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Almost 40 years have passed since Georgescu-Roegen’s seminal work,The Entropy Law and the Economic Process. During this time there has been much debate on the relevance of thermodynamics to economics, and many attempts to build bridges between the two. There has also been much confusion as to what the laws of thermodynamics actually say. This article clearly explains heat, work, and the thermodynamic laws, the meaning of entropy, and the importance of kinetics as a barrier to thermodynamically favorable processes. The two most important misunderstandings in the literature, namely entropy as disorder, and entropy as a measure of information, are highlighted. Reviewing the literature shows that thermodynamics is most relevant for building a descriptive model, or preanalytic vision of economics, because it implies physical constraints on production and consumption. Similarly, it suggests that there may be serious ﬂaws with neoclassical economic models, and in particular the primacy of sustained growth. However, thermodynamics does not seem to aid mathematical modeling in economics, nor does it provide normative insights. As an aid to energy policy, thermodynamics is useful for assessing the feasibility of technology options— those that have the potential to meet our goals, and should be counted as options, and those that should not. But it does not provide a prescription outside of this technical realm. Factors, such as environmental impact, cost, and social acceptability, will ultimately determine which technically feasible options are most desirable.
Thermodynamics is the study of energy and its transformations. Born in the 19th century, during studies on steam engine efﬁciency, it is now one of the pillars of the physical sciences. The deep impres- sion that classical thermodynamics made on Ein- stein, for example, convinced him that “it is the only physical theory of universal content that, within the framework of applicability of its basic concepts, will never be overthrown.”1Given this preeminence, the idea that economic theory may be inconsistent with the laws of thermodynamics is of grave concern. It was this concern that lead economists, such as Ken- neth Boulding,2Nicholas Georgescu-Roegen,3and Ayres and Kneese,4 to critique economic theory with the explicit use of thermodynamics, and further, at- tempt to reformulate the theory by grounding it in
physical reality. Over the last 40 years or so, this work has been debated and developed by many au- thors and has led to the ﬁeld we now callecological
C.P. Snow asserted that not knowing the second law of thermodynamics was akin to never having read a work of Shakespeare, and perhaps this com- parison has proved more apt than he intended. Just as the potential for the Bard to be misunderstood and misinterpreted is high, the literature concerned with thermodynamics and economics is notable for its confusion. In this article, we attempt ﬁrst to pro- vide a clear explanation of what the laws of thermo- dynamics state, and highlight the most pernicious misinterpretations. Then, we explore the relevance that these laws have to economics, and the criticisms
that have been leveled at the orthodox theory based on these principles. Finally, we summarize the many attempted links between thermodynamics and eco- nomics, and highlight those that are now established and accepted—the “well-lit roads”—and those that have been found wanting and are now considered to be “burned bridges.”
Thermodynamics is founded on four laws. The ﬁrst (zeroth law) and the last (third law) are really only inclusions to ensure logical coherence and need not detain us here.aThe “meat” of thermodynamics is contained in its ﬁrst and second laws. These laws are qualitative descriptions of phenomena that have been observed to occur unfailingly in nature. We do not know why they hold—the laws are simply postulated and have always been conﬁrmed when tested, and so we are conﬁdent using them.5
In this section, we will explain the basic concepts of thermodynamics using simple language, avoid- ing mathematics except where it helps to reinforce the concepts. There are a number of reasons for this. First, a meaningful introduction to the math- ematics of thermodynamics requires book-length space (e.g., Fermi6). Second, the speciﬁc mathemat- ics of interest depends on the ﬁeld in which ther- modynamics is applied. Among the professions that apply thermodynamics most regularly, mechanical engineering is generally concerned with completely different systems than those of interest to chemists, while chemical engineers may be caught somewhere in between. This leads to the third, and perhaps most relevant, point: it is not clear what system- speciﬁc mathematics are relevant to economics. In fact, experience seems to show that thermodynamic formalism is of very little use to economics anyway. Rather, it is a solid understanding of the laws them- selves, rather than the mathematics, that provides insights relevant to economics. Also, there has been much confusion in the economics literature around what thermodynamics does and does not say, and
ture,” or in other words, if bodies A and B are in equilib- rium, as are B and C, then A and C must also be in equi- librium. The third law implies that absolute zero (0 K) can not be reached by any number of ﬁnite steps.
for this reason it is worth taking pains to get the concepts right. To sophisticated readers, we apolo- gise in advance for the simplicity that is necessitated by clarity.
Thermodynamics essentially describes transforma- tions of energy from one form to another, and the modes of these transformations are called “heat” and “work.” There is no difﬁculty in comprehend- ing this simple statement, but if there is a devil in the detail, it is this: despite its fundamental impor- tance and common usage in everyday life, energy is an evasive concept and difﬁcult to pin down. In his now iconic series of lectures, Richard Feynman remarked that “we don’t know what energy is, but we can calculate it. We know the formulas work, but not the mechanisms or reasons for this.”7Energy is an abstraction from more “real” quantities, such as height, temperature, pressure, velocity, mass, etc. These are real quantities in that they can be mea- sured directly. Consequently, there are many types of energy: gravitational-potential, kinetic, thermal, elastic-potential, electrical, chemical-potential, ra- diant, and nuclear.
With this in mind, a rough deﬁnition for energy may be “the capacity of a system to do work.”8In physics, “work” (W ) has the precise meaning of “motion against an opposing force.” Thus, lifting a weight against gravity, accelerating a car against air resistance, or forcing a ﬂow of electrons through an electrically resistive material are all examples of “doing work.” “Heat” (Q) has the precise mean- ing of the “transfer of energy caused by a difference in temperature.” Temperature itself is a measure of the average motion of molecules, which includes three kinds of motion; translational, rotational, and vibrational. Heat and work are therefore two differ- ent modes of energy transfer. Work can be thought of as transferring energy through the uniform mo- tion of atoms, while heat transfers energy through a random motion of atoms.8This is represented schematically in Figure 1.
The ﬁrst law implies that energy can not be cre- ated or destroyed. Thus, the workings of the uni- verse can be viewed as a series of energy trans- formations. For example, the lumberjack converts chemical-potential energy stored in his muscles to kinetic energy in his axe swing. When the axe strikes the tree, the kinetic energy is channelled into break- ing the chemical bonds in the tree’s structure. The fallen tree will then crash to the ground, transfer- ring its gravitational-potential energy in the pro- cess. Each of these (work) conversions also includes a portion of energy that is released as heat. This inevitable release of heat from any energy transfor- mation is profound, and is described by the second law of thermodynamics.
The second law of thermodynamics can (and has) been stated in a number of different but equivalent ways, with the various statements emphasizing sub- tlely distinct aspects of the law. Because the laws of thermodynamics were discovered through investi- gations into the working of steam engines, which have the purpose of converting heat into work, it
Essentially, what Kelvin’s statement says is that nature exerts a tax on the conversion of heat into work; some of the thermal energy supplied must be paid into the surroundings as heat.8In comparison, Clausius’ statement implies that work must be done to move thermal energy from a low temperature to a higher one. These two statements are equivalent, as the failure of one implies the failure of the other. For example, if heat could ﬂow from a cold to a hot source spontaneously, then Clausius’ statement would be false. This would also mean that a ﬂow from hot to cold could be used to do work, and the energy paid out to the low temperature body could then spontaneously return to the hot body and be used to do work again, in which case Kelvin’s statement would be false. Essentially, these laws
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