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Broadly about specifics

Discussions about the economic and financial ramifications of PEAK OIL

Broadly about specifics

Unread postby radon1 » Sat 23 Jul 2016, 07:15:20

(I originally wrote this as a post in the When a cornucopian rejects Jevons Paradox thread, but then decided that it deserves a separate topic).


People always like to talk about a "system", without explaining what the "system" is, as the word sounds solid enough such that no one would ask any questions. In any event, whenever someone talks about a system, he implies that there is a function that describes that system:

F = F(x1,...,xn, t),

where x1,...,xn is a set of independent variables, and t - is time.

An example of such a function in a thermodynamic system is temperature; in a mechanical system - momentum, and so on. An economic system is usually described by function "GDP", or "output" designated as Q. In the most general form,

Q = Q(p, m, R, t)

where p - is people, m - is money, R - is resources (this is a vector or even a matrix), and t - is time. Here the analytical division begins, because most people do not recognize this function in this form.

First, the primitive "naturalists" go. They discount the money as an inconsequential nonsense, and believe that people and labor is a resource which is indistinguishable from other resources. In their world, the output function looks like

Q = Q (R, t).

In other words, the output function is driven purely by the laws of physics. Sounds familiar, doesn't it? This is quite a significant share of the "peaker" or "doomer" audience - various resourcists, entropyists, anti-entropyists, thermodynamists, eroists, energetists, propagandists of the "Monstrovich's paper" and so on. These people fail to notice that for thousands of years, when the energy and resources were available in abundance, and when, according to them, the growth of output Q should have been at its maximum - because the "total available energy and resources" were at maximum - nobody gave a heck about those energy and resources and the growth was minuscule or non-existent, and something outside the realm of Q(R,t) should have happened in order to mount the present-day growth machine.

These people are often preaching some sort dystopian future as the "cure from present-day ills" - all people and resources should be arranged in a specific order in accordance with some formulas and calculations (which they don't usually "have to hand"). However, as they normally see themselves as subjects rather than objects of their experimentation, they fail to notice that if they were subjected to their own recommended treatment by someone else, they could be very unhappy about their place in that new order.

The next category is "austrians" (from the "Austrian school of economics"). This is probably the majority of the audience, and majority of the educated humans at large, even though they are unaware of it. These recognize the uniqueness of people and labour in the equation, but believe that money are an expression of value of resources, and thus, are indistinguishable from resources - you can take any resource and use it as money. Therefore, "money are objective" and are not an independent variable, and from their perspective the output function looks like this:

Q = Q (p, R, t).

The expressions that characterize this approach are "gold is money", "printing money equals inflation", "petrodollar", "energy is money" and so on.

The “austrians” do have an economic theory that demonstrates that the humanity should be on an unimpeded path to prosperous economic development. However, in practice they observe that the reality fails to live up to their theory. Their explanation is simple (as luckily “people” is a separate independent variable in their approach): the failure of economic development is due to some evil conspiracy "at very particular levels" (banksters, illuminati, Jekyll island, fractional reserve banking, evil capitalism etc), and if we change "wrong people" p at those levels, to "right people" p', then the economic paradise will come. The volumes of letters being typed in devotion to this topic is absolutely astounding.

The next group is “orthodoxists”, traditional economists, econ101 etc. These people suffer from multi-polar personality disorder. They basically adopt any form of the output function that helps them advance their argument at any specific moment even if this is contrary to what they were saying a minute ago. On one hand, they kinda recognise a separate role of money - they have the production function etc. Since they sense that money do not have to follow the logic of physics laws (“money can be made from thin air”) while the output function is somewhat proportional to money, they argue that “growth can be unlimited” in a limited “system”. They conveniently forget at this moment, however, that on another page they argued that money were an expression of value of resources (i.e. “money are objective” in full agreement with the “austrians”) and as such should be subject to the same physical limitation as the resources do. And even then, their “unlimited growth” argument is akin to saying “I sold you 1kg of meat today, tomorrow I will sell you 1000g of meat, thus achieving 100000% output growth”, as their argument, at a closer look, boils down to playing with the money denominations.

So, what's the point?

The point is that we understand that

Q = Q (p, m, R, t).

Don't we?
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Re: Broadly about specifics

Unread postby dissident » Sat 23 Jul 2016, 18:52:46

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Re: Broadly about specifics

Unread postby ennui2 » Sat 23 Jul 2016, 19:03:19

Still linking to dieoff.org? In 2016? Really?

Radon is onto something insofar as yes, it IS possible to classify different groups of doomers into buckets. I started doing this, gosh, maybe from around 2007-9. I get criticized as being a strawman guy a lot, but the fact of the matter is that doomerism DOES fall into buckets or schools of thought, and once someone locks into a paradigm, it's almost impossible for them ever to dislodge themselves.

The purpose of a site like this should, in theory, be a proving ground where we can pinch our arms to see whether our current convictions about how the world works are true or not. You know, intellectual curiosity. Instead people don't really leave the door open to the idea their paradigms are wrong. And so discussion never really happens, only shouting matches, hence my favorite gif:

Image
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Re: Broadly about specifics

Unread postby Cog » Sat 23 Jul 2016, 19:13:46

It is possible to break the chains of doomerism if you put your mind to it. I was as doomy as anyone in 2009. A few years later I realized I was wallowing in it, searching out only doomy stories to confirm my bias, and was generally miserable.

I still read the doom posted on the forum but with a open mind as to its validity.
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Re: Broadly about specifics

Unread postby Whatever » Sat 23 Jul 2016, 19:15:56

radon1 wrote:(I originally wrote this as a post in the When a cornucopian rejects Jevons Paradox thread, but then decided that it deserves a separate topic).


People always like to talk about a "system", without explaining what the "system" is, as the word sounds solid enough such that no one would ask any questions. In any event, whenever someone talks about a system, he implies that there is a function that describes that system:

F = F(x1,...,xn, t),

where x1,...,xn is a set of independent variables, and t - is time.

An example of such a function in a thermodynamic system is temperature; in a mechanical system - momentum, and so on. An economic system is usually described by function "GDP", or "output" designated as Q. In the most general form,

Q = Q(p, m, R, t)

where p - is people, m - is money, R - is resources (this is a vector or even a matrix), and t - is time. Here the analytical division begins, because most people do not recognize this function in this form.

First, the primitive "naturalists" go. They discount the money as an inconsequential nonsense, and believe that people and labor is a resource which is indistinguishable from other resources. In their world, the output function looks like

Q = Q (R, t).

In other words, the output function is driven purely by the laws of physics. Sounds familiar, doesn't it? This is quite a significant share of the "peaker" or "doomer" audience - various resourcists, entropyists, anti-entropyists, thermodynamists, eroists, energetists, propagandists of the "Monstrovich's paper" and so on. These people fail to notice that for thousands of years, when the energy and resources were available in abundance, and when, according to them, the growth of output Q should have been at its maximum - because the "total available energy and resources" were at maximum - nobody gave a heck about those energy and resources and the growth was minuscule or non-existent, and something outside the realm of Q(R,t) should have happened in order to mount the present-day growth machine.

That sounds real sciency and mathematical and all, but it is really just your clumsy propaganda.

Who the hell are you talking about?

"...according to them, the growth of output Q should have been at its maximum - because the "total available energy and resources" were at maximum"

That makes no sense. You are saying that the thermodynamic approach leaves out people and money, and supposedly only considers resources and time. Well complexity takes time to evolve. So, according to you, proponents of thermodynamics are now failing to consider even time as well? That would leave only Q(R)! Where do you get this stuff? You are working *WAY* too hard to put words into thermodynamic mouths.

I have mentioned that people should take a look at the Korowicz paper.

http://www.feasta.org/wp-content/upload ... rowicz.pdf

It is not about thermodynamics at all. It is about complex non-linear system dynamics and risk analysis applied to civilization.

radon1 wrote:These people are often preaching some sort dystopian future as the "cure from present-day ills" - all people and resources should be arranged in a specific order in accordance with some formulas and calculations (which they don't usually "have to hand"). However, as they normally see themselves as subjects rather than objects of their experimentation, they fail to notice that if they were subjected to their own recommended treatment by someone else, they could be very unhappy about their place in that new order.

You are definitely not talking about me. I have never preached a dystopian future as a cure for present day ills. I have been saying quite clearly that there is no cure for today's ills. I am saying that social collapse and massive human die-off are coming, whether we change our ways or not. That is all. Get it?



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Re: Broadly about specifics

Unread postby Whatever » Sat 23 Jul 2016, 19:56:42

ennui2 wrote:I get criticized as being a strawman guy a lot

I know it must hurt, but that is a pretty valid criticism in your case, ennui. Perhaps you should take a look in the mirror.

ennui2 wrote:The purpose of a site like this should, in theory, be a proving ground where we can pinch our arms to see whether our current convictions about how the world works are true or not. You know, intellectual curiosity. Instead people don't really leave the door open to the idea their paradigms are wrong. And so discussion never really happens, only shouting matches

You mean like this example from one of your recent posts?:

post1320668.html#p1320668

Image

Is this what you mean by intellectual curiosity, ennui?

You don't seem very open minded to the idea that your paradigm might be wrong.



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Re: Broadly about specifics

Unread postby Whatever » Sat 23 Jul 2016, 20:16:29

Cog wrote:It is possible to break the chains of doomerism if you put your mind to it. I was as doomy as anyone in 2009. A few years later I realized I was wallowing in it, searching out only doomy stories to confirm my bias, and was generally miserable.

I still read the doom posted on the forum but with a open mind as to its validity.

So I guess it is true. Ignorance = Bliss.

If it is true happiness you seek, I hear it is somewhat elusive these days:

how-elusive-is-happinesss-in-the-modern-world-t72703.html



---Futilitist 8)
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Re: Broadly about specifics

Unread postby AdamB » Sat 23 Jul 2016, 20:24:00

radon1 wrote:So, what's the point?

The point is that we understand that

Q = Q (p, m, R, t).

Don't we?


Peakers can't get bell shaped curves to fit empirically observed oil production rates..and you think they can do MATH?? The most famous people over the past decade within the peak oil movement are an astrologist who ratted out the religious bent of his followers, a beat cop who killed himself one evening when things just wouldn't collapse, and a violin playing new age Californian who dropped out of college because that weed was da debil!

What in the world gives you the impression that faith and belief based concepts requirs an underlying understanding of even arithmetic? See many differential equations in the Bible? Me neither.
Plant Thu 27 Jul 2023 "Personally I think the IEA is exactly right when they predict peak oil in the 2020s, especially because it matches my own predictions."

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Re: Broadly about specifics

Unread postby ennui2 » Sat 23 Jul 2016, 21:09:16

Whatever wrote:You mean like this example from one of your recent posts?:

Image

Is this what you mean by intellectual curiosity, ennui?


I gave him what he wanted. After all, he says he's only here for the yuks.
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Re: Broadly about specifics

Unread postby dissident » Sat 23 Jul 2016, 21:10:48

Thermodynamics is applicable to nonlinear dynamical systems:

https://en.wikipedia.org/wiki/Statistical_mechanics

Economics is not a science. during the 1800s it introduced a thermodynamic-like formulation but this is fake.

Humanity is part of the physical world. It is subject to conservation of energy and is a dynamical system. Humans like to engage in magical thinking and pretend they stand apart from physical reality. But that is itself subject to physical constraints (the brain can do all sorts of cut and paste constructs but cannot generate models of reality beyond the available set of experiences and does not do such a good job with this meager data; the ancient Greek philosophers were dead wrong when they believed that they could understand the universe by reasoning it out -- no empirical data input = no understanding).

None of the variables used in economics is fundamental. All of them are actually complex unknown functionals of other physical variables (e.g. energy). The problem is that economics pretends its variables are fundamental and basically indivisible, which is utter nonsense.
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Re: Broadly about specifics

Unread postby Whatever » Sat 23 Jul 2016, 21:22:38

dissident wrote:Thermodynamics is applicable to nonlinear dynamical systems:

https://en.wikipedia.org/wiki/Statistical_mechanics

Economics is not a science. during the 1800s it introduced a thermodynamic-like formulation but this is fake.

Humanity is part of the physical world. It is subject to conservation of energy and is a dynamical system. Humans like to engage in magical thinking and pretend they stand apart from physical reality. But that is itself subject to physical constraints (the brain can do all sorts of cut and paste constructs but cannot generate models of reality beyond the available set of experiences and does not do such a good job with this meager data; the ancient Greek philosophers were dead wrong when they believed that they could understand the universe by reasoning it out -- no empirical data input = no understanding).

None of the variables used in economics is fundamental. All of them are actually complex unknown functionals of other physical variables (e.g. energy). The problem is that economics pretends its variables are fundamental and basically indivisible, which is utter nonsense.

Yes. They don't call economics the dismal science for nothing.*

*(Just joking. I know that's not really why they call it the dismal science.)

I agree that economics is definitely not science. And of course you are correct that the biophysical universe is a big mystery to most folks. Magical thinking is the norm.



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Re: Broadly about specifics

Unread postby regardingpo » Sat 23 Jul 2016, 21:26:28

radon1 wrote:They discount the money as an inconsequential nonsense... Sounds familiar, doesn't it?

No, it doesn't sound familiar. For example, literally everyone on this site agrees that high price and cheap money is what fuelled the fracking boom.

You do know what a strawman argument is?
Do you?


radon1 wrote:The point is that we understand that
Q = Q (p, m, R, t).
Don't we?

No again. It may be a point, but it's certainly not the main point.

The main point is that it is R which determines what p can possibly do given enough t (and in the current system m).

To put this as simply as possible, humans can survive without m, but not without R. Or without an environment which can support human life, but it looks like you left that out of your equation.
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Re: Broadly about specifics

Unread postby radon1 » Sun 24 Jul 2016, 06:03:07

dissident wrote:http://dieoff.org/page241.htm


None of the variables used in economics is fundamental. All of them are actually complex unknown functionals of other physical variables (e.g. energy). The problem is that economics pretends its variables are fundamental and basically indivisible, which is utter nonsense.


So, how are you going to analyze Q using the "scientific method"?

What is your solution linking "physical variables" to Q?
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Re: Broadly about specifics

Unread postby radon1 » Sun 24 Jul 2016, 06:05:14

regardingpo wrote:
To put this as simply as possible, humans can survive without m, but not without R. Or without an environment which can support human life, but it looks like you left that out of your equation.


This is not about survival, this is about Q.

Environment is a part of R.
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Re: Broadly about specifics

Unread postby regardingpo » Sun 24 Jul 2016, 12:21:45

radon1 wrote:This is not about survival, this is about Q.

I never said it was. I just used one extreme example to make a simple yet important point.

radon1 wrote:Environment is a part of R.

No, it isn't. R is part of the environment, not the other way round. For example, living on a planet with a suitable gravitational constant counts as environment, but not as resource.

P.S. If you're gonna respond to this by saying your topic is not about gravity, please don't bother.
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Re: Broadly about specifics

Unread postby Whatever » Sun 24 Jul 2016, 16:16:06

radon1 wrote:So, how are you going to analyze Q using the "scientific method"?

What is your solution linking "physical variables" to Q?

The solution is to stop listening to economists. Let the physicists solve it.

http://phys.org/news/2009-11-law-thermo ... ution.html

Second Law of Thermodynamics May Explain Economic Evolution

(PhysOrg.com) -- Terms such as the "invisible hand," laissez-faire policy, and free-market principles suggest that economic growth and decline in capitalist societies seem to be somehow self-regulated. Now, scientists Arto Annila of the University of Helsinki and Stanley Salthe of Binghampton University in New York show that economic activity can be regarded as an evolutionary process governed by the second law of thermodynamics. Their perspective may provide insight into some fundamental economic questions, such as the causes of economic growth and diversification, as well as why it’s so difficult to predict economic growth and decline.

As Annila and Salthe explain in their study published in Entropy, the second law of thermodynamics was originally formulated to describe the flow of heat from hot to cold areas. However, when formulated as an equation of motion, the second law can be used to describe many other processes in energetic terms, such as natural selection for the fittest species, organization of cellular metabolism, or an ecosystem’s food web. In these systems, free energy is consumed; that is, energy is dispersed in a way to promote the maximal increase of entropy, which is the essence of the second law.

While economic activities are traditionally viewed as being motivated by profit, Annila and Salthe argue that the ultimate motivation of economic activities is not to maximize profit or productivity, but rather to disperse energy. From this perspective, a growing economy consists of entities (e.g. products, labor, etc.) that are assigned an energy density resulting from their individual production processes. These density differences are the forces that direct energy flows (e.g. manufacturing processes) to equalize energy density differences within the system and with respect to its surroundings.

The scientists argue that this tendency to disperse the maximum amount of energy (that is, to consume free energy in the least time) is what gives rise to economic laws and regularities. Further, economies organize themselves in hierarchical systems within systems to improve on energy dispersal and to access new sources of energy. For instance, the global economy is comprised of national economies, each housing economic zones that in turn accommodate districts, firms, households and so on, organized so that global resources are produced and consumed most effectively in terms of energy dispersal.

The entire economy is a direct outcome of the second law of thermodynamics. Do you even have a place for the second law in your formula?



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Re: Broadly about specifics

Unread postby radon1 » Sun 24 Jul 2016, 17:12:48

Whatever wrote: Let the physicists solve it.


Sure, let them do that. Can we please see the formalized solution, linking Q to whatever physical matters they pick? A formalized solution, rather than general talk.

The scientists argue that this tendency to disperse the maximum amount of energy (that is, to consume free energy in the least time) is what gives rise to economic laws and regularities. Further, economies organize themselves in hierarchical systems within systems to improve on energy dispersal and to access new sources of energy. For instance, the global economy is comprised of national economies, each housing economic zones that in turn accommodate districts, firms, households and so on, organized so that global resources are produced and consumed most effectively in terms of energy dispersal.


Brilliant. 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?

Do you even have a place for the second law in your formula?


You have R in the formula, and obviously, whatever applies to R, applies to the overall formula. Did you know it, by the way? And by the way, are you sure you understand what the second law of thermodynamics is?
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Re: Broadly about specifics

Unread postby sunweb » Sun 24 Jul 2016, 17:17:21

ennui2 - Jay is a friend. I might have been there before him.
In 1968, while fishing on the causeway between Miami and Miami Beach, I had an epiphany. I had just finished a BS in anthropology and had studied psychology for many years (and went on later to get a degree, become licensed and practice for 20 years).

I was looking at the skyline of Miami (boy I bet it has changed) and realized that it couldn’t go on. “Civilization” was asking too much of us. We are too separated from nature. We are too pack in together. Our original child development situation had warped. Our connection to our brethren had been lost. We had allowed our hubris and arrogance to blind us to our situation.

In 1972, Limits to Growth came out. So besides not being healthy for humans psychologically, sociologically or spiritually, we are creating an unsustainable, environmentally devastating and devastated world.
 Then Energy for Survival by Wilson Clark, Energy Basis for Man and Nature by Howard T. Odum and Elisabeth C. Odum, The Fires of Culture by Carol E Steinhart, Technics and Civilization by Lewis Mumford, Creating Alternative Futures: The End of Economics by Henderson, Hazel.
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Re: Broadly about specifics

Unread postby Whatever » Sun 24 Jul 2016, 18:11:03

radon1 wrote:Brilliant. 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

Entropy 2009, 11(4), 606-633; doi:10.3390/e11040606

Article

Economies Evolve by Energy Dispersal

Arto 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.

I'm skipping quite a bit, but here is the basic equation:

The 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]:

Image

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].

There you go. Good luck trying to fit that equation into your simplistic economic "formula".

radon1 wrote:
Futilitist wrote:Do you even have a place for the second law in your formula?

You have R in the formula, and obviously, whatever applies to R, applies to the overall formula. Did you know it, by the way?

No, I didn't. I don't care about your silly economic "formula".

radon1 wrote:And by the way, are you sure you understand what the second law of thermodynamics is?

Yes.



---Futilitist 8)
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Re: Broadly about specifics

Unread postby radon1 » Sun 24 Jul 2016, 18:55:30

Whatever wrote:
Here is the introduction to their formal paper:



Fail. They make no effort to prove that their model does apply to real economies. They simply take a "system", postulate axiomatically that their approach applies to this "system", and then refer to this "system" as to an "economy" and produce their mind games (basically copy-pasting some physics/statistics paper):

2. Economy as an Energy Transduction System
According to our naturalistic approach, an economy is an energy transduction system. To describe its characteristics and evolution in a self-similar manner using the statistical physics of open systems, all entities of the system are regarded as systems themselves (Figure 1). Each entity is associated with an energy density that results from its physical production processes.


You could equally take some computer game strategy and deduce that this game's logic applies to real economies by postulating that it does. Great job.

The text itself is full of, let's say, meaningless word soup, for all practical purposes. What is "energy density" of an economy? How do you measure it? What is entropy(!) of an economy?

But this was a good illustration of "naturalists".

Futilitist wrote:No, I didn't. I don't care about your silly economic "formula".


It does not apply to some specific formula, it applies to formulas in general. You come across as amateurish.

And by the way, are you sure you understand what the second law of thermodynamics is?
Yes.


You probably don't, see above.
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