This section is a change of pace, a shift to the literary mode of intellectual biography, an exposition of the ideas of two thinkers whose enormous and early contributions to the economics of sustainability have been insufficiently recognized. Reading about ideas in the context of the real people who developed and championed them is often more interesting and informative than studying just the ideas themselves, abstracted from their human origins. For a fascinating discussion of other earlier pioneers, see Juan Martinez-Alier’s book Ecological Economics (1987).1
Frederick Soddy is especially important for two reasons. First, he recognized back in the 1920s the critical importance of the laws of thermodynamics for economics, a theme which Nicholas Georgescu-Roegen developed in much more depth and detail fifty years later. Second, Soddy argued that money leads us to confuse debt (the symbol) with wealth (the reality symbolized), and to forget that while the former can grow forever, the latter cannot. If one should think that this particular form of “money illusion” is unlikely, one has only to read the newspaper to be convinced otherwise. Recently there was a Ponzi scheme called the New Era Foundation, operating out of Philadelphia, that stung some of the richest and most financially astute people in the country. How could these sophisticated people fall for that nonsense? was my first reaction. On reflection, however, I had to ask myself, Were they not just being consistent with the canonical faith in growth? They were quite accustomed to having their money double every seven years. After all, that reflects a rate of return of only 10% annually. If someone promises to double your money in six months instead of seven years, what a priori reason is there to kick him out of your office? If money can already grow fast, then why can’t it grow still faster? Since money has not elsewhere been treated in this volume, except briefly in Chapter 1, a discussion of Soddy and his ideas is convenient for this reason as well.2
Nicholas Georgescu-Roegen has been cited frequently in this volume (recall the “entropy hourglass” in the introduction to Part 1). He died last year (1994). I include my obituary essay about him here because it explains in a simple way the overall nature of his contributions, and their relevance to sustainability. The coherence of this contribution is not evident from the scattered, though frequent, references to him throughout this book. Georgescu-Roegen’s life also illustrates the extreme difficulty that even a consummate economist faces in making the discipline of economics take seriously any new insight that fundamentally challenges its customary presuppositions.