Olabanji Ogunjobi

Mrs. L. Ramirez
BADM 350
March 16, 2015

Physics laws application to economics is not novel; it is ecological/environmental Economics

Ginatempos article entitled The Physics laws and the unsustainability of economic
liberalism (2014) argues that economic liberalism is unsustainable, given that the very model is
incoherent with nature or physical laws and supports his argument by asserting the relevance of
the first and second principles of thermodynamics on the current human economic system. The
authors purpose is to use his knowledge of physics to point out wasteful flaws of economics
liberalism as he advises economists to devise alternative economic systems where equity and
solidarity would be paramount. While it is very logical to suggest that economic models must be
cognizant of the limitation of the earth as a pollution sink, one must also bear in mind that not
using such natural resources could heavily slow economic growth and development of countries.
He lucidly indicated unlimited and continuous growth as the bane of the current economic
system, growth is surely part of the deficiencies of economic liberalism, but it is certainly not the
bane. The bane is equitable distribution of created wealth and cheap access to high quality
education for development of technology to mitigate the overdependence on natural resources.
The author begins his article by establishing the vitality of nature laws and its
inseparability from various systems on the planet. He makes it resoundingly clear how physics
can be used to understand the happenings of the world even social and economic phenomena
(Ginatempo, 2014). He points out the conflict between economic laws and nature laws, stating

that such conflict arose from the neo-linear model of economics as opposed to the cyclical model
of natural phenomena (Ginatempo, 2014). He mentioned that as opposed to social and economic
laws which is susceptible to transgression by politicians and policymakers, physics or nature
laws are not subject and cannot be subject to transgression.
Ginatempo invokes the conservation law which states that many physical quantities
must conserve at the occurrence of any physical phenomena, from which the adage of nothing is
created, nothing is destroyed, everything is transformed (Ginatempo, 2014). He infers from the
aforementioned conservation law that production in an economic context are transformations of
various mass and energy. Those transformations he says seldom or never reaches a 100 %
thereby, indicating inefficiency.
By Ginatempos definition, the inefficiency is environmental pollution. We must note that
efficiency is the language of economics and that all economic system are not and would not be
perfect or totally sustainable. In fact, the reason for the existence of the discipline is to make
better use of limited resources in order to maximize utility. Every production as suggested by the
author himself, would result in some form of environmental pollution. Environmental pollution
and death as an entropy of a deficient system is not inevitable.
In the article, Ginatempo used space for parking to demonstrate, elucidate and
corroborate the links between the second principles of thermodynamics and economic production
and consumption. He mentions that the predatory of the available common resources behaviors,
reduce the efficiency of the transformation. (Ginatempo, 2014) There goes the irrationality of
humans and bad policing of the system. Economics and politics are interwoven, the
consequences of the inscrutability is ambiguous because politics ultimately determines the
distribution of resources guided by the principles of economics.

In explaining the physical reasons of economic crises, he faulted the use of Gross
Domestic Product (GDP) as measure of economic production given the fact that its linear
structure affects sustainability. All economists, including myself concur the GDP is not a perfect
measure. However, it remains the most complete, although it lacks human face i.e. ignores
unique demographics on the surface. There are now other measures that incorporates social
aspects, some of the new methods of measurement are the Gini coefficient, Human Development
Index, Happiness Index, etc. Despite these other ways of measuring the wellbeing of a
population, a better integrated measurement mechanism is needed still.
For an economy to grow, there must be production, consumption and services. With the
current system, for companies to produce, they must convert raw materials, and for that to
happen, energy and mass (physics) is needed, for consumers to consume, they also need energy
and mass, which leads to them making waste and running into debt, the same goes for
governments rendering services (Ginatempo, 2014). This is a process of unavoidable waste
creation that Ginatempo says accompanies the linear structure of the world economy. He believes
waste and debt grows faster than the GDP and he cites Italys GDP scenario as proof. This
singular reference of his is not concrete enough to draw a conclusion that debt and waste grow at
a higher rate than income. Citing a singular case without comparison to another country defeats
the relativism of economic objectivity and prediction.
Ginatempo further explains the risks of instability of the linear structure of economic
liberalism albeit rudimentarily. He paints a debt spiral scenario based on what ifs, he noted the
existence of oligarchies and their role in hoarding raw materials to control prices and stifle
competition. While Ginatempos criticism of the price control tactic of oligarchs is valid, he
ignores the bankability of business ventures and the benefits of economies of scale. No banker

would underwrite a loan for a small project (oligarchs can borrow more to do more) with huge
risks. It is likely that entrepreneurs might perceive his criticism as dent on entrepreneurialism,
which is needed for inventions to improve human pursuit. Social entrepreneurship might the way
to go, money, must be made somehow within whatever system.
He concludes his article by making a number of suggestions geared towards a better
economic system, one that departs from the current structurally linear model to a cyclical
structure in conformity with nature laws. His alternative a change in the occidental lifestyle of
people, jointly liable access to common resource (No Oligarchy power). Basically, Ginatempos
alternative is an economic system that is egalitarian and ecologically friendly. This is not novel,
its actually a branch of economics, and an emerging school of thought rapidly gaining ground as
climate change becomes a frontline global issue.
This article introduces an interesting perspective to the continuous discussion about
creating a more equitable economic system. The application of the principles of thermodynamics
and its relevance to economic production was lucid and concrete. Being a physicist, Ginatempo
did not demonstrate the necessary understanding of the intricacies of economics and politics. He
focuses quite a lot the flaws of the system, rather than the irrationality of humans who run the
system. I would certainly have agreed more with him, if nature laws could have been used to
explain the irrationality of humans.

References
Ginatempo, B. (2014). The Physics laws and the unsustainability of economic liberalism. E3S
Web of Conferences, 2, 1-6. doi:10.1051/e3sconf/20140202002