Constitutive Explanations as a Methodological Framework for Integrating Thermodynamics and Economics

Abstract

The common approach to integrating thermodynamics and economics is subsuming thermodynamic aspects among the set of constraints under which economic activity takes place. The causal link between energy and growth is investigated via aggregate econometric analysis. This paper discusses methodological issues of aggregate analysis and proposes an alternative framework based on recent developments in philosophy of science, in particular of the life sciences. “Constitutive explanations” eschew the covering law approach to scientific explanation and concentrate on the identification of multi-level architectures of causal mechanisms that generate phenomena. This methodology has been productively employed to organize cross-disciplinary research, and I suggest that it can also provide a framework for integrating thermodynamics and economics, since this also requires the combination of several scientific disciplines. I present the example of the “rebound effect” as a kind of constitutive explanation and put it in the context of urbanization as a complex mechanism that is the defining feature of economic growth in physical terms.