Entropic Origins of Value

In the following essay, my aim is to explore various penumbras falling between economics and thermodynamics. My use of the word "penumbra" is an appropriation from the seminal modern-day thinker on the topic of the economic nature of thermodynamics, Nicholas Georgescu-Roegen (GR from here out). The word hints at the fact that there are some very shadowy, unresolved connections (and non-connections) between the two fields.

Many economists have paid at least lip service to the impact on economic theory of the thermodynamic revolution in physics, especially in the wake of GR's contribution in the form of The Entropy Law and the Economic Process from 1971. Still, economics appears largely unaffected, clinging yet to the dogma of classical mechanics--this to the detriment of us all. Capital theory is a very grey area indeed, as Michael Macrakis discusses at some length in his recent book Scarcity's Way: the Origins of Capital. Mainstream economic valuation has continued on its course of increasing abstraction, now almost completely lacking any basis in the physico-chemical or thermodynamic origins of worth--note that the economy of pure finance is estimated to be some 30 to 50 times larger than the truly productive one.

While in this paper I will attempt very little in the way of normative analysis, I will try where possible to add my own impressions to the stew. I do so tentatively because I am simply awed by the level of critique and sheer quantity of knowledge that went into, for example, the above two titles. Moreover, I am left (partly for lack of time) with a great many questions still unanswered; in some cases those unanswered questions involve what I think is rather rudimentary chemistry and quantum mechanics.

The main issue, related to my own take on things, that I would like to bring out is that there are some fundamental paradoxes and contradictions in the way thermodynamics and entropy are thought of, spoken of, and approached. The divergence between the original formulations of the laws of thermodynamics and the aims of Boltzmann's statistical mechanics has been the subject of many other works; here I hope to speak to that divergence on a somewhat more lyrical (and, with luck, more accessible) level.

My first task will be to cover some of the basic, textbook physics related to the laws of thermodynamics; I will mention their physical, arithmomorphic formulations, and will walk through the solutions to a few simple problems. Next, I will look at Herman Daly's creative approach to the interpretation of GR's ideas (Daly is a former student of GR); then I will examine some of the less technical essentials from GR's own Entropy-Law classic. In so doing, I will address rhetorical (dialectical) formulations of the laws, with particular attention, of course, to the second, and will point to the essential economic origin of the concept of entropy. I will go on to survey various formulations by a few other thinkers (including Macrakis, mentioned above). I will conclude by elaborating briefly on my own questions about basic entropy-perception paradoxes.