Energy Currency

"Since the publication of The Entropy Law and the Economic Process (Georgescu-Roegen 1971), an important current of ecological economics has concerned the application of the second law of thermodynamics to economic analysis. Insofar as monetary theory is concerned, however, the main contribution to the entropic perspective remains the work of Frederick Soddy, the English radiochemist. Awarded the Nobel Prize in chemistry in 1921, Soddy dedicated the second half of his life to economics. He denounced the widespread tendency to confuse money with true wealth, which, he argued, was incorporated in goods and services, whereas money was merely a claim on such wealth. In making this argument, he acknowledged the influence of John Ruskin (Soddy 1922; 1933), but can more broadly be said to have followed in the tradition of the “many 19th-century economists [who] distinguished material welfare from what Thorstein Veblen called ‘pecuniary’ wealth. (...) The distinction between ‘real wealth’ and financial claims was a central theme of Friedrich List’s National System of Political Economy (1841), Calvin Colton’s Public Economy for the United States (1848) and the American School of technological and protectionist writers in general.”