Scientific American, ever a bastion for good history of science and balanced coverage of social science, has it in for economics.
The strategy the economists used was as simple as it was absurd—they substituted economic variables for physical ones. Utility (a measure of economic well-being) took the place of energy; the sum of utility and expenditure replaced potential and kinetic energy. A number of well-known mathematicians and physicists told the economists that there was absolutely no basis for making these substitutions. But the economists ignored such criticisms and proceeded to claim that they had transformed their field of study into a rigorously mathematical scientific discipline.Nadeau criticizes economic theory for two deadly sins: stealing methods from physics and then not updating methods when the physics changed. The first is on the right track, the second is simply absurd.
Nadeau's criticism of neoclassical economics should be as follows: The physical calculus introduced to economics because of familiarity carries with it ontological implications that do not hold for economic systems. Economists failed to learn this lesson and improve the calculus, and as a result economics remains unable to deal appropriately with environmental problems.
In fact, Nadeau runs his argument almost completely off a cliff. He pollutes his account with distracting tidbits about how the "old" physical theory has since been updated--in physics. What happened in physics is irrelevant to his argument: it might have been the case that the calculus of the old physical theory was the correct basis for economics. It isn't, and that should be the focus of his criticism.
A few of Nadeau's specific criticisms of neoclassical economic theory are worthwhile. For example, under such a theory, "the market system is a closed circular flow between production and consumption, with no inlets or outlets." This seems not to be true, and altering the calculus to allow for inlets and outlets might, as Nadeau suggests, better allow for the inclusion of natural resources within economics.
In the end, Nadeau gets it about right:
If the environmental crisis did not exist, the fact that neoclassical economic theory provides a coherent basis for managing economic activities in market systems could be viewed as sufficient justification for its widespread applications. But because the crisis does exist, this theory can no longer be regarded as useful even in pragmatic or utilitarian terms because it fails to meet what must now be viewed as a fundamental requirement of any economic theory—the extent to which this theory allows economic activities to be coordinated in environmentally responsible ways on a worldwide scale.
Why not lead with that?