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In human thermodynamics, economic thermodynamics or thermoeconomics is the thermodynamic study of the system by which a country's money and goods are produced and used. [1] In the study of thermoeconomics, economists use the laws of thermodynamics, such as Clausius' entropy, or the principles of non-equilibrium thermodynamics, such as Prigogine's dissipative structures theory, for the modeling of the activity and forcast of economies.
History
In a general sense, the argument exists that the science of economic thermodynamics began following the publication of English-born American economist Kenneth Boulding’s famous 1966 article “The Economics of the Coming Spaceship Earth” in conjunction with Romanian mathematician Nicholas Georgescu-Roegen’s 1971 book The Entropy Law and the Economic Process, after which economist became interested in the subject. [11] Earlier works, however, can be found, such as English radiochemist Frederick Soddy's 1926 book Virtual Wealth and Debt.
Origin of term
The term "thermoeconomics" was coined by American engineer Myron Tribus and used in a functional sense in relation to cost and efficency as presented in a 1962 paper that dealt with seawater desalination processes. [2] The term soon began to be used, essentially within the field of engineering, as the study of the efficency of energy use in industrial processes or as the "field that links economic analysis with thermodynamics". [3]
In 2001, social scientist Peter Corning began using the term thermoeconomics, in a functional sense, as the study of economic systems through the tools of energy and entropy. [5] Life, according to Corning, is a contingent and labor-intensive activity" in which "energetic profitability is essential to growth and reproduction". Corning calls this the first law of thermoeconomics. In 2007, similar to Corning, American chemical engineer Libb Thims defined "thermoeconomics" as that overarching human thermodynamics discipline, developed by those such as Frederick Soddy (1922), Nicholas Georgescu-Roegen (1971), Philip Mirowski (1989), and Jing Chen (2005), and others, that thermodynamically studies human societies from an economic point of view. [8]
Related terms
A related term is "biophysical economics" coined by American mathematician and physical chemist Alfred Lotka in 1924 used to signify the application of biological and physical principles to aid economic analysis. [4]
The related term "bioeconomics" refers to the study of how organisms of all kinds earn their living in nature's economy, with particular emphasis on co-operative interactions and the progressive elaboration of the division of labor. [6] Today, the term is used in various ways, from Georgescu-Roegen's thermodynamic analyses to the work in ecological economics on the problems of fisheries management. [7]
The term “econophysics”, described as the use of statistical mechanics to solve problems in economics, was coined by H. E. Stanley in the mid 90's, to describe the large number of papers written by physicists in the problems of (stock) markets, and first appeared in a conference on statistical physics in Calcutta in 1995.
Objections
Although most scientists agree that all physical processes abide by the laws of thermodynamics, there are many economists and physicists that maintain that the economy is exempt from these laws. In 2003, American physicist Joseph McCauley argued that “real financial markets cannot behave thermodynamically” because “financial markets are unstable, they do not approach statistical equilibrium, nor are there any available topological invariants on which to base a purely formal statistical mechanics.” Likewise, American economist Paul Samuelson, who earlier in his career was an avid user of thermodynamic analogies, concluded in 1972 that: [10]
References
1. (a) Thims, Libb. (2007). Human Chemistry (Volume Two), (preview), pg. 677-678. Morrisville, NC: LuLu.
(b) Ksenzhek, Octavian S. (2007). Money: Virtual Energy - Economy through the Prism of Thermodynamics, Universal Publishers.
(c) Longman Dictionary of Contemporary English (Economy).
2. Yehia M. El-Sayed (2003). The Thermoeconomics of Energy Conversions (pg. 4). Pergamon.
3. (a) Sieniutycz, Stanislaw; Salamon, Peter (1990). Finite-Time Thermodynamics and Thermoeconomics (pg vii, 1). Taylor & Francis.
(b) Berry, R.S., Salamon, P. and Heal, G. (1978). "On a Relation between Thermodynamic and economic optima", Resources and Energy, 1, 125.
(c) Sieniutycz, S. (1978). Optimization in Process Engineering. Warsaw: WNT.
(d) Mansson, B.A.G. (1985). Contributions to Physical Resource Theory, Chalmers University of Technology, Goteborg.
4. (a) Lotka, A. J. (1924). Elements of Physical Biology (published in 1954 as Elements of Mathematical Biology), Baltimore: Williams and Wilkins.
(b) Cleveland, Cutler, J. (1999). "Biophysical Economics: From Physiocracy to Ecological Economics and Industrial Ecology." (PDF) In Bioeconomics and Sustainability: Essays in Honor of Nicholas Gerogescu-Roegen, J. Gowdy and K. Mayumi, Eds. (Edward Elgar Publishing, Cheltenham, England), pp. 125-154.
(c) Biophysical economics - Encyclopedia of Earth
5. Corning, Peter A. (2001). "Thermoeconomics - Beyond the Second Law" (PDF), Institute for the Study of Complex Systems.
6. Reinheimer, Hermann (1913). Evolution by Co-operation: A Study in Bioeconomics, London: Kegan, Paul, Trench, Trubner.
7. Corning, Peter, A. "Bioeconomics as a Subversive Science From 'Tastes' and 'Preferences' to 'Adaptation' and 'Basic Needs'" (Prepared for the Annual Meeting, Western Economics Association International San Francisco, CA, July 1996), Institute for the Study of Complex Systems.
8. (a) Thims, Libb. (2007). Human Chemistry (Volume One), (preview). pg. 53, Morrisville, NC: LuLu.
(b) Thims, Libb. (2007). Human Chemistry (Volume Two), (preview), pg. 677-678. Morrisville, NC: LuLu.
9. McCauley, Joseph L. (2003). “Thermodynamic Analogies in Economics and Finance: Instability of Markets.” Published in: Physica A 329 (2003): pp. 199-212.
10. Samuelson, Paul. (1972). The Collected Scientific Papers (pg. 450). Vol. 3, ed. R. Merton. Cambridge, Mass.: MIT Press.
11. (a) O’Hara, Phillip A. (1999). Encyclopedia of Political Economy, (section: “Entropy, Negentropy, and the Laws of Thermodynamics”, pg. 261-65). Routledge.
(b) Boulding, Kennith E. (1966). "The Economics of the Coming Spaceship Earth",
Further reading
External links
History
In a general sense, the argument exists that the science of economic thermodynamics began following the publication of English-born American economist Kenneth Boulding’s famous 1966 article “The Economics of the Coming Spaceship Earth” in conjunction with Romanian mathematician Nicholas Georgescu-Roegen’s 1971 book The Entropy Law and the Economic Process, after which economist became interested in the subject. [11] Earlier works, however, can be found, such as English radiochemist Frederick Soddy's 1926 book Virtual Wealth and Debt.
Origin of term
The term "thermoeconomics" was coined by American engineer Myron Tribus and used in a functional sense in relation to cost and efficency as presented in a 1962 paper that dealt with seawater desalination processes. [2] The term soon began to be used, essentially within the field of engineering, as the study of the efficency of energy use in industrial processes or as the "field that links economic analysis with thermodynamics". [3]
In 2001, social scientist Peter Corning began using the term thermoeconomics, in a functional sense, as the study of economic systems through the tools of energy and entropy. [5] Life, according to Corning, is a contingent and labor-intensive activity" in which "energetic profitability is essential to growth and reproduction". Corning calls this the first law of thermoeconomics. In 2007, similar to Corning, American chemical engineer Libb Thims defined "thermoeconomics" as that overarching human thermodynamics discipline, developed by those such as Frederick Soddy (1922), Nicholas Georgescu-Roegen (1971), Philip Mirowski (1989), and Jing Chen (2005), and others, that thermodynamically studies human societies from an economic point of view. [8]
Related terms
A related term is "biophysical economics" coined by American mathematician and physical chemist Alfred Lotka in 1924 used to signify the application of biological and physical principles to aid economic analysis. [4]
The related term "bioeconomics" refers to the study of how organisms of all kinds earn their living in nature's economy, with particular emphasis on co-operative interactions and the progressive elaboration of the division of labor. [6] Today, the term is used in various ways, from Georgescu-Roegen's thermodynamic analyses to the work in ecological economics on the problems of fisheries management. [7]
The term “econophysics”, described as the use of statistical mechanics to solve problems in economics, was coined by H. E. Stanley in the mid 90's, to describe the large number of papers written by physicists in the problems of (stock) markets, and first appeared in a conference on statistical physics in Calcutta in 1995.
Objections
Although most scientists agree that all physical processes abide by the laws of thermodynamics, there are many economists and physicists that maintain that the economy is exempt from these laws. In 2003, American physicist Joseph McCauley argued that “real financial markets cannot behave thermodynamically” because “financial markets are unstable, they do not approach statistical equilibrium, nor are there any available topological invariants on which to base a purely formal statistical mechanics.” Likewise, American economist Paul Samuelson, who earlier in his career was an avid user of thermodynamic analogies, concluded in 1972 that: [10]
"the sign of a half-baked speculator in the social sciences is his search for something in the social system that corresponds to the physicist's notion of entropy."
References
1. (a) Thims, Libb. (2007). Human Chemistry (Volume Two), (preview), pg. 677-678. Morrisville, NC: LuLu.
(b) Ksenzhek, Octavian S. (2007). Money: Virtual Energy - Economy through the Prism of Thermodynamics, Universal Publishers.
(c) Longman Dictionary of Contemporary English (Economy).
2. Yehia M. El-Sayed (2003). The Thermoeconomics of Energy Conversions (pg. 4). Pergamon.
3. (a) Sieniutycz, Stanislaw; Salamon, Peter (1990). Finite-Time Thermodynamics and Thermoeconomics (pg vii, 1). Taylor & Francis.
(b) Berry, R.S., Salamon, P. and Heal, G. (1978). "On a Relation between Thermodynamic and economic optima", Resources and Energy, 1, 125.
(c) Sieniutycz, S. (1978). Optimization in Process Engineering. Warsaw: WNT.
(d) Mansson, B.A.G. (1985). Contributions to Physical Resource Theory, Chalmers University of Technology, Goteborg.
4. (a) Lotka, A. J. (1924). Elements of Physical Biology (published in 1954 as Elements of Mathematical Biology), Baltimore: Williams and Wilkins.
(b) Cleveland, Cutler, J. (1999). "Biophysical Economics: From Physiocracy to Ecological Economics and Industrial Ecology." (PDF) In Bioeconomics and Sustainability: Essays in Honor of Nicholas Gerogescu-Roegen, J. Gowdy and K. Mayumi, Eds. (Edward Elgar Publishing, Cheltenham, England), pp. 125-154.
(c) Biophysical economics - Encyclopedia of Earth
5. Corning, Peter A. (2001). "Thermoeconomics - Beyond the Second Law" (PDF), Institute for the Study of Complex Systems.
6. Reinheimer, Hermann (1913). Evolution by Co-operation: A Study in Bioeconomics, London: Kegan, Paul, Trench, Trubner.
7. Corning, Peter, A. "Bioeconomics as a Subversive Science From 'Tastes' and 'Preferences' to 'Adaptation' and 'Basic Needs'" (Prepared for the Annual Meeting, Western Economics Association International San Francisco, CA, July 1996), Institute for the Study of Complex Systems.
8. (a) Thims, Libb. (2007). Human Chemistry (Volume One), (preview). pg. 53, Morrisville, NC: LuLu.
(b) Thims, Libb. (2007). Human Chemistry (Volume Two), (preview), pg. 677-678. Morrisville, NC: LuLu.
9. McCauley, Joseph L. (2003). “Thermodynamic Analogies in Economics and Finance: Instability of Markets.” Published in: Physica A 329 (2003): pp. 199-212.
10. Samuelson, Paul. (1972). The Collected Scientific Papers (pg. 450). Vol. 3, ed. R. Merton. Cambridge, Mass.: MIT Press.
11. (a) O’Hara, Phillip A. (1999). Encyclopedia of Political Economy, (section: “Entropy, Negentropy, and the Laws of Thermodynamics”, pg. 261-65). Routledge.
(b) Boulding, Kennith E. (1966). "The Economics of the Coming Spaceship Earth",
Further reading
- Schwartzman, David. (2007). "The Limits to Entropy: the Continuing Mususe of Thermodynamics in Environmental and Marxist theory", In Press, Science & Society
- A Thermodynamic Formulation of Economics (PDF) - Juergen Mimkes
- Bryant, John. (1979). “An Equilibrium Theory of Economics”. Energy Economics, Vol. 1, Issue 2, April. pgs. 102-11.
External links
- Thermodynamicsociety.org - a small discussion forum on the relation between physics and economics
- Energy, Entropy, Economics, and Ecology (a list of related excerpts, articles, and books)
