Abstract
A Gibbs-Duhem relationship in economics, Slutsky conditions, and the relationship proposed by marginalist theory between exchange value and value in use was found from a phenomenological description and tested considering the macroeconomic equations. To simplify the calculations, it was considered that the economic systems are in equilibrium to make an analogy with the thermodynamics of equilibrium. In addition, fundamental considerations were made, such as considering that a consumer's wealth or a small country is constant for the existence of a measurable (quantifiable) utility function. However, according to the discussion, it could be seen that W. Saslow's theory must be developed in the field of non-equilibrium thermodynamics, which is why the economy is not a system that is in equilibrium, but rather, on the contrary, the economy is a dynamic system.
TopIntroduction
There are many analogies between economic and physical systems in economics; in particular, Thermodynamics has implications. These analogies are similar to each other, especially in how they deal with the concept of entropy. The idea of applying the way of thinking of thermodynamics to economics is not new, in fact, in the thought of Karl Marx. For Marxist thought, energy is a fluid, just like money is (Baierlein, 2001).
Bejan et al. (2020) shows that the sudden end of economic expansion (movement, wealth) emerges as a natural, physical feature of the spreading movement, which has access to power (money), freedom to morph, and power storage (savings) for future movement on even greater areas. The movement is driven by power generation, which is interspaced with power savings on the same area. The theory is constructed systematically from the physical basis of economics concepts (money, savings, time, and bubbles) to a physics model that accounts for the time-dependent spreading of movement on an area. Previous study has shown that physics accounts for the proportionality between the annual wealth (GDP) of a population and the annual consumption of fuel to generate power for that population. The present theory extends this view to the more realistic situation where every movement in society (wealth and fuel consumption) is time dependent.
Jakimowicz (2020) shows that non-extensive cross-entropy econometrics is a valuable complement to traditional econometrics as it explains phenomena based on power-law probability distribution and enables econometric model estimation for non-ergodic ill-behaved (troublesome) inverse problems. Furthermore, the entropy economics has accelerated the emergence of modern econophysics and complexity economics. These new directions of research have led to many interesting discoveries that usually contradict the claims of conventional economics. Econophysics has questioned the efficient market hypothesis, while complexity economics has shown that markets and economies function best near the edge of chaos. Quantum economics has already appeared on the horizon, which recognizes money as a fundamental measurement device in the economy. The development of these sciences may indicate the need to reformulate all mainstream economics from its foundations.
A research Rashkovskiy (2021) consider the thermodynamic approach to the description of economic systems and processes. The first and second laws of thermodynamics as applied to economic systems are derived and analyzed. It is shown that there is a deep analogy between the parameters of thermodynamic and economic systems (markets); in particular, each thermodynamic parameter can be associated with a certain economic parameter or indicator. The economic meaning of such primordial thermodynamic concepts as pressure, volume, internal energy, heat, etc. has been established. The thermostatistics of the market is considered. It is shown that, as in conventional thermostatistics, many market parameters, such as price of goods, quantity of goods, etc., as well as their fluctuations can be calculated formally using the partition function of an economic system.
In this Tsirlin & Gagarina (2020), we consider optimal trading processes in economic systems. The analysis is based on accounting for irreversibility factors using the wealth function concept. The existence of the welfare function is proved, the concept of capital dissipation is introduced as a measure of the irreversibility of processes in the microeconomic system, and the economic balances are recorded, including capital dissipation. Problems in the form of kinetic equations leading to given conditions of minimal dissipation are considered.
Many consider that this case corresponds to a way of thinking of dialectical materialism. Historically, the development of thermodynamics originated due to the industrial revolution. The Nobel Prize winner in economics Samuelson suggested that economics and thermodynamics had much in common (Bedi et al., 2007), but his research was not as deep as Roegen Georgescu, who made a detailed study of one of the main variables of state of thermodynamics: Entropy (Bryant, 1982).
Key Terms in this Chapter
Low-Carbon Economy: A low-carbon economy (LCE) or decarbonized economy is an economy based on low-carbon power sources with minimal greenhouse gas (GHG) emissions into the atmosphere, specifically carbon dioxide. GHG emissions due to anthropogenic (human) activity are the dominant cause of observed climate change since the mid-20th century. Continued emission of greenhouse gases may cause long-lasting changes worldwide, increasing the likelihood of severe, pervasive, and irreversible effects for people and ecosystems.
Eco-Tariffs: An eco-tariff, also known as an environmental tariff, is a trade barrier erected to reduce pollution and improve the environment. These trade barriers may take the form of import or export taxes on products with a large carbon footprint or imported from countries with lax environmental regulations.
Sustainable Development: Sustainable development is an organizing principle for meeting human development goals while simultaneously sustaining the ability of natural systems to provide the natural resources and ecosystem services on which the economy and society depend. The desired result is a state of society where living conditions and resources are used to continue to meet human needs without undermining the integrity and stability of the natural system. Sustainable development can be defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainability goals, such as the current UN-level Sustainable Development Goals, address the global challenges, including poverty, inequality, climate change, environmental degradation, peace, and justice.
Eco Commerce: Eco commerce is a business, investment, and technology-development model that employs market-based solutions to balancing the world’s energy needs and environmental integrity. Through green trading and green finance, eco-commerce promotes the further development of “clean technologies” such as wind power, solar power, biomass, and hydropower. AU23: Reference appears to be out of alphabetical order. Please check
Circularity: A circular economy (also referred to as “circularity”) is an economic system that tackles global challenges like climate change, biodiversity loss, waste, and pollution. Most linear economy businesses take a natural resource and turn it into a product that is ultimately destined to become waste because it has been designed and made. This process is often summarised by “take, make, waste.” By contrast, a circular economy uses reuse, sharing, repair, refurbishment, remanufacturing, and recycling to create a closed-loop system, minimize resource inputs, and create waste, pollution, and carbon emissions. The circular economy aims to keep products, materials, equipment, and infrastructure in use for longer, thus improving the productivity of these resources. Waste materials and energy should become input for other processes through waste valorization: either as a component or recovered resource for another industrial process or as regenerative resources for nature (e.g., compost). This regenerative approach contrasts with the traditional linear economy, which has a “take, make, dispose” production model.
Green Politics: Green politics, or ecopolitics, is a political ideology that aims to foster an ecologically sustainable society often, but not always, rooted in environmentalism, nonviolence, social justice, and grassroots democracy. It began taking shape in the western world in the 1970s; since then, Green parties have developed and established themselves in many countries around the globe and have achieved some electoral success.
Natural Resource Economics: Natural resource economics deals with the supply, demand, and allocation of the Earth’s natural resources. One main objective of natural resource economics is to understand better the role of natural resources in the economy to develop more sustainable methods of managing those resources to ensure their future generations. Resource economists study interactions between economic and natural systems intending to develop a sustainable and efficient economy.
Green Economy: A green economy is an economy that aims at reducing environmental risks and ecological scarcities and that aims for sustainable development without degrading the environment. It is closely related to ecological economics but has a more politically applied focus.
Emissions Trading: Emissions trading (also known as cap and trade, emissions trading scheme, or ETS) is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants.
Environmental Enterprise: An environmental enterprise is an environmentally friendly/compatible business. Specifically, an environmental enterprise is a business that produces value in the same manner which an ecosystem does, neither producing waste nor consuming unsustainable resources. In addition, an environmental enterprise rather finds alternative ways to produce one’s products instead of taking advantage of animals for the sake of human profits. To be closer to being an environmentally friendly company, some environmental enterprises invest their money to develop or improve their technologies which are also environmentally friendly. In addition, environmental enterprises usually try to reduce global warming, so some companies use environmentally friendly materials to build their stores. They also set in environmentally friendly place regulations. All these efforts of the environmental enterprises can bring positive effects both for nature and people. The concept is rooted in the well-enumerated theories of natural capital, the eco-economy, and cradle-to-cradle design. Examples of environmental enterprises would be Seventh Generation, Inc., and Whole Foods.