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32 • An Introduction to Ecological EconomicsThe Second Law of Thermodynamicsstates that entropynever decreases in an isolatedsystem. Although matter andenergy are constant in quantity(First Law), they change inquality. The measure of qualityis entropy, and basically it is aphysical measure of the degreeof “used-up-ness” or randomizationof the structure or capacityof matter or energy to beuseful to us. Entropy increasesin an isolated system. We assumethe universe is an isolatedsystem, so the SecondLaw says that the natural, defaulttendency of the universeis “shuffling” rather than “sorting.”In everyday terms, left tothemselves, things tend to getmixed up and scattered. Sortingdoes not occur by itself.it always takes more energy to do the recycling than the amount that canbe recycled. Thus, recycling energy is not physically impossible but alwayseconomically a loser—regardless of the price of energy. No animalcan directly recycle its own waste products as its own food. If it could, itwould be a perpetual motion machine. In strict analogy, no economy canfunction by directly reusing only its own waste products as raw materials.The circular flow diagram gives the false impression that the economyis capable of direct reuse. Some very good textbook writers have explicitlyaffirmed this false impression. For example, Heilbroner and Thurow, 10in a standard economics text, tell us that “the flow of output is circular,self-renewing, self-feeding.” In other words, the economy is a perpetualmotion machine. To drive the point home, the first study question at theend of the chapter is, “Explain how the circularity of the economic processmeans that the outputs of the system are returned as fresh inputs.” Itwould have been reasonable to ask how dollars spent reappear as dollarsearned in the circular flow of exchange value and how purchasing poweris regenerated in the act of production. But explaining how outputs are returnedas inputs, indeed fresh inputs, requires the student to discover thesecret of perpetual motion! Of course, the authors do not really believe inperpetual motion; they were trying to get across to the student the importanceof replenishment—how the economic process reproduces itselfand keeps going for another round. Certainly this is an important idea tostress, but the key to understanding it is precisely that replenishmentmust come from outside the economic system. This is a point conventionaleconomists tend to neglect, and it leads to the mistaking of the part for thewhole. If the economy is the whole, it has no outside; it is an isolatedsystem.The error in the text cited is fundamental but not unique. It is representativeof most standard texts. Heilbroner and Thurow have the virtueof clear expression—a virtue that makes it easier to spot errors. Othertexts leave the student with the same erroneous impression but withoutforthrightly stating the implication in words that cause us to think again.Nor is the error confined to standard economists. Karl Marx’s models ofsimple and expanded reproduction are also isolated circular flow models.Marx, with his theory that labor was the source of all value, was even moreeager than standard economists to deny any important role to nature inthe functioning of the economy and creation of value. For Marx, the ideathat nature embodied scarcity was an abomination. All poverty was the resultof unjust social relations, or class exploitation, not the “niggardlinessof nature.” Thomas Malthus had argued that overpopulation relative to10 R. Heilbroner and L. Thurow, The Economic Problem, New York: Prentice-Hall, 1981, pp.127, 135.