This thesis investigates the energetic foundations of economic activity. Occurring in the physical domain, economic production and growth are subject to the laws of thermodynamics, which both facilitate and constrain all outcomes in the economic process. This thesis also explores the growth of useful knowledge. While energy is argued to delineate the boundaries of economic possibility, useful knowledge acts to transform this energy into economic value. Together, these statements imply that this thesis explores the fundamentally co-evolutionary relationship between knowledge and energy in the economic system.
In pursuing this question, perspectives from evolutionary economics are adopted, which are arguably more attuned to both the energy and knowledge bases of the economic system. Accordingly, the Foster and Potts (2009) methodology is utilised, integrating the micro, meso and macro domains of evolutionary economic analysis. In the meso domain, the history of the global economy since the Industrial Revolution is examined. It is argued that the transition to a paradigm of sustained economic growth was facilitated by its nature as Energy Revolution, in which the limits to growth guaranteed by the fixed supply of land were transcended by an abundant supply of non-renewable (or ‘consumptible’) energy. The five ensuing long waves of growth also depended crucially on the availability of free energy, but also, as this thesis argues, on the coalescence of technological, organisational and institutional innovation with available skills and finance. Australia’s energetic vi long waves are distinguished on the basis of these ingredients for growth. The macro analysis constitutes a statistical investigation of Australia’s record of economic growth, as defined by its supply of capital, labour and primary energy. An extensive dataset of Australia’s energy use and economic growth since 1901 is compiled to facilitate this analysis. Economic growth is shown to depend crucially on the complementary input of these factors (in a LINEX function) and a significant econometric distinction between long waves is drawn. The micro analysis reflects the origination and adoption of the rules promoting or discouraging another Energy Revolution–a return to renewable resources. This investigation details the theoretical concepts deemed relevant by evolutionary theories, quantitatively assesses the diffusion of renewable energy providers, identifies conducive and prohibitive Australian Government initiatives and offers policy recommendations.
The primary objectives of this thesis are threefold. Firstly, it argues for the restoration of energetic considerations to the foundation of economic analysis; secondly, it recognises that the application of useful knowledge to shape the pathways taken by free energy is equally necessary for production and growth to occur in the economic system; and thirdly, implicitly, and most importantly, it seeks to advance the application of evolutionary concepts to the analysis of knowledge, energy and economic growth.
Keywords: Evolutionary Economics, Economic Growth, Thermodynamics, Long Waves, Energy Transitions, Industrial Revolution, Co-evolution
JEL Classification: B52, E23, O13, O41, N77, Q43