Economies Evolve by Energy Dispersal

Abstract

Economic activity can be regarded as an evolutionary process governed by the 2 nd 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.

The Character of Consciousness

“…For the other thing, one's identity, i.e., the system itself is an ambiguous and dynamic notion that prevents from defining it as distinct from its surrounding systems. For example, the problems of altruism and tragedy of commons resolve by identifying one's identity (Annila and Salthe, 2009;Anttila and Annila, 2011).…”

No way out? The double-bind in seeking global prosperity alongside mitigated climate change

“…1, a perspective that bears some similarities with the thermodynamic model used by Annila and Salthe (2009) to represent economic flows. Energy reservoirs lie along a higher potential surface than the system of interest.…”

Entropy, Function and Evolution: Naturalizing Peircian Semiosis

“…This also impedes a proper understanding of the role of entropy in semiosis, which is the central concern of this paper. In simple terms, focusing on the formal convergence between Shannon entropy and Boltzmann entropy would limit the possible relevance of the thermodynamic notion of entropy to the processes of data processing in the technical sense, which has resulted in a large literature on the energetic costs of computing and on reversible computing [6,[20][21][22][23][24][25][26][27][28][29]. This technical notion can be expanded into a universal physical notion, if physical processes themselves are seen as computations [2,[31][32][33].…”

“…Therefore, my reconsideration of the role of entropy in the cybersemiotic framework also helps to continue with the Georgescu-Roegen [23] tradition in economics, thereby overcoming its later narrowing down to purely environmental concerns in ecological economics. A sound conceptualization of entropy and information can provide a restatement of the role of entropy in economics, thus contributing to a small, yet vigorous strand in this literature [24][25][26][27]. the anthropic principle, following an argument on evolution that has been presented by Deutsch. This allows for a new view on the Peircian notion of 'Firstness'.…”