Resources and Environmental Economics

This study clarifies the concepts of “feedback”, “positive feedback”, and “negative feedback” and explains the philosophy of the coupling principle of positive and negative feedback. The evolution process of the system is the organic coupling of positive and negative feedback, and only the reciprocating cycle of positive and negative feedback can ensure the occurrence and existence of heterogeneous new things. In the economic system, the law of increasing returns corresponds to the positive feedback mechanism, whereas the law of diminishing returns corresponds to the negative feedback mechanism. This study briefly expounds on the differences in understanding between the law of increasing returns and diminishing returns, and the equilibrium and disequilibrium of economic operation in the economics circle, based on the histories of economic thoughts and social and economic forms. This study emphasizes that instead of dividing and opposing each other, the idea of static partial equilibrium and dynamic general nonequilibrium in epistemology can be united to solve this difference. Finally, this paper explains the essential relationship and compatibility between the law of diminishing returns and increasing returns from the characteristics, nature, and proportional changes of tangible and intangible factors of production. Applying the positive and negative feedback coupling principle can clarify the essential relationship between the law of diminishing returns and increasing returns. From the philosophical level and epistemological significance, it can bridge the fundamental differences between equilibrium and nonequilibrium theories, which in turn, can help realize the creative synthesis of economic theory.