THE ROLE OF ENERGY FROM THE ASPECT OF ECONOMIC THEORY

Throughout the history of economic theory, the role of energy as one of the key factors of economic growth was not given proper and direct importance. Energy remains present and recognized in economic theory and practice exclusively as an intermediate input. Although the classical economics implicitly included energy in economic activity through land as a key production factor, neoclassical economics segregates nature (land) and its sources of energy. Namely, the land is classified as a part of capital as it becomes productive only when one uses labor and capital for processing it. Research interests were/ are directed towards the primary inputs such as capital and labor while intermediate inputs (i.e. energy) were given indirect relevance. Energy allows continuity of the overall economic activity in the long run not only as a supplement to standard (neoclassical) production inputs. Instead, without energy production would not be possible. According to the so-called ecological economics, energy is the most important primary factor of production. From these economic standpoints on energy emerges the aim of this paper which deals with the determination of energy’s role from the aspect of economic theory. Moreover, special emphasis is placed on the criticism of the neoclassical growth theory from the perspective of various economic schools. The results of the theoretical analysis show that the standard (neoclassical) factors of production and growth are nothing but energy transformers. Therefore, opposing opinions of various economic schools and criticism of neoclassical economic paradigm could not be avoided.