As mentioned above, there exist several identifiable 'engines of growth' (positive feedback cycles) of which the first, historically, and still one of the most powerful, has been the continuously declining real price of physical resources, especially energy (and power) delivered at a point of use. The tendency of virtually all raw material and fuel costs to decline over time (lumber was the main exception) has been thoroughly documented, especially by economists at Resources For the Future (RFF). The landmark publication in this field was the book Scarcity and Growth (Barnett and Morse 1963), updated by Barnett (1979). The details of historical price series, up to the mid-1960s, can be found in Potter and Christy (1968). The immediate conclusion from those empirical results was that scarcity was not in prospect and was unlikely to inhibit economic growth in the (then) foreseeable future. It is also very likely, however, that increasing availability and declining costs of energy (and other raw materials) has been a significant driver of past economic growth. The increasing availability of energy from fossil fuels has clearly played a fundamental role in growth since the first industrial revolution. Machines powered by fossil energy have gradually displaced animals, wind power, water power and human muscles and thus made human workers vastly more productive than they would otherwise have been.
The word 'energy' in the previous paragraph is commonly understood to mean 'available energy' or 'energy that can be used to do work' in the technical sense. However, the first law of thermodynamics in physics is that energy is conserved. The total energy in a system is the same before and after any process. It is not energy, per se, but 'available energy' that can 'do work' or drive a process of transformation. The accepted thermodynamic term for this quantity is exergy. Exergy is not conserved. On the contrary, it is 'used up' (and converted, so to speak, into entropy).
The technical definition of exergy is the maximum amount of work that can be done by a system (or subsystem) approaching thermodynamic equilibrium with its surroundings by reversible processes. The equilibrium state is one in which there are no gradients: energy, pressure, density and chemical composition are uniform everywhere. The term 'work' here is a generalization of the usual meaning. For example, a gas consisting of one sort of molecules diffusing into a gas consisting of another sort of molecules (for instance, carbon dioxide diffusing into the air) 'does work', even though that work cannot be utilized for human purposes. Nevertheless, exergy is a measure of distance from equilibrium, and the important point is that all materials - whether they are combustible or not -contain some exergy, insofar as they have a composition different from the composition of the surrounding reference system. (For more detail see any suitable thermodynamics text, such as Szargut et al. (1988). Iron ore contains exergy, for instance, because it contains a higher proportion of iron and a lower proportion of silica and alumina and other things than the earth's crust. Carbon dioxide contains some exergy precisely because it differs chemically from the average composition of the earth's atmosphere. The exergy content of a non-combustible substance can be interpreted (roughly) as the amount of fuel exergy that would have been required to achieve that degree of differentiation from the reference state. On the other hand, all combustible substances, especially fossil fuels, have exergy contents only slightly different from their heat values (known as enthalpy).
In short, virtually all physical substances - combustible or not - contain exergy. Moreover, the exergy of any material can be calculated by means of precise rules, as soon as the surroundings (that is the reference state) are specified. From a biological-ecological perspective, solar exergy is the ultimate source of all life on earth, and therefore the source of economic value. This idea was first proposed by the Nobel laureate chemist Frederick Soddy (1922, 1933) and revived by the ecologist Howard Odum (1971, 1973, 1977), and economist Nicholas Georgescu-Roegen (1971, 1976b). A number of attempts to justify this bioeconomic or biophysical view of the economy by econometric methods using empirical data followed (Costanza 1980, 1982; Hannon and Joyce 1981; Cleveland et al. 1984).
However, despite the impressively close correlations between gross exergy consumption and macroeconomic activity as revealed by the work of the biophysical group cited above, the underlying energy (exergy) theory of value is impossible to justify at the microeco-nomic level and it is quite at odds with the paradigm of mainstream economics which is built on a theory of human preferences (for example, Debreu 1959). There will be comment further on this point later.
Nevertheless, exergy analysis has its uses. Exergy is a general measure applicable to all material resources at any stage of processing, including minerals and pollutants. It can be applied to the evaluation and comparison of resource availability (for example Wall 1977). From a theoretical perspective, the economic system can be viewed as a system of exergy flows, subject to constraints (including the laws of thermodynamics, but also others) and the objective of economic activity can be interpreted as a constrained value maximization problem (or its dual, an exergy minimization problem) with value otherwise defined (Eriksson 1984). Exergy analysis can also be used empirically as a measure of sustainabil-ity, to evaluate and compare wastes and emissions from period to period or country to country (Ayres et al. 1998). Reference is made to exergy, hereafter, even where the word 'energy' is used in its familiar sense.
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