THE ECONOMICS OF DECLINE (July 8, 2009)
When I met Nicholas Georgescu-Roegen in 1986 at a two-day conference in Newark, New Jersey, our interests were rather different. In his eighties, he was preoccupied with energy issues. By today’s standards, he was a green of sorts. As an economist with a background in physics, he used thermodynamics to argue that the energy available on earth would eventually be exhausted. With the exception of largely constant amount of incoming solar energy, all other sources of energy on the planet would perish in the end. Thus he argued that the human population had to shrink, as well. The details of his argument escape me now, but I will never forget what he said about the best way forward. He believed that the economics of growth offered all the tools we needed, except that they should be used backwards. Disinvestment was to be played by the very same rules as investment, but the rules were to be applied in reverse: we should start by dismantling the most profitable industrial plants and then proceed to the less profitable ones. He thus put much confidence into one of the major fields of the dismal science at the time. The economics of decline is uppermost in my mind these days, and Georgescu-Roegen’s wise advice pops up every now and then. To my surprise, I have not put it in writing thus far.