💰 The relevance of thermodynamics to economics

https://en.wikipedia.org/wiki/Nicholas_Georgescu-Roegen#The_relevance_of_thermodynamics_to_economics

The physical theory of #thermodynamics is based on two laws: The first law states that energy is neither created nor destroyed in any isolated system (a conservation principle). The second law of thermodynamics — also known as the #entropy law — states that energy tends to be degraded to ever poorer qualities (a degradation principle).

Georgescu argues that the relevance of thermodynamics to #economics stems from the physical fact that man can neither create nor destroy matter or energy, only transform it. The usual economic terms of "#production" and "#consumption" are mere verbal conventions that tend to obscure that nothing is created and nothing is destroyed in the economic process — everything is being transformed.

The science of thermodynamics features a #cosmology of its own predicting the #heat_death_of_the_universe: Any transformation of energy — whether in nature or in human society — is moving the universe closer towards a final state of inert physical uniformity and #maximum_entropy. According to this cosmological perspective, all of man's economic activities are only speeding up the general march against a future planetary heat death locally on earth, Georgescu submits. This view on the economy was later termed '#entropy_pessimism'. Some of Georgescu's followers and interpreters have elaborated on this view.