UK's Economic and Social Research Council (ESRC) has funded me to work with Tim Garrett and Matheus Grasselli to derive models of production that are consistent with the Laws of Thermodynamics. This seminar brought together the projects on the macroeconomics of sustainability, and it was my first opportunity to present what Tim, Matheus and I have achieved thus far. This focuses mainly on my approach, since Tim's is something I appreciate but lack the (thermodynamics) mathematics to present adequately. What we have done is introduce energy into both Neoclassical (Cobb Douglas and CES) and Post Keynesian (Leontief) models of production, and see what the consequences of this are. They include: * Explaining the "Solow Residual".
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The "Rebuilding Macroeconomics" project established by the UK's Economic and Social Research Council (ESRC) has funded me to work with Tim Garrett and Matheus Grasselli to derive models of production that are consistent with the Laws of Thermodynamics. This seminar brought together the projects on the macroeconomics of sustainability, and it was my first opportunity to present what Tim, Matheus and I have achieved thus far. This focuses mainly on my approach, since Tim's is something I appreciate but lack the (thermodynamics) mathematics to present adequately. What we have done is introduce energy into both Neoclassical (Cobb Douglas and CES) and Post Keynesian (Leontief) models of production, and see what the consequences of this are. They include: * Explaining the "Solow Residual".
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Steve Keen considers the following as important:
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| The "Rebuilding Macroeconomics" project established by the UK's Economic and Social Research Council (ESRC) has funded me to work with Tim Garrett and Matheus Grasselli to derive models of production that are consistent with the Laws of Thermodynamics. This seminar brought together the projects on the macroeconomics of sustainability, and it was my first opportunity to present what Tim, Matheus and I have achieved thus far. This focuses mainly on my approach, since Tim's is something I appreciate but lack the (thermodynamics) mathematics to present adequately. What we have done is introduce energy into both Neoclassical (Cobb Douglas and CES) and Post Keynesian (Leontief) models of production, and see what the consequences of this are. They include: * Explaining the "Solow Residual". It is not "Total Factor Productivity", but the contribution to production from the energy throughput of the "representative machine". This has gone from ten tons of fuel per day in the time of Stephenson's "Rocket" steam train, to 10 tonnes per second in the time of Elon Musk's Falcon 9 rocket. * Showing that the "capital: output ratio" in Post Keynesian economics is actually the efficiency with which machinery converts energy into useful work. This talk includes a fair bit of back-and-forth with the audience, who are the convenors and researchers being funded by the sustainability hub. |
Great video.
I really dislike this attempt to bring reality into economics
BTW, some of Dr. Garrett's work sounds/reads just like a post from StrongTowns referring to our infastructure. Resources matter!
Video of Prof. Shaikh describing the origins of The Humbug Production Function: https://youtu.be/4BeWBy8gYHA
Excellent Prof Keen. Economics has been out of reality for centuries. Many of its laws are not only defeating common senses but also offending the law of physics. Cant wait for your next upload.
Have you heard of the technocracy movement? They were another group that believed in energy based economics.
Since "Debunking Economics" which was joining with my experience of economics, taught in high school, I was a bit waiting for an alternative proposition. That presentation is indeed very inspiring, specially to an engineer with strong bias towards physics!
hmm adding matter ? cool ! How about adding gravity to the model and we have Ultimate Macroeconomics Model which consistent to our Physical World.
Prof Keen, thanks for sharing these videos.
The key thing we can do as humanity seems to be to increase the "efficiency" of converting energy into useful work, no? Then as energy contracts, we can have a "soft landing." As much of the physical production is taken up by machines, it seems more and more of us are employed in the information-economy, essentially running the cybernetics (or supply chain) of the system, trying to improve its efficiency – making sure products get to where they would be useful, and are assembled in the most useful manner.
With advances in tech, communications, and AI, these cybernetic tasks that were done manually, or via human-to-human contact may increasingly be accelerated by software – thus likely impacting the efficiency factor in your equation. What is the role of information-work in your system?