The Role of Energy and Entropy in Economic Thought: From Georgescu-Roegen to Daly

Abstract

This article reappraises Georgescu-Roegen’s bioeconomics, grounded in the entropy law, alongside Herman Daly’s steady-state program. Conceiving the economic process as irreversible matter–energy transformations (throughput) makes the limits of substitution assumptions visible and foregrounds the determining role of “useful work (exergy)” alongside energy quantity in production. At the measurement level, the System of Environmental–Economic Accounting (SEEA) and Material Flow Accounting (MFA) enable asset-based tracking of welfare. On the normative plane, Daly’s sequencing of scale–distribution–allocation is institutionalized through carbon and material budgets, cap–auction–dividend mechanisms, and ecological tax reform. Within Weitzman’s “prices versus quantities” framework, the superiority of quantity instruments is examined for domains characterized by high uncertainty. The study argues that this chain—from theory to indicators to rule design—grounds sustainability policy in the principle “rules (scale) first, allocation (prices) second.”