by Whatever » Sun 24 Jul 2016, 18:11:03
$this->bbcode_second_pass_quote('radon1', 'B')rilliant. Thanks for posting this. Fantastic illustration.
Again, can they please present proven formulas that support their hypothesis? Or at least, a verifiable set of historical data confirming it? Because general statements, which have not been proven, are just that - empty general statements. Waste of time, in other words.
Not saying that they are wrong, but can they please take time, do the real physicists' work, and actually prove their propositions, rather than play a blogger?
Here is the introduction to their formal paper:
http://www.mdpi.com/1099-4300/11/4/606/htm$this->bbcode_second_pass_quote('', 'E')ntropy 2009, 11(4), 606-633; doi:10.3390/e11040606
Article
Economies Evolve by Energy DispersalArto Annila 1,2,3,* and Stanley Salthe 4,*
1Department of Biosciences, University of Helsinki, FI-00014 Helsinki, Finland
2Institute of Biotechnology, University of Helsinki, FI-00014 Helsinki, Finland
3Department of Physics, University of Helsinki, FI-00014 Helsinki, Finland
4Biological Sciences, Binghamton University, Binghamton, New York 13754, NY, USA
*Authors to whom correspondence should be addressed.
Received: 17 September 2009 / Accepted: 14 October 2009 / Published: 21 October 2009
Abstract: Economic activity can be regarded as an evolutionary process governed by the 2nd law of thermodynamics. The universal law, when formulated locally as an equation of motion, reveals that a growing economy develops functional machinery and organizes hierarchically in such a way as to tend to equalize energy density differences within the economy and in respect to the surroundings it is open to. Diverse economic activities result in flows of energy that will preferentially channel along the most steeply descending paths, leveling a non-Euclidean free energy landscape. This principle of ‘maximal energy dispersal’, equivalent to the maximal rate of entropy production, gives rise to economic laws and regularities. The law of diminishing returns follows from the diminishing free energy while the relation between supply and demand displays a quest for a balance among interdependent energy densities. Economic evolution is dissipative motion where the driving forces and energy flows are inseparable from each other. When there are multiple degrees of freedom, economic growth and decline are inherently impossible to forecast in detail. Namely, trajectories of an evolving economy are non-integrable, i.e. unpredictable in detail because a decision by a player will affect also future decisions of other players. We propose that decision making is ultimately about choosing from various actions those that would reduce most effectively subjectively perceived energy gradients.
Keywords: energy transduction; entropy; hierarchy; evolution; natural process; natural selection; statistical physics; thermodynamics
PACS Codes: 05. Statistical physics; hermodynamics; and nonlinear dynamical systems; 87.23.-n Ecology and evolution; 89.65.-s Social and economic systems; 89.75.-k Complex systems
1. Introduction
Parallels between economic and biological systems have not gone unnoticed. Common roots stem from the formulation of evolutionary theory based on natural selection [1]. Darwin was inspired by the idea that favorable variation is preserved under a struggle for existence when reading Malthus [2]. The tenet of self-directed and self-regulatory processes was first posited by classical liberalism as being manipulated by an ‘invisible hand’ [3], and was later reworded as laissez-faire policy [4] and is today given, albeit in more refined terms, as free-market principles [5].
It is time to re-inspect the fundamental resemblance between economic and biological systems using the 2nd law of thermodynamics, which was recently formulated as an equation of motion for natural processes [6,7,8]. In this form, evolution by natural selection can be recognized as being guided by the 2nd law. This relationship is in agreement with earlier reasoning about the governing role of the 2nd law, known also as the principle of increasing entropy, in directing numerous natural processes, animate as well as inanimate [9,10,11,12,13,14,15,16,17,18].
Certainly in the past too, the principle of increasing entropy has invigorated cross-disciplinary thinking [19,20] and given rise to evolutionary economics, thermoeconomics and econophysics [21,22,23,24,25,26,27,28]. However, the inspiration has not been exhausted, because the entropy law, in the words of Georgescu-Roegen is still surrounded by many conceptual difficulties and equally numerous controversies [19].
Common considerations about entropy contrast with the principal findings of this study. It is reasoned here that economic activities are not confined by the 2nd law but are actually manifestations of it. The entropy of an entire economic system does not decrease due to its diverse activities at the expense of entropy increase in its surroundings. Rather, it follows from the conservation of energy that both the economy and its surroundings are increasing in entropy (decreasing in available energy) when mutual differences in energy densities are leveling off as a result of economic activity. The key here is that according to the statistical physics of open systems increasing entropy means dispersal of energy, rather than as increasing disorder. Finally, we understand the ultimate motivation of economic activities, not as the maximizing of profit or productivity, but rather to disperse energy.
These conclusions stem from the same statistical theory [6,7,8] that has been recently applied to understand diverse evolutionary processes [29,30,31,32,33,34,35,36,37] The 2nd law is found to yield functional structures, hierarchical organizations, skewed distributions and sigmoid cumulative curves that also characterize economies. Here, we use the thermodynamic formalism to address some fundamental questions of economics. What drives economic growth and diversification? Where do the law of diminishing returns, the Pareto principle, the balance of supply and demand, and the principle of comparative advantage come from? Why is it so difficult to predict economic growth and decline?
These questions are approached here from a strictly material and operational standpoint. It is understood that this standpoint of thermodynamics which relates everything directly or indirectly in terms of energy may immediately strike some as deficient. For example, is not information, as an essential guide of economic activities, immaterial? However, it has been argued that no information can be stored or processed without being represented in a physical form that, in turn, is subject to the laws of thermodynamics [38,39,40]. Moreover we fully acknowledge that physics in its traditional deterministic and reductionist form applicable for closed systems is rightfully rejected in attempting to account for behavior of open systems, e.g., for human endeavors. However the 2nd law, when formulated properly using the statistical physics of open systems, reveals that nature is an intrinsically interdependent system and its evolution is inherently a non-deterministic process. Thus, our holistic account aims to remove doubts and concerns commonly leveled against physicalism. Yet, our objective is not to turn economics into physics, but to clarify economic activity in the context of the 2nd law, which accounts for all irreversible motions in nature.
We will proceed to describe an economy as an energy transduction system, first in qualitative and then in mathematical terms. Thereafter the intractable nature of economic progression and regression is clarified, and, as well, accompanied structural, functional and organizational changes are exemplified. Some familiar economic relationships and regularities are derived from the ubiquitous natural law. Finally, the subjective nature of decision making is discussed.
$this->bbcode_second_pass_quote('', 'T')he equation of motion for an evolving economy (Equation 3.3) can be rewritten using the definition of entropy S = kBlnP as the law of increasing entropy [6,8]:
The equation of motion says that entropy S is increasing when energy density differences, contained in Ajk, are decreasing by way of various flows vj. The non-negativity of dS/dt is apparent from the quadratic form obtained by inserting Eqaution 3.5 in 3.6. The formula obtained from statistical physics of open systems is consistent with the basic maxim of chemical thermodynamics [45], i.e., the entropy maximum corresponds to the free energy minimum as well as with the classical form of dS given by Carnot [46], the Gouy-Stodola theorem [55,56] and the mathematical foundations of thermodynamics [50,57,58].
The form of Equation 3.6 makes it explicit that it is the energy density difference between the system and its surroundings that drives the probable motions. The economy will prosper when the difference from its surroundings is positive and conversely the economy will decline when the difference is negative. The significance of surroundings is apparent, for example, when an economy is curtailed by an embargo. It is emphasized that both during economic progression and regression, the entropy of the economy, just as the entropy of its surroundings, are increasing. There is no room for a provisional proposition that the entropy of a system could possibly decrease at the expense of entropy increase at its exterior (or vice versa). Such generosity would violate the conservation of energy because the system and its surroundings share the same flows at their mutual interfaces [8].