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Physioeconomics: The Basis for Long-Run Economic Growth
Book reviews
381
Physioeconomics: The Basis for Long-Run Economic Growth Parker, Philip, The MIT Press, Cambridge, MA, 2000, US$ 37, ISBN 0-262-16194-X Philip Parker has written an intriguing book. All those who practice economics as physics will be delighted, but all those who understand markets as being socially constructed will be disappointed. The aim of Physioeconomics is to show that certain physical laws and physiological concepts explain economic behaviour at both micro- and macro-levels. Using thermodynamics, this book assembles evidence from different disciplines in order to show that individual utility systematically varies from one country to another as predicted by models of physics-based physiology. Its main objective is to explain that long-term economic growth and behaviour across countries will remain divergent. Cultural and social variables are mainly hidden by the physiological variables. This book is organised in eight chapters. The first one reviews the various explanations of growth including economic geography in recalling the long lasting controversy about the equatorial paradox. Various indicators can easily describe this paradox. The closer a country is to the equator, the lower is its consumption per capita. According to this study, 70% of the variances in income per capita across countries can be explained by absolute latitude. This paradox can be ignored, explicitly recognised or explained by factors such as lack of work ethic. However, a commonly accepted theoretical framework is still missing unless one accepts the main argument of this book, namely that physical explanations are in conformity with rational utility maximisation. Physiology is the important part of economic growth that matters. What should be studied, therefore, is the behaviour of a genetically evolved primate mammal, and not so much societal institutions and cultural differences. Darwin is greeting you. The second chapter summarises the main empirical findings supporting this argument. It insists on regularities, such as conditional convergence as a long term process, and a strong regularity across countries for income or consumption. Another regularity concerns economic growth as spatially correlated with asymmetry, in the sense that distance across each country does not matter, but a specific country’s distance from the equator is crucial. The final regularity on which this chapter insists is solar climate, which requires a profound knowledge about heat transfer. This topic is treated in length in the following chapters. Chapters 3 and 4 can be considered as building blocks for this knowledge as they concern utility physics geared to energy conservation. The understanding of energy production, considered as a link between metabolism and work, points to heat dissipation, energy loss due to radiation, evaporation and conduction as well as energy storage. These chapters also recall the history of “human thermostat” and its relationship to behaviour assumptions such as “man is a tropical animal” and insist on autonomic limits designing a frontier of physioeconomic behaviour. Chapter 5 analyses physical and physiological conditions which neoclassical utility function requires. Homeostatic preferences are mainly based on the assumption that consumption converges to equilibrium and that this “set point” is given by those conditions. Therefore, differences between one country and another with respect to preference structure and levels of consumption must be related to such conditions. In the long run, they only disappear in similar environmental conditions. However, there is still a long way to go in order to link chemical homeostasis and economics, because of core texts on neurophysiology.
382
Book reviews
Chapter 6 explores the consequences of homeostatic utility function on consumption. Based on laboratory research, it is shown that basic needs are related to changes in skin temperature and other physical changes to different environments. The experimental findings show how the human body prefers different goods consistent with the law of thermodynamics. Research conducted on food intake shows how specific brain processes control this function. The relationship between thermal conditions and metabolic rates across a broad range of temperature manipulated in climate chambers is non-linear. Heat production increases exponentially, which inversely also holds for oxygen consumption. Therefore, food, clothing and housing are typical homeostatic goods. The policy implication is straight forward: there cannot be one single standard meeting basic human needs as the basket of homeostatic goods will never converge. It is also misleading to rank countries according to their absolute levels of consumption. The final chapters explore such policy implications. Chapter 7 suggests ideas for relative performance indicators based on marginal utility and discusses how economic performance can be measured best. The empirical findings in line with physics-based physiology are presented very carefully. They sketch a research agenda for exploring differences in utility functions across countries. Chapter 8 considers the importance of various factors explaining variances in long-term growth during the 21st century. It is based on the assumption that no major environmental change will occur, that the trend towards market liberalisation and democracy will continue, and that a genetically psychological need—how to avoid entropy—will persist. In short, physics dominates the prediction of the very long-term and not social institutions. Neoclassical economics will be increasingly founded on the natural sciences. Economics as physics is the only promising way for interdisciplinary research. Economics will not be increasingly constrained by physical conditions but will be the result of it. Furthermore, economics will not be constrained by social conditions because society is the reflection of physics-based facts. The search for alternatives to neoclassical economics is vain. Socioeconomics and ecological economics, to name only a few expressions, can only lead to a dead end. Humanities are subordinates to Natural Science. To show that they are complements, and that social choices are always moral ones, therefore, remains the ultimate challenge. Beat Bürgenmeier Centre of Human Ecology and Environmental Sciences University of Geneva, 40, Boulevard Pont d’Arve CH-1211 Geneva 4, Switzerland Tel.: +41-22-705-8279; fax: +41-22-705-8173 E-mail address: [email protected] URL: http://www.ecopo.unige.ch doi:10.1016/j.socec.2003.12.030
381
Physioeconomics: The Basis for Long-Run Economic Growth Parker, Philip, The MIT Press, Cambridge, MA, 2000, US$ 37, ISBN 0-262-16194-X Philip Parker has written an intriguing book. All those who practice economics as physics will be delighted, but all those who understand markets as being socially constructed will be disappointed. The aim of Physioeconomics is to show that certain physical laws and physiological concepts explain economic behaviour at both micro- and macro-levels. Using thermodynamics, this book assembles evidence from different disciplines in order to show that individual utility systematically varies from one country to another as predicted by models of physics-based physiology. Its main objective is to explain that long-term economic growth and behaviour across countries will remain divergent. Cultural and social variables are mainly hidden by the physiological variables. This book is organised in eight chapters. The first one reviews the various explanations of growth including economic geography in recalling the long lasting controversy about the equatorial paradox. Various indicators can easily describe this paradox. The closer a country is to the equator, the lower is its consumption per capita. According to this study, 70% of the variances in income per capita across countries can be explained by absolute latitude. This paradox can be ignored, explicitly recognised or explained by factors such as lack of work ethic. However, a commonly accepted theoretical framework is still missing unless one accepts the main argument of this book, namely that physical explanations are in conformity with rational utility maximisation. Physiology is the important part of economic growth that matters. What should be studied, therefore, is the behaviour of a genetically evolved primate mammal, and not so much societal institutions and cultural differences. Darwin is greeting you. The second chapter summarises the main empirical findings supporting this argument. It insists on regularities, such as conditional convergence as a long term process, and a strong regularity across countries for income or consumption. Another regularity concerns economic growth as spatially correlated with asymmetry, in the sense that distance across each country does not matter, but a specific country’s distance from the equator is crucial. The final regularity on which this chapter insists is solar climate, which requires a profound knowledge about heat transfer. This topic is treated in length in the following chapters. Chapters 3 and 4 can be considered as building blocks for this knowledge as they concern utility physics geared to energy conservation. The understanding of energy production, considered as a link between metabolism and work, points to heat dissipation, energy loss due to radiation, evaporation and conduction as well as energy storage. These chapters also recall the history of “human thermostat” and its relationship to behaviour assumptions such as “man is a tropical animal” and insist on autonomic limits designing a frontier of physioeconomic behaviour. Chapter 5 analyses physical and physiological conditions which neoclassical utility function requires. Homeostatic preferences are mainly based on the assumption that consumption converges to equilibrium and that this “set point” is given by those conditions. Therefore, differences between one country and another with respect to preference structure and levels of consumption must be related to such conditions. In the long run, they only disappear in similar environmental conditions. However, there is still a long way to go in order to link chemical homeostasis and economics, because of core texts on neurophysiology.
382
Book reviews
Chapter 6 explores the consequences of homeostatic utility function on consumption. Based on laboratory research, it is shown that basic needs are related to changes in skin temperature and other physical changes to different environments. The experimental findings show how the human body prefers different goods consistent with the law of thermodynamics. Research conducted on food intake shows how specific brain processes control this function. The relationship between thermal conditions and metabolic rates across a broad range of temperature manipulated in climate chambers is non-linear. Heat production increases exponentially, which inversely also holds for oxygen consumption. Therefore, food, clothing and housing are typical homeostatic goods. The policy implication is straight forward: there cannot be one single standard meeting basic human needs as the basket of homeostatic goods will never converge. It is also misleading to rank countries according to their absolute levels of consumption. The final chapters explore such policy implications. Chapter 7 suggests ideas for relative performance indicators based on marginal utility and discusses how economic performance can be measured best. The empirical findings in line with physics-based physiology are presented very carefully. They sketch a research agenda for exploring differences in utility functions across countries. Chapter 8 considers the importance of various factors explaining variances in long-term growth during the 21st century. It is based on the assumption that no major environmental change will occur, that the trend towards market liberalisation and democracy will continue, and that a genetically psychological need—how to avoid entropy—will persist. In short, physics dominates the prediction of the very long-term and not social institutions. Neoclassical economics will be increasingly founded on the natural sciences. Economics as physics is the only promising way for interdisciplinary research. Economics will not be increasingly constrained by physical conditions but will be the result of it. Furthermore, economics will not be constrained by social conditions because society is the reflection of physics-based facts. The search for alternatives to neoclassical economics is vain. Socioeconomics and ecological economics, to name only a few expressions, can only lead to a dead end. Humanities are subordinates to Natural Science. To show that they are complements, and that social choices are always moral ones, therefore, remains the ultimate challenge. Beat Bürgenmeier Centre of Human Ecology and Environmental Sciences University of Geneva, 40, Boulevard Pont d’Arve CH-1211 Geneva 4, Switzerland Tel.: +41-22-705-8279; fax: +41-22-705-8173 E-mail address: [email protected] URL: http://www.ecopo.unige.ch doi:10.1016/j.socec.2003.12.030