Georgescu-Roegen's defense of classical thermodynamics revisited

International Journal of Accounting and Economics Studies, 2021

So far, economics does not have a coherent theory. This condition is a consequence of the ambiguity of basic categories such as capital, labor, money, and consumption. In the traditional narrative, these categories do not have a strict scientific meaning. This situation is positively changed by the inclusion of the fundamental principles of thermodynamics, especially the famous second principle. This is the main hypothesis argued in the body of the article. The consistent use of thermodynamics made it possible to reinterpret the system of fundamental concepts, as well as to solve cognitive problems in the field of capital and labor theory and sources of profit. The results of the presented empirical research indicate the consistency of the modified economic theory.  Â

Annals of the New York Academy of Sciences, 2010

Almost 40 years have passed since Georgescu-Roegen's seminal work, The Entropy Law and the Economic Process. During this time there has been much debate on the relevance of thermodynamics to economics, and many attempts to build bridges between the two. There has also been much confusion as to what the laws of thermodynamics actually say. This article clearly explains heat, work, and the thermodynamic laws, the meaning of entropy, and the importance of kinetics as a barrier to thermodynamically favorable processes. The two most important misunderstandings in the literature, namely entropy as disorder, and entropy as a measure of information, are highlighted. Reviewing the literature shows that thermodynamics is most relevant for building a descriptive model, or preanalytic vision of economics, because it implies physical constraints on production and consumption. Similarly, it suggests that there may be serious flaws with neoclassical economic models, and in particular the primacy of sustained growth. However, thermodynamics does not seem to aid mathematical modeling in economics, nor does it provide normative insights. As an aid to energy policy, thermodynamics is useful for assessing the feasibility of technology optionsthose that have the potential to meet our goals, and should be counted as options, and those that should not. But it does not provide a prescription outside of this technical realm. Factors, such as environmental impact, cost, and social acceptability, will ultimately determine which technically feasible options are most desirable.

s Thermodynamics is a phenomenological science that derives its concepts directly from observation and experiment. The laws of thermodynamics can be considered as axioms of a mathematical model, and the fact that they are based upon commonplace observations makes them tremendously powerful and generally valid. In particular, the interest of applying thermodynamics in a systematic manner to describe the behavior of economic and financial systems has a long history [29]. In this paper we set out the first and second laws of Thermodynamics, which are fundamentals in the world of physics, and we examine the dynamics of the main processes encountered as applied to economic systems. And also we construct the mathematical model for constant pries process. And finally this paper end with conclusion.

This paper has the objective of reviewing some of the key aspects that involve the association between physics and economics. It also invites to considerate the history behind the neoclassical model and how its physical origin is not well known. It is curious to see the close relation between these two sciences, but it is also curious how this could lead to misinterpretations and beliefs of economics being dependent on physics, which clearly is not the case.

Ecological Economics, 1998

The laws of physics, especially the first and second laws of thermodynamics, have significant implications for economic theory. The major implications of the First Law (conservation of mass/energy) are straightforward and have been discussed at length elsewhere. In brief, raw material inputs to economic processes are not 'consumed'. Having been extracted from the environment in the first place, they eventually return to the environment as wastes. The economic implications of the Second Law (entropy law) are far more subtle. There is considerable literature, initiated by the work of Georgescu-Roegen, on the supposed constraints on economic growth imposed by the fact that economic processes utilize 'low-entropy' raw materials (fossil fuels and high grade metal ores) and discard 'high entropy' wastes. However, as a practical matter the flux of available low-entropy energy (exergy) from the sun is extremely large and certainly adequate to sustain economic activity in the solar system indefinitely, even though fossil fuel and metal ore stocks may eventually be exhausted. It is argued in this paper that the real economic significance of the Second Law lies in the fact that exergy is: (i) not conserved; and (ii) is a useful common measure of resource quality, as well as quantity, applicable to both materials and energy. Thus, exergy can be used to measure and compare resource inputs and outputs, including wastes and losses. This is potentially important in itself. Moreover, since exergy is not conserved it is truly consumed (i.e. used up) in economic processes. Hence, exergy is no less a 'factor of production' than labor or capital. This fact has strong implications for economic growth theory, especially with regard to assessing the role of technical progress.

The thermodynamic formulation of economics is based on the laws of calculus. Differential forms in two dimensions are generally not exact forms (δQ), the integral from (A) to (B) is not always the same as the integral from (B) to (A). It is possible to invest little in one way and gain a lot on the way back, and to do this periodically. This is the mechanism of energy production in heat pumps, of economic production in companies and of growth in economies. Not exact forms may be turned into exact forms (dS) by an integrating factor T, dS = δQ/T. The new function (S) is called entropy and is related to the probability (P) as S = ln P. In economics the function (S) is called production function. The factor (T) is a market index or the standard of living, GNP/capita, of countries. The dynamics of economic growth is based on the Carnot process, which is driven by external resources. Economic growth and capital generation-like heat pumps and electric generators-depend on natural resources like oil. GNP and oil consumption run parallel for all countries. Markets and motors, economic and thermodynamics processes are all based on the same laws of calculus and statistics.

During this time there has been much debate on the relevance of thermodynamics to economics, and many attempts to build bridges between the two. There has also been much confusion as to what the laws of thermodynamics actually say. This article clearly explains heat, work, and the thermodynamic laws, the meaning of entropy, and the importance of kinetics as a barrier to thermodynamically favorable processes. The two most important misunderstandings in the literature, namely entropy as disorder, and entropy as a measure of information, are highlighted. Reviewing the literature shows that thermodynamics is most relevant for building a descriptive model, or preanalytic vision of economics, because it implies physical constraints on production and consumption. Similarly, it suggests that there may be serious flaws with neoclassical economic models, and in particular the primacy of sustained growth. However, thermodynamics does not seem to aid mathematical modeling in economics, nor does it provide normative insights. As an aid to energy policy, thermodynamics is useful for assessing the feasibility of technology optionsthose that have the potential to meet our goals, and should be counted as options, and those that should not. But it does not provide a prescription outside of this technical realm. Factors, such as environmental impact, cost, and social acceptability, will ultimately determine which technically feasible options are most desirable.

Evolutionary and Institutional Economics Review, 2007

The present article marks some potentially fruitful dimensions of economic research based on principles of economic theory but using more analogies with physics. Molecular structure of society with its different states, principles generating spontaneous order different from "invisible hand", social analogies of the concepts of temperature and pressure in physics are investigated. Some analogies between phase transitions in physics and transition between different social regimes can reveal the areas of stability of liberal regimes as well as possibility of spontaneous emergence of different social orders. A possibility to expand neoclassical economics to capture Marxism and nationalism in a formal mathematical framework is also discussed.

Foundations of Mechanics, 1992

For a long time now, confusion has existed in the minds of many over the meaning of various concepts in thermodynamics. Recently, this point has been brought to people's attention by two articles appearing on the well-known archive (arxiv) web site. The content of these two pieces serves to illustrate many of the problems and has occasioned the construction of this answer to at least some of them. The position of the axiom proposed by Carathéodory is central in this matter and here its position is clarified and secured within the framework of thermodynamics. In particular, its relation to the First Law is examined and justified. Introduction. There is little doubt that, although based on phenomena and, possibly more importantly, experiences with which virtually everyone is familiar, confusion does arise in the minds of many when it comes to understanding thermodynamics. However, as was stated on the dust cover of Landsberg's first book on the subject [1], 'Thermodynamics is among the most abstract branches of physics'. Considering the beginnings of the subject were so firmly rooted in so seemingly practical a subject as the theory of heat engines, this appears an almost astonishing statement but a little delving into the theory shows it to be a fairly accurate assessment of the subject and probably indicates one of the reasons for the confusion arising in so many minds. Added to this thought, it is often forgotten that, when considering theories of physics in general, the discussion concerns theories which purport to describe perceived physical happenings. As such, it should be remembered always that it is the physics which is all-important; it is the physical observations which must always provide the impetus in any subsequent investigations. In all this, the mathematics is merely a tool; a very important tool, but still a tool. Therefore, any deductions made must be checked against observed physical fact. It is the physics which must dominate! On the other hand, it often proves difficult to do this as the mathematical theory often appears abstruse to the uninitiated and frequently serves to add to the mysticism some might wish to attach to their chosen field. There is little doubt that this is one factor leading to confusion in the minds of many in various areas of science, of which thermodynamics is but one.

The thermodynamic formulation of economics is based on the laws of calculus. Differential forms in two dimensions are generally not exact forms (δQ), the integral from (A) to (B) is not always the same as the integral from (B) to (A). It is possible to invest little in one way and gain a lot on the way back, and to do this periodically. This is the mechanism of energy production in heat pumps, of economic production in companies and of growth in economies. Not exact forms may be turned into exact forms (dS) by an integrating factor T, dS = δQ/T. The new function (S) is called entropy and is related to the probability (P) as S = ln P. In economics the function (S) is called production function. The factor (T) is a market index or the standard of living, GNP/capita, of countries. The dynamics of economic growth is based on the Carnot process, which is driven by external resources. Economic growth and capital generation-like heat pumps and electric generators-depend on natural resources like oil. GNP and oil consumption run parallel for all countries. Markets and motors, economic and thermodynamics processes are all based on the same laws of calculus and statistics.

Journal of Heterodox Economics, 2016

This article deals with the notion of entropy in its applicability to economics. Briefly, it regards some classical cases of such a use as the labour concept of Podolinsky and the bioeconomics of Georgescu-Roegen. This article also attempts to apply the concept of entropy to the analysis of market structures in the example of the perfect competition model. Thus, the article asserts that if we compare different entropy concepts with the main characteristics of a market with perfect competition, we must conclude that the latter is a structure with the maximum level of entropy. But maximum entropy means the system’s death. So, as a system, a perfectly competitive market cannot exist. Despite economists recognise the unreality of such a market from an empirical point of view, the application of the entropy concept helps us to repeat this approval also as a methodological one. The use of the entropy concept as a methodological instrument helps to question some other economic models, too.

Acta Physica Polonica A, 2016

In 2015, the science known as econophysics, which has been developing very quickly in latest years, celebrated its 20th anniversary. Perhaps a 20-year period is too short to evaluate the importance and achievements of econophysics, but the broad scope of research and significance of certain results encouraged me to undertake such an attempt. If societies appreciate efforts by econophysicists, perhaps we will be able to avoid next economic crises and related losses. Econophysics is a transdisciplinary science based on the observation that physical objects and economic objects can share a common theory. Since logical homologies are its foundation, it is an example of the well-known isomorphism principle formulated by Ludwig von Bertalanffy. The emergence of interdisciplinary fields of knowledge is consistent with the paradigm of general systems theory. The development of a given field of knowledge is most often measured by its ability to formulate new knowledge about reality. Progress in research can be spoken of both when the application of traditional methods leads to the discovery of new facts and when new scientific laws are discovered using new methods. Econophysics is an attempt to develop economics through the transfer of research methods and techniques from physics to economics. We are therefore dealing here with a second possibility. The methods of physics most often applied in economics include the theory of stochastic processes, cellular automata and nonlinear dynamics. This study presents the most important existing achievements of econophysics and the attempts to reconcile them with traditional economic knowledge. The accomplishment of a paradigmatic correspondence between econophysics and economics, both in the local and in the global sense, is a prerequisite for using the achievements of the former in economic policy.

1997

Boltzmann's 1872 derivation of the H-theorem was of great significance because it provided a basis for the second law of thermodynamics in terms of the molecular/kinetic theory of heat. By showing that a statistical treatment of the many molecules comprising a gas can produce a monotonic decrease of an entropy-like quantity, H ~ -S , he provided the essential insight into the connection between the second law and the evolution of systems through macroscopic states occupying progressively larger volumes in phase space. However, it is a common misconception that an analysis like that given by Boltzmann demonstrates that the second law of thermodynamics would be observed in a universe of particles whose motions are completely described by the laws of classical mechanics. I attempt to clarify that this is a misconception by showing that an element introduced into Boltzmann's derivation as simply an approximation to the dynamics expected under classical mechanics, in fact introduces a new feature into the dynamics of the model system. It is shown that this added feature, present in the model but not in a classical mechanical universe, is solely responsible for the monotonic behavior of H. Hence, while this type of analysis provides an understanding of how the second law comes about, it does not stay within the confines of classical mechanics in doing so. Thus it is not a derivation of the second law of thermodynamics just from the laws of classical mechanics for a system with many degrees of freedom and a low-entropy initial condition. The implications of this conclusion are important for our understanding of the physical basis of the second law of thermodynamics.

Ecological Economics, 2006

The relation between Thermodynamics and Economics is a paramount issue in Ecological Economics. Two different levels can be distinguished when discussing it: formal and substantive. At the formal level, a mathematical framework is used to describe both thermodynamic and economic systems. At the substantive level, thermodynamic laws are applied to economic processes.

One of the greatest unsolved mysteries in physics is the formation and evolution of material systems. Nearly everyone in the physics community would say that this is a long-solved problem, but they do not even notice that the formation and evolution of material systems, both animate and inanimate, are in direct violation of the laws of thermodynamics, which is also completely accepted 'as is' by the physics and scientific communities. Under these circumstances, two new theories of galactic and universal evolution have recently been proposed. But a better place for such a physics theory of physical evolution would be in a new and more comprehensive balanced thermodynamics so it could counter the physical principle of entropy in those physical instances that it does not matter. After all, entropy is, in fact, a form of anti-or deevolution. When a living or animate body dies, it becomes inanimate matter and entropy takes over in the body as the living processes and interactions cease. Unfortunately, the laws or principles of thermodynamics as they now stand are grossly incomplete and needfully wrong, but no one seems to have seen this error. The simplest error in them is that they refer to closed systems, which is commonly accepted, but there is no such thing as a closed system in the universe unless it is the universe itself, as a unitary continuous whole. So additional laws or rules are needed to fill this theoretical gap: Primarily Prigogine's Principle and chaos theory with the emergence of complexities. Nor does thermodynamics take into direct consideration the natural forces that rule physics and all physical interactions. However, thermodynamics can be extended to take these into account and thus develop a complete and comprehensive view of the physical universe. Doing so carries surprises in it with the development of physical evolution, both animate and inanimate, as a common property of the physical universe, and more.