Mind the gap: the economic problem as an interplay among desires, matter, and energy

There is a rich literature on the economic importance of energy. Yet, little has been achieved to harmonize core economic theory with energetic principles. This paper proposes a theoretical framework that might prove valuable to do so, based on a slight conceptual modification of the neoclassical economic problem. By conceiving its necessary condition not as desires but as gaps between desired and spontaneous states of material reality, an extension of economic imperialism towards the realm of energetics is enabled. When the origin of the economic problem is placed on physical divergences, goods are exposed as specific material configurations that close gaps. And as material rearrangements can only be achieved through energy transferred by prime movers (e.g. workers, horses, engines), such transfers are revealed as the essence of economic activity. Thus, whenever energy and power constrained agents are analyzed, the derivation of optimization procedures follows intuitively: consumer’s constraints are energetic, where economic energies play the role of prices, and firm’s profits are energy surpluses, where prime movers play the role of factors of production. This leads to familiar refutable hypothesis expressed in energy terms. Furthermore, equilibrium is characterized by the schedule of energy assignments that lead to utility maximization, for any set of economic energies and energy contents of goods. Although only autarchic and single-period agents are analyzed, the stage is set to analyze exchanging and multi-period agents, which could allow for a general interpretation of economic fundamentals (e.g. prices, capital) as visible social expressions of invisible energetic dynamics.

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JEL Codes:
O13; Q40; D11; D21

 Record created 2017-04-01, last modified 2018-09-13

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