July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001 Biophysical Reviews and Letters Vol. 11, No. 2 (2016) 63–86 c World Scientific Publishing Company DOI: 10.1142/S1793048016300012 Historical and Critical Review on Biophysical Economics Yekbun Adig¨uzel Department of Biophysics, School of Medicine Istanbul Kemerburgaz University Kartaltepe Mah. Incirli Cad. No:11 Bakirkoy, Istanbul, Turkey [email protected] Received 18 March 2016 Revised 25 April 2016 Accepted 3 May 2016 Published 21 July 2016 Biophysical economics is initiated with the long history of the relation of economics with ecological basis and biophysical perspectives of the physiocrats. It inherently has social, economic, biological, environmental, natural, physical, and scientific grounds. Biological entities in economy like the resources, consumers, populations, and parts of production systems, etc. could all be dealt by biophysical economics. Considering this wide scope, current work is a “biophysical economics at a glance” rather than a comprehensive review of the full range of topics that may just be adequately covered in a book-length work. However, the sense of its wide range of applications is aimed to be provided to the reader in this work. Here, modern approaches and biophysical growth theory are pre- sented after the long history and an overview of the concepts in biophysical economics. Examples of the recent studies are provided at the end with discussions. This review is also related to the work by Cleveland, “Biophysical Economics: From Physiocracy to Ecological Economics and Industrial Ecology” [C. J. Cleveland, in Advances in Bioeconomics and Sustainability: Essay in Honor of Nicholas Gerogescu-Roegen,eds. J. Gowdy and K. Mayumi (Edward Elgar Publishing, Cheltenham, England, 1999), pp. 125–154.]. Relevant parts include critics and comments on the presented concepts in a parallelized fashion with the Cleveland’s work. Keywords: Biophysical economics; thermoeconomics; ecological economics; laws of thermodynamics; energy; entropy; exergy; energy quality; embodied energy; resources’ depletion; energy scarcity; sustainability. 1. Introduction Economy is part of civilization and takes role in its functioning. Material and energy always persisted as a part of the economy and they always will, despite that they were ignored by the economists at certain times in history. Economy is currently accepted mainly as a social science. For certain reasons, the early economists focused not only on the social but on the biophysical aspects of economics as well. Before the 63 July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001 64 Y. Adig¨uzel 19th century, economists were questioning the source of wealth. The French Phys- iocrats were the first formal economics school and their work could be accounted as also the first biophysical economics studies. This could be accounted as a difference of biophysical economics from thermoeconomics, which is commonly considered to be the same as biophysical economics. Physiocrats focused on land and agriculture as the origin of wealth. Later, Thomas Malthus studied on population and pre- sumed its exponential growth. Malthus suggested that population size is required to be controlled due to the noncompliance with the linear increase in the agricultural production. Adam Smith focused on land and labor, as do the classical economists of the day. In the end, wealth was admitted to be an outcome mainly of these two factors. Afterwards, David Ricardo recognized inverse relation of the quality of the lands that were used in general and the population growth. Karl Marx further noted the decrease in the quality of agricultural land with time. In 1870s, Jevons, Menger, and Walras performed abstractions and ignored material and energy as the physical inputs and outputs. This consumption-focused, socially oriented approach wastermedastheneoclassical economics, which was barely mentioning the natu- ral resources. Use of a theoretical, mathematical language or utilization of physics without a biophysical perspective was not exceptions to this view. Besides ignoring the finite resources of the world and inconsistency with the thermodynamic princi- ples, treating humans as rational and the presentation of hypotheses that were not prone to testing were some other problems. The emergence of biophysical economics relied on recognition and formulation of the physical principles and reinvention of the energy and material dependent nature of the economy. Several academics and intellectuals contributed to this progress with their invaluable works. Facilitated information flow of the present century contributed the recognition despite the hardness of bringing together several disciplines in the views of sole individual scholars, who are generally coming from distinct fractionated disciplines of their research fields. Biophysical economics may be criticized for having a passive stance by not presenting solutions to the resource scarcity but rather alarming for possible depletion of the resources. However, proper political actions of course are not guar- anteed by, but may be realized with the help of such right theoretical frameworks through the precise understanding of economic systems. In addition, evolution of the current approaches in biophysical economics is bringing the field as a much broader one to the extent that it can be about explaining citizens’ views and deci- sions, flow of people between workplaces and other locations of economic relation, and about the flow of wealth and the control on the flow of wealth, underpinned by the political systems, finance, and the democratic measures (see Sec. 3.4). This review attempts to highlight this transition, as well as providing an overall insight on the concept. Section 2 of the manuscript gives a historical outline with a chrono- logical order and brief comments, wherever possible. Section 3 discusses selected examples and tries to elaborate the concept while presenting further discussions. Section 4 is the conclusion. July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001 Historical and Critical Review on Biophysical Economics 65 2. Biophysical Economics at a Glance Stemming of biophysical economics from classical approaches was not unexpected since the criticisms of the standard views focused on their ignorance of some obvi- ous facts like energy dependency and environment-sourced resources’ contribution to economics. This ignorance can partly be explained by the success of the classical approaches in meeting the requirement of theoretical ground for making reliable estimations and predictions. Conditional earlier success of the classic view also explains the source of stimulus in developing explanations of advanced and more comprehensive economic theories since standard theories did not meet the expectan- cies later due to the changing conditions of resources’ availability. So, the stimulus for new theories was the energy dependency (“increased reliance on imported oil”) after Industrial Revolution. That made the recognition of energy scarcity in the long run, which revealed itself by the energy price shocks.2,3 These were around 70s and 80s. Yet, maybe the earliest form of biophysical models is far earlier, dating back to 1750s. It was the physiocrats. 2.1. Physiocrats Physiocrats emanated in 1750s, before the Industrial Revolution. Francois Qesnay4 and his disciplines (Mirabeau, Dupont) led this first scientific economic thought school.1,5 This thought carried the natural resources to the center of the first disciplined approach. Preliminary to this advancement is the scientific progresses, which brought the era to the level that intellects could establish the first systematic thought of the first social discipline, namely economics. Agricultural society found its place in this thought through the means of wealth. Material wealth was sourced by fertile lands. So, agriculture was supposed to be the ultimate occupation and economy was believed to rely on the ‘Natural Law’, which had no grounds of human free will as long as the human acts in the moral order, compatible with the physical laws. Although they were not announced prominently later, Physiocrats belief in nature as the source of wealth has commons with the biophysical economics. As mentioned in the introduction, Physiocrats may be accounted as the point of dis- tinction between biophysical economics and thermoeconomics, which is regarded usually as the same as biophysical economics. What we see in relation to the rel- evant terminology that there is generally close intimacy together with deviation under certain circumstances. 2.2. Laws of thermodynamics Industrial Revolution came afterwards. It was based on the formalization of the laws of thermodynamics.6,7 This formalization relies on the immense efforts of sci- entists like Joule, Clausius, Thomson (Lord Kelvin), Maxwell, and Boltzmann, who took primary roles in the introduction of the heat concept, the first law of ther- modynamics, absolute temperature, dynamic theory, entropy, the second law of July 21, 2016 9:55 WSPC/S1793-0480 204-BRL 1630001 66 Y. Adig¨uzel thermodynamics, and energies’ distribution. Carnot’s explanation on the steam engines was published in 1824.8 This was important for explaining how much useful work can be obtained from an energy transformation, which is of direct relevance to economics.1 In this sense, the type and efficiencies of transformations that are of interest by both economic and physical means are those that end up in conversion into useful goods or services