More Heat Than Light

Mirowski, a historian of economic thought, argues that neoclassical economics was constructed in the 1870s by directly copying the mathematics of mid-nineteenth-century energy physics, and that the copying was literal rather than analogical. Jevons, Walras and Pareto took the field equations of rational mechanics, substituted utility for potential energy and commodity space for physical space, and produced a theory of exchange.

His charge is that the transfer was incompetent as physics. The energy conservation principle that makes the physical equations work has no counterpart in the economic version, because there is nothing conserved in exchange that corresponds to energy. Economists took the mathematical form without the conservation constraint that gives the form its content, and then spent a century defending the resulting apparatus against empirical failure. He traces this through the history of value theory, showing that classical political economy had a substance theory of value that the marginalists replaced with a field theory borrowed wholesale.

The book is technically demanding, requires familiarity with both the physics and the economics, and is written with sustained polemical force. It has been influential among heterodox economists and historians of science and has been largely ignored or rejected by mainstream economists, who argue that the origin of a mathematical technique says nothing about its validity. That response is fair as far as it goes, and Mirowski's stronger claim, that the borrowing produced specific incoherences in the treatment of utility, income effects and integrability, is the part worth engaging with. For investors the value is indirect: it explains why the standard economic apparatus has the shape it has and where its formal problems sit.