In economic thermodynamics, Herman Edward Daly (1938-) is an American economist noted for his work, beginning in the late 1970s, in theorizing on the overlap of economics, ecology, and thermodynamics. Daly is considered a pioneer in the field of ecological economics, which relies on thermodynamic principles to some extent, as found in his 2004 textbook Ecological Economics. [1]

In commentary on American physical chemist Frederick Soddy’s thermodynamic wealth ideas, American Daly states that while debt can grow at compound interest forever, real physical wealth cannot continue to grow at the same speed “because its physical dimension is subject to the destructive force of entropy”. [2]

Georgescu-Roegen
Daly was a student of Romanian mathematician Nicholas Georgescu-Roegen, noted for his 1971 book The Entropy Law and the Economic Process, at Vanderbilt University, completing his doctorate there in 1967. [3] Under Georgescu-Roegen’s influence, in his 1977 Steady State Economics, Daly criticized the failure of mainstream economics to account for, what he considered, the throughput of low-entropy natural resources. In his 1996 book Beyond Growth, Daly comments: [4]

“If confess that it is a matter of some consternation and distress to me that twenty-two years after the publication of The Entropy Law and the Economic Process on can still find no trace of their influence in the standard principles [economics] textbooks.”

On this question, he goes on to outline what he thinks would need to be changed in standard economics textbooks so to accommodate Georgescu-Roegen’s view of entropy (material entropy). On Georgescu-Roegen’s fallacious view of matter-energy as type of entropy, Daly makes the same mistakes. Daly states, for example, that the isolated circular flow diagrams of the hypothetical economic process, from firms to households and back again, would need to be changed to one analogous to the digestive tract of an animal in which, according to Daly, “they continuously take in low-entropy matter/energy and give back high-entropy matter/energy … an organism cannot recycle its own waste products.” This view, which Daly claims to be common to biology textbooks, however, is fallacious view of what entropy is; propagated by Georgescu-Roegen.

References
1. Hokikian, Jack. (2002). The Science of Disorder: Understanding the Complexity, Uncertainty, and Pollution in Our World (pg. 178). Los Feliz Publishing.
2. iversity Press.
3. Daly, Herman E. and Farley, Joshua. (2004). Ecological Economics: Principles and Applications (keywords: thermodynamics, entropy). Island Press.
4. Daly, Herman E. (1996). Beyond Growth: the Economics of Sustainable Development (pgs. 192-98). Beacon Press.

Further reading
● Prugh, Thomas, Costanza, Robert, Daly, Herman, Goodland, Robert, Cumberland, John H., and Norgaard, Richard B. (1999). Natural Capital and Human Economic Survival, 2nd ed. (pg. 15). CRC.

External links
● Herman Daly – Wikipedia.
● Daly, Herman E. – Encyclopedia of Earth.
● Daly, Herman E. – WorldCat Identities.