Thermoeconomics

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In the natural sciences, thermoeconomics is the statistical physics of economic value.[1][2] According to Peter Corning, thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood through the second law of thermodynamics but in terms of such economic criteria as productivity, efficiency, and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work.[3]

Thermoeconomists reason that human economic systems can be modeled as thermodynamic systems then, based on this premise, attempt to develop theoretical economic analogs of the first and second laws of thermodynamics.[4] In addition, the thermodynamic quantity exergy, i.e. measure of the useful work energy of a system, is the most important measure of value. In thermodynamics, thermal systems exchange heat, work, and or mass with their surroundings; in this direction, relations between the energy associated with the production, distribution, and consumption of goods and services can be determined.

Contents

[edit] History

Thermoeconomics is a relatively new science, although it traces its conceptual origins to the early 18th century views of the physiocrats. One of the first publications to discuss aspects of economic activity from an energy perspective was the 1865 book The Coal Question by Stanley Jevons, the father of modern notions of utility maximisation in neoclassical economics. Later, Paul Samuelson, with his Foundations of Economic Analysis, and Nicholas Georgescu-Roegen, in the late 1960s, began to apply thermodynamic and statistical-mechanical theory to economics

[edit] Overview

Economic systems in a society always involve matter, energy, entropy, and information. Moreover, the aim of many economic activities is to achieve a certain structure. In this manner, thermoeconomics attempts to apply the theories in non-equilibrium thermodynamics, in which structure formations called dissipative structures form, and information theory, in which information entropy is a central construct, to the modeling of economic activities in which the natural flows of energy and materials function to create scarce resources.[5] In thermodynamic terminology, human economic activity may be described as a dissipative system, which flourishes by transforming and exchanging resources, goods, and services. These processes involve complex networks of flows of energy and materials.

[edit] Engineering economics

In engineering and industrial design, thermoeconomics applies to methodologies combining exergy and economics for optimizing the design and operation of thermal systems, a typical example being power generation units.[6] In plant design, for example, energy and mass flowsheets and stream tables are generated which shows the major pieces of equipment. Using these, cost data is generated. Cost estimates are the driving force for any design study.

[edit] Related views

A related term is the recently coined "physioeconomics" by economist Philip Parker, from his 2000 book Physioeconomics - the Basis for Long-Run Economic Growth, in which the physical laws and various physiologial concepts are used to explain both microeconomic and macroeconomic behaviors, especially as these might vary from country to country. According to Parker, humans are homeotherms by nature. Thus, sciences such as heat transfer and thermodynamics, in coordination with recent findings in neuroscience, such as the relation between the hypothalamus and economic function, can be used to model economic aspects such as utility and consumption, which vary per latitude.

According to these views, a country's performance is gauged not by its absolute level of income or consumption, but rather by how far it is from homeostatic steady state. Countries closer to their homeostatic steady state are predicted to grow slower than those farther away, even though they might have lower levels of consumption.

Recently, there has been a push to connect neurochemistry and medicine to economics. In the 1993 Nobel Lecture by economist Robert Fogel, for example, he acknowledges a link between long-run economic growth and fundamental principles of physics and physiology, where he states:

“ Recent findings in the biomedical area call attention to what may be called the thermodynamic and physiological factors in economic growth. ”

[edit] See also

[edit] References

  1. ^ Georgescu-Roegen, Nicholas (1971). The Entropy Law and the Economic Process. Harvard University Press. ISBN 0-674-25781-2. 
  2. ^ Chen, Jing (2005). The Physical Foundation of Economics - an Analytical Thermodynamic Theory. World Scientific. ISBN 981-256-323-7. 
  3. ^ Corning, P. (2002). “Thermoeconomics – Beyond the Second Law” – source: www.complexsystems.org
  4. ^ Burley, Peter; Foster, John (1994). Economics and Thermodynamics – New Perspectives on Economic Analysis. Kluwer Academic Publishers. ISBN 0-7923-9446-1. 
  5. ^ Sieniutycz, Stanislaw; Salamon, Peter (1990). Finite-Time Thermodynamics and Thermoeconomics. Taylor & Francis. ISBN 0-8448-1668-X. 
  6. ^ Moran, Michael, J.; Shapiro, Howard, N. (2003). Fundamentals of Engineering Thermodynamics. Wiley. ISBN 0-471-27471-2. 

[edit] Further reading

  • Soddy, Frederick (1922). Cartesian Economics: The Bearing of Physical Science upon State Stewardship. London:Hendersons. 
  • El-Sayed, Yehia, M. (2003). The Thermoeconomics of Energy Conversions. Pergamon. ISBN 0-08-044270-6. 

[edit] External links

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