Economics as energy framework: Complexity, turbulence, financial crises, and protectionism. Issue 1 (7th March 2015)

• Record Type: Journal Article
• Authors: Rutledge, John
• Is Part Of: Review of financial economics. Volume 25:Issue 1(2015)
• Page Start: 10
• Page End: 18
• Publication Date: 2015-03-07
• Subjects: B52 -- F60 -- G11 -- G15; Non‐equilibrium -- Turbulence -- Financial crisis -- Thermodynamics -- Complexity; Business -- Periodicals; Economics -- Periodicals; Business; Economics; Electronic journals; Periodicals; 332.05
• DOI: 10.1016/j.rfe.2015.02.003
• Languages: English
• ISSNs: 1058-3300

Abstract

Abstract: 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.