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Economics as energy framework: Complexity, turbulence, financial crises, and protectionism
Author(s) -
Rutledge John
Publication year - 2015
Publication title -
review of financial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.347
H-Index - 41
eISSN - 1873-5924
pISSN - 1058-3300
DOI - 10.1016/j.rfe.2015.02.003
Subject(s) - protectionism , economics , capital (architecture) , non equilibrium thermodynamics , financial market , finance , international economics , thermodynamics , physics , archaeology , history
This paper presents a framework for thinking about economic growth, trade, and capital flows viewed as transformations of current and vintage solar energy, stored in the form of natural resources, human capital, physical capital and technology described by the laws of thermodynamics. Recent developments in nonequilibrium thermodynamics (NET) show how efficient global capital markets and high‐speed communications networks accelerate energy flow and growth but also create turbulence, financial crisis, protectionism and conflict. The paper discusses the role that NET can play in helping us understand stock market bubbles and financial crises.