TY - JOUR
T1 - Time horizons and electricity futures
T2 - An application of Nicholas Georgescu-Roegen's general theory of economic production
AU - Farrell, Katharine N.
AU - Mayumi, Kozo
N1 - Funding Information:
The authors wish to acknowledge financial support from the Japan Society for the Promotion of Science and the UK Support Programme for University Research. Thanks are due to Malte Faber and to Mario Giampietro and Joan Martínez-Alier for suggestions regarding how to approach this topic and to three peer reviewers for their helpful comments. Errors and omission remain, of course, entirely our own.
PY - 2009/3
Y1 - 2009/3
N2 - This paper reports theoretical economic production work and uses electricity futures trading to illustrate its argument. The focus is relationships between time, production and tradition both in Nicholas Georgescu-Roegen's analytical representation of the production process (i.e., flow/fund model) and in his dialectical scheme dealing with the evolutionary changes in the economic process. Our main arguments are (1) the flow/fund model is designed to be employed in conjunction with attention to how the boundaries of a given process are determined and (2) process boundaries are dialectical distinctions-between process and not-process-that are strongly related to time and tradition. We propose that Georgescu-Roegen's The Entropy Law and the Economic Process is best understood as the elaboration of a general theory of economic production and we developed two conceptual tools (time {A figure is presented} and meta-funds), both of which are related to the dialectical distinction between process and not-process, which we use to operationalise this general theory. Finally, we demonstrate that, although trading in electricity futures is surprising if one uses a stock/flow vs services distinction (because electricity supply is classed as a service) it appears perfectly logical under Georgescu-Roegen's general theory: shortening time horizons, combined with a shift in the relationship between raw fuel supplies and power production procedures, lead to a shift in the status of electricity supply, from fund to flow.
AB - This paper reports theoretical economic production work and uses electricity futures trading to illustrate its argument. The focus is relationships between time, production and tradition both in Nicholas Georgescu-Roegen's analytical representation of the production process (i.e., flow/fund model) and in his dialectical scheme dealing with the evolutionary changes in the economic process. Our main arguments are (1) the flow/fund model is designed to be employed in conjunction with attention to how the boundaries of a given process are determined and (2) process boundaries are dialectical distinctions-between process and not-process-that are strongly related to time and tradition. We propose that Georgescu-Roegen's The Entropy Law and the Economic Process is best understood as the elaboration of a general theory of economic production and we developed two conceptual tools (time {A figure is presented} and meta-funds), both of which are related to the dialectical distinction between process and not-process, which we use to operationalise this general theory. Finally, we demonstrate that, although trading in electricity futures is surprising if one uses a stock/flow vs services distinction (because electricity supply is classed as a service) it appears perfectly logical under Georgescu-Roegen's general theory: shortening time horizons, combined with a shift in the relationship between raw fuel supplies and power production procedures, lead to a shift in the status of electricity supply, from fund to flow.
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U2 - 10.1016/j.energy.2008.07.002
DO - 10.1016/j.energy.2008.07.002
M3 - Research Article
AN - SCOPUS:61549109595
SN - 0360-5442
VL - 34
SP - 301
EP - 307
JO - Energy
JF - Energy
IS - 3
ER -