ABSTRACT
Once again, we have much to learn from the original and penetrating contributions of Nicholas Georgescu-Roegen. Earlier he had brought the attention of economists to the importance of the entropy concept as the physical counterpart of the economist’s concept of scarcity. In the paper in this volume and in earlier papers (1), he has brought these concepts and others to bear on the economics of energy. The full development of his models brings out many points, some of which I shall refer to later, but the two leading implications for understanding the economics of energy are (1) a protest against the "price complex" as a full guide to decision-making about energy, and (2) the proposition that any economic system is inevitably a consumer of matter in useful form. In effect, these two statements stake out a middle ground between two contending schools of thought. The neoclassical or "orthodox" position (I play the role of advocate of this view) is that there is no special economics of energy, that the rule of maximizing profits or minimizing costs at market prices provides an efficient allocation of resources. The "energy" position is that every good should be though of as measured by the energy directly or indirectly contained in it, and the aim of policy should be to minimize the energy content of goods produced. The attack on the "price complex" is a criticism of the former view, the emphasis on ultimate need for matter contradicts the view that only energy counts.
