It is critical that economists build into their models what ‘production’ and ‘consumption’ actually involves. Production does not involve the creation of anything (first law of thermodynamics). It involves the rearrangement of matter-energy – the physical transformation of natural resources through the agency of capital and labour – whereby use value is added to the natural resources we extract from the ecosphere. Consumption involves the disarrangement of matter-energy, where upon we destroy the use value embodied in the matter-energy that subsequently exists in the form of ‘goods’. Ultimately, when all goods have been directly consumed or have depreciated through use, the output of the economic process is waste that returns to the ecosphere. – Phil Lawn
You can hear Phil expand upon this at the Sustainable Prosperity Conference in Adelaide January 2020
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