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Natural Resources in the Theory of Production : Georgescu-Roegen/Daly versus Solow/Stiglitz

Quentin Couix, Université Paris 1 Panthéon-Sorbonne, Centre d'économie de la Sorbonne

This paper proposes a historical and epistemological account of one of the key controversy between natural resources economics and ecological economics, lasting from early 1970s to the end of 1990s. It shows that the theoretical disagreement on the scope of the economy’s dependence to natural resources, such as energy and minerals, has deep methodological roots. On one hand, Solow’s and Stiglitz’s works are built on a “model-based methodology”, where the model precedes and supports the conceptual foundations of the theory and in particular the assumption of “unbounded resources productivity”. On the other hand, Georgescu-Roegen’s counter-assumption of “thermodynamic limits to production”, later revived by Daly, rests on a methodology of “interdisciplinary consistency” which considers thermodynamics as a relevant scientific referent for economic theory. However, both paradigms face important issues at the conceptual level. Natural resources economists have not been able to consistently make sense of such central notions as substitution and technical progress, in order to support the relevance of their model in the “real world”. On the other side, ecological economists have hinted at different interpretations of thermodynamic limits, relying either on the first or the second laws of thermodynamics, and focusing either on material or energy resources, leaving the precise meaning of their assumption uncertain. These conceptual issues have lasted over time and prevented both paradigms from convincingly settling the problem.

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Keywords: natural resources, thermodynamics, growth, sustainability, model, theory, methodology

Paper file