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Thermoeconomics, also referred to as biophysical economics, is a school of heterodox economics that applies the laws of statistical mechanics to economic theory. [1] Thermoeconomics can be thought of as the statistical physics of economic value [2] and is a subfield of econophysics.

Heterodox economics schools of economic thought or methodologies that are outside "mainstream economics", contrasting with or going beyond neoclassical economics

Heterodoxy is a term that may be used in contrast with orthodoxy in schools of economic thought or methodologies, that may be beyond neoclassical economics. Heterodoxy is an umbrella term that can cover various schools of thought or theories. These might for example include institutional, evolutionary, Georgist, Austrian, feminist, social, post-Keynesian, ecological, Marxian, socialist and anarchist economics, among others.

Laws of thermodynamics law that defines fundamental physical quantities that characterize thermodynamic systems and their behavior

The three laws of thermodynamics define physical quantities that characterize thermodynamic systems at thermal equilibrium. The laws describe how these quantities behave under various circumstances, and preclude the possibility of certain phenomena.

Statistical physics is a branch of physics that uses methods of probability theory and statistics, and particularly the mathematical tools for dealing with large populations and approximations, in solving physical problems. It can describe a wide variety of fields with an inherently stochastic nature. Its applications include many problems in the fields of physics, biology, chemistry, neuroscience, and even some social sciences, such as sociology and linguistics. Its main purpose is to clarify the properties of matter in aggregate, in terms of physical laws governing atomic motion.



Thermoeconomists maintain that human economic systems can be modeled as thermodynamic systems. Thermoeconomists argue that economic systems always involve matter, energy, entropy, and information. [3] Then, based on this premise, theoretical economic analogs of the first and second laws of thermodynamics are developed. [4]

Economic system system of production and exchange

An economic system, or economic order, is a system of production, resource allocation and distribution of goods and services within a society or a given geographic area. It includes the combination of the various institutions, agencies, entities, decision-making processes and patterns of consumption that comprise the economic structure of a given community. As such, an economic system is a type of social system. The mode of production is a related concept. All economic systems have three basic questions to ask: what to produce, how to produce and in what quantities and who receives the output of production.

Thermodynamic system precisely specified macroscopic region of the universe, defined by boundaries

A thermodynamic system is a group of material and/or radiative contents. Its properties may be described by thermodynamic state variables such as temperature, entropy, internal energy, and pressure.

Matter Substance that has mass and volume

In classical physics and general chemistry, matter is any substance that has mass and takes up space by having volume. All everyday objects that can be touched are ultimately composed of atoms, which are made up of interacting subatomic particles, and in everyday as well as scientific usage, "matter" generally includes atoms and anything made up of them, and any particles that act as if they have both rest mass and volume. However it does not include massless particles such as photons, or other energy phenomena or waves such as light or sound. Matter exists in various states. These include classical everyday phases such as solid, liquid, and gas – for example water exists as ice, liquid water, and gaseous steam – but other states are possible, including plasma, Bose–Einstein condensates, fermionic condensates, and quark–gluon plasma.

Moreover, many economic activities result in the formation of structures. Thermoeconomics applies the statistical mechanics of non-equilibrium thermodynamics to model these activities. [1] In thermodynamic terminology, human economic activity may be described as a dissipative system, which flourishes by consuming free energy in transformations and exchange of resources, goods, and services. [5] [6]

Non-equilibrium thermodynamics branch of thermodynamics

Non-equilibrium thermodynamics is a branch of thermodynamics that deals with physical systems that are not in thermodynamic equilibrium but can be described in terms of variables that represent an extrapolation of the variables used to specify the system in thermodynamic equilibrium. Non-equilibrium thermodynamics is concerned with transport processes and with the rates of chemical reactions. It relies on what may be thought of as more or less nearness to thermodynamic equilibrium. Non-equilibrium thermodynamics is a work in progress, not an established edifice. This article will try to sketch some approaches to it and some concepts important for it.

Application to biology

Thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood not 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. [7] [8] [ dubious ]

Energy Physical property transferred to objects to perform heating or work

In physics, energy is the quantitative property that must be transferred to an object in order to perform work on, or to heat, the object. Energy is a conserved quantity; the law of conservation of energy states that energy can be converted in form, but not created or destroyed. The SI unit of energy is the joule, which is the energy transferred to an object by the work of moving it a distance of 1 metre against a force of 1 newton.

Second law of thermodynamics law of physics stating that systems spontaneously evolve towards states of higher entropy

The second law of thermodynamics states that the total entropy of an isolated system can never decrease over time, and is constant if and only if all processes are reversible. Isolated systems spontaneously evolve towards thermodynamic equilibrium, the state with maximum entropy.

Productivity describes various measures of the efficiency of production. Often, a productivity measure is expressed as the ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input, typically over a specific period of time. Most common example is the (aggregate) labour productivity measure, e.g., such as GDP per worker. There are many different definitions of productivity and the choice among them depends on the purpose of the productivity measurement and/or data availability. The key source of difference between various productivity measures is also usually related to how the outputs and the inputs are aggregated into scalars to obtain such a ratio-type measure of productivity.

See also

Econophysics is a heterodox interdisciplinary research field, applying theories and methods originally developed by physicists in order to solve problems in economics, usually those including uncertainty or stochastic processes and nonlinear dynamics. Some of its application to the study of financial markets has also been termed statistical finance referring to its roots in statistical physics. Econophysics is closely related to social physics.

Ecodynamics is a part of applied economics. It covers knowledge on monetary value, the usage of money and the money flow. It deals with labour, and capital.

Kinetic exchange models are multi-agent dynamic models inspired by the statistical physics of energy distribution, which try to explain the robust and universal features of income/wealth distributions.

Related Research Articles

Entropy physical property of the state of a system, measure of disorder.

In statistical mechanics, entropy is an extensive property of a thermodynamic system. It is closely related to the number Ω of microscopic configurations that are consistent with the macroscopic quantities that characterize the system. Entropy expresses the number Ω of different configurations that a system defined by macroscopic variables could assume. Under the assumption that each microstate is equally probable, the entropy is the natural logarithm of the number of microstates, multiplied by the Boltzmann constant kB. Formally,

Thermodynamics branch of physics concerned with heat, work, temperature, and thermal or internal energy

Thermodynamics is the branch of physics that deals with heat and temperature, and their relation to energy, work, radiation, and properties of matter. The behavior of these quantities is governed by the four laws of thermodynamics which convey a quantitative description using measurable macroscopic physical quantities, but may be explained in terms of microscopic constituents by statistical mechanics. Thermodynamics applies to a wide variety of topics in science and engineering, especially physical chemistry, chemical engineering and mechanical engineering, but also in fields as complex as meteorology.

Ecological economics research field on the interdependence of human economies and natural ecosystems

Ecological economics is both a transdisciplinary and an interdisciplinary field of academic research addressing the interdependence and coevolution of human economies and natural ecosystems, both intertemporally and spatially. By treating the economy as a subsystem of Earth's larger ecosystem, and by emphasizing the preservation of natural capital, the field of ecological economics is differentiated from environmental economics, which is the mainstream economic analysis of the environment. One survey of German economists found that ecological and environmental economics are different schools of economic thought, with ecological economists emphasizing strong sustainability and rejecting the proposition that natural capital can be substituted by human-made capital.

Irreversible process process that is not reversible

In science, a process that is not reversible is called irreversible. This concept arises frequently in thermodynamics.

In physics and philosophy, a relational theory is a framework to understand reality or a physical system in such a way that the positions and other properties of objects are only meaningful relative to other objects. In a relational spacetime theory, space does not exist unless there are objects in it; nor does time exist without events. The relational view proposes that space is contained in objects and that an object represents within itself relationships to other objects. Space can be defined through the relations among the objects that it contains considering their variations through time. The alternative spatial theory is an absolute theory in which the space exists independently of any objects that can be immersed in it.

Steady-state economy economy made up of constant physical wealth and population size

A steady-state economy is an economy made up of a constant stock of physical wealth (capital) and a constant population size. In effect, such an economy does not grow in the course of time. The term usually refers to the national economy of a particular country, but it is also applicable to the economic system of a city, a region, or the entire world. Early in the history of economic thought, classical economist Adam Smith of the 18th century developed the concept of a stationary state of an economy: Smith believed that any national economy in the world would sooner or later settle in a final state of stationarity.

In physics, maximum entropy thermodynamics views equilibrium thermodynamics and statistical mechanics as inference processes. More specifically, MaxEnt applies inference techniques rooted in Shannon information theory, Bayesian probability, and the principle of maximum entropy. These techniques are relevant to any situation requiring prediction from incomplete or insufficient data. MaxEnt thermodynamics began with two papers by Edwin T. Jaynes published in the 1957 Physical Review.

There are close parallels between the mathematical expressions for the thermodynamic entropy, usually denoted by S, of a physical system in the statistical thermodynamics established by Ludwig Boltzmann and J. Willard Gibbs in the 1870s, and the information-theoretic entropy, usually expressed as H, of Claude Shannon and Ralph Hartley developed in the 1940s. Shannon commented on the similarity upon publicizing information theory in A Mathematical Theory of Communication.

Thermal physics branch of physics

Thermal physics is the combined study of thermodynamics, statistical mechanics, and kinetic theory of gases. This umbrella-subject is typically designed for physics students and functions to provide a general introduction to each of three core heat-related subjects. Other authors, however, define thermal physics loosely as a summation of only thermodynamics and statistical mechanics.

Nicholas Georgescu-Roegen Mathematician, Statistician and Economist

Nicholas Georgescu-Roegen was a Romanian American mathematician, statistician and economist. He is best known today for his 1971 magnum opus The Entropy Law and the Economic Process, in which he argued that all natural resources are irreversibly degraded when put to use in economic activity. A progenitor and a paradigm founder in economics, Georgescu-Roegen's work was seminal in establishing ecological economics as an independent academic sub-discipline in economics.

Introduction to entropy

Entropy is an important concept in the branch of physics known as thermodynamics. The idea of "irreversibility" is central to the understanding of entropy. Everyone has an intuitive understanding of irreversibility. If one watches a movie of everyday life running forward and in reverse, it is easy to distinguish between the two. The movie running in reverse shows impossible things happening – water jumping out of a glass into a pitcher above it, smoke going down a chimney, water in a glass freezing to form ice cubes, crashed cars reassembling themselves, and so on. The intuitive meaning of expressions such as "you can't unscramble an egg", or "you can't take the cream out of the coffee" is that these are irreversible processes. No matter how long you wait, the cream won't jump out of the coffee into the creamer.

Charles A. S. Hall (1943) is an American systems ecologist and ESF Foundation Distinguished Professor at State University of New York in the College of Environmental Science & Forestry.

Branches of physics sub-field of study of physics

Physics deals with the combination of matter and energy. It also deals with a wide variety of systems, about which theories have been developed that are used by physicists. In general, theories are experimentally tested numerous times before they are accepted as correct as a description of Nature. For instance, the theory of classical mechanics accurately describes the motion of objects, provided they are much larger than atoms and moving at much less than the speed of light. These "central theories" are important tools for research in more specialized topics, and any physicist, regardless of his or her specialization, is expected to be literate in them.

Mauro Bonaiuti, PhD, teaches Ecological economics on the Master's on Socio-Environmental Sustainability and Ethical Finance programme at the University of Turin. He is co-founder of the Italian Degrowth Association and among the promoters of the Italian Solidarity Economy Network.

Quantum thermodynamics study of quantum-mechanical thermodynamic systems and processes

Quantum thermodynamics is the study of the relations between two independent physical theories: thermodynamics and quantum mechanics. The two independent theories address the physical phenomena of light and matter. In 1905 Einstein argued that the requirement of consistency between thermodynamics and electromagnetism leads to the conclusion that light is quantized obtaining the relation . This paper is the dawn of quantum theory. In a few decades quantum theory became established with an independent set of rules. Currently quantum thermodynamics addresses the emergence of thermodynamic laws from quantum mechanics. It differs from quantum statistical mechanics in the emphasis on dynamical processes out of equilibrium. In addition there is a quest for the theory to be relevant for a single individual quantum system.


  1. 1 2 Sieniutycz, Stanislaw; Salamon, Peter (1990). Finite-Time Thermodynamics and Thermoeconomics. Taylor & Francis. ISBN   0-8448-1668-X.
  2. Chen, Jing (2005). The Physical Foundation of Economics - an Analytical Thermodynamic Theory. World Scientific. ISBN   981-256-323-7.
  3. Baumgarter, Stefan. (2004). Thermodynamic Models, Modeling in Ecological Economics (Ch. 18) Archived 2009-03-25 at the Wayback Machine
  4. Burley, Peter; Foster, John (1994). Economics and Thermodynamics – New Perspectives on Economic Analysis. Kluwer Academic Publishers. ISBN   0-7923-9446-1.
  5. Raine, Alan; Foster, John; Potts, Jason (2006). "The new entropy law and the economic process". Ecological Complexity. 3 (4): 354–360. doi:10.1016/j.ecocom.2007.02.009.
  6. Annila, A. and Salthe, S., Arto; Salthe, Stanley (2009). "Economies evolve by energy dispersal". Entropy. 11 (4): 606–633. Bibcode:2009Entrp..11..606A. doi:10.3390/e11040606.CS1 maint: multiple names: authors list (link)
  7. Peter A. Corning 1*, Stephen J. Kline. (2000). Thermodynamics, information and life revisited, Part II: Thermoeconomics and Control information [ dead link ] Systems Research and Behavioral Science, Apr. 07, Volume 15, Issue 6 , Pages 453 – 482
  8. Corning, P. (2002). “Thermoeconomics – Beyond the Second Law Archived 2008-09-22 at the Wayback Machine

Further reading

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