Production: a biophysical and evolutionary theory

Jing Chen () and James K. Galbraith ()
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Jing Chen: University of Northern British Columbia
James K. Galbraith: The University of Texas at Austin

Review of Evolutionary Political Economy, 2024, vol. 5, issue 1, 85-119

Abstract: Abstract We present an economic theory of production developed from biophysical principles and consistent with the production decisions facing businesses and other economic actors, including households and governments. The theory is a compact analytical model, derived from thermodynamics and closely related to the Black–Scholes formula for options pricing, which provides, in our view, a simplified and realistic understanding, when compared with the neoclassical production theory. The theory also explains closely related biological and social phenomena, since the underlying processes are, essentially, the same. Specific examples are provided, to illustrate some applications of this approach.

Keywords: Production theory; Fixed cost; Variable cost; Biophysical economics (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s43253-023-00113-x

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