Economics from a thermodynamics point of view

The Week In Review section of the sunday New York Times had an article about considering an economy as a machine, and hence applying the laws of thermodynamics as one would to any machine.

The concept was pioneered by Nobel Laureate Frederick Soddy.

He offered a perspective on economics rooted in physics — the laws of thermodynamics, in particular. An economy is often likened to a machine, though few economists follow the parallel to its logical conclusion: like any machine the economy must draw energy from outside itself. The first and second laws of thermodynamics forbid perpetual motion, schemes in which machines create energy out of nothing or recycle it forever. Soddy criticized the prevailing belief of the economy as a perpetual motion machine, capable of generating infinite wealth — a criticism echoed by his intellectual heirs in the now emergent field of ecological economics.

A more apt analogy, said Nicholas Georgescu-Roegen (a Romanian-born economist whose work in the 1970s began to define this new approach), is to model the economy as a living system.

Mr. Soddy was “roundly dismissed as a crank”.

But this is a very interesting idea. We know that nature is excellent at self regulation. A simplistic example is that of the natural predator cropping up to regulate the growth of a species.

We have also copied nature, consciously or unconsciously, in various technology designs. The helicopter resembles a gnat, subway trains resemble earthworms.

So why shouldn’t an economy, built out of the transactions between products of nature i.e. humans, be subject to laws of nature? It’s not such a far fetched idea. We apply Newton’s third law of equal and opposite reaction when we preach on how to treat others. We apply the law of inertia when justifying our own resistance to change.

More recently, there has been a convergence of science, specifically quantum physics, and “esoteric” mystical concepts such as omnipresence, omniscience, higher vibrations, pranic theories and so on. Although yogis such as Paramahansa Yogananda, Swami Satyananda. Swami Rama and Dr. Ramamurti Mishra among others quoted scientific theories and cited empirical evidence to expound on yogic concepts, the convergence gained steam with books such as the The Tao of Physics by Fritjof Capra.

Mr. Soddy’s Ecological Economy

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