the thermodynamics of economics

With this post, I intend to make the proposition that an ever growing economy violates the second law of thermodynamics and is therefore physically not possible. This is not an easy task, especially since I flunked thermodynamics a couple of times at college until I eventually just barely passed it... and I never actually learned much of economics... 

I once discussed the application of thermodynamic principles to explain totalitarian political regime behaviours. How controlling a people to submission and acceptance could be achieved in the same way a fridge controls natural decomposition of food to submission by extracting heat from inside and expelling to the outside by a gas circuit. The equivalent for gas in that case was information, the heat were human actions, and the inside-outside were defined by the country's borders. Now it's about economics.

I quickly googled what other people have written about the relation between economics and thermodynamics, and I found there is already some material. I haven't read much yet, but I'll do it and quote later if there's interesting stuff. Now first we should try to understand what this second law is all about... it has been formulated in many variants:

• You always waste some energy during an energy transformation. This means that an energy transformation is never 100% efficient, something is always wasted in other forms besides the ones directly intended. For example, when transforming electrical energy to light, some energy is wasted as heat. 
• Energy tends to flow spontaneously from being concentrated in one place to becoming diffused or dispersed and spread out, unless it is hindered from doing so. This means that a cube of ice will melt at room temperature. 
  
• In a closed system (one which is sealed in such way that it restricts energy exchange with the outside), the amount of energy available to do work will never increase spontaneously. Which in turn means that the amount of energy NOT available to do work will never decrease. This amount of unavailable energy is also called Entropy. So entropy may remain, but will never decrease. This is why you need to eat, your body only miraculously would generate energy by itself, or even transform it from other sources like the sun (unless you're a plant).

Brig Klyce suggests as example the following: "Consider simply a black bucket of water initially at the same temperature as the air around it. If the bucket is placed in bright sunlight, it will absorb heat from the sun, as black things do. Now the water becomes warmer than the air around it, and the available energy has increased. Has entropy decreased? Has energy that was previously unavailable become available, in a closed system? No, this example is only an apparent violation of the second law. Because sunlight was admitted, the local system was not closed; the energy of sunlight was supplied from outside the local system. If we consider the larger system, including the sun, available energy has decreased and entropy has increased as required."

So this law and thermodynamics is about energy and energy transfers between systems, energy which can be quantified in calories and joules. The energy equivalent in economic world are commodities and services that can be traded between parties, and since everything has an economic value, and that value is measured in money, we can say that the equivalent to energy unit in the economic system is money.

Now consider a very simple economic system consisting of two naked men, Jack and Jim (I actually considered which combination would sound the least sexist, 2 men, 2 women or one of each, and I couldn't decide, so 2 men it is...), one holding a burger and the other holding a beer. They are locked in a jail and have no contact with the outside world. 

Jack says to Jim, I'm thirsty, I'll give you my burger if you give me your beer, Jim says that's fine since I'm hungry but not thirsty. An economic transaction occurred worth one burger which has the same value as one beer. Jack drinks half the beer, and Jim eats half the burger. Then Jim says to Jack, I could really use a beer to push down this burger, and Jack says great 'cause since I drank that beer my stomach got a bit emptier and I got hungrier. So a new trade occurs, worth half a beer which is the same as half a burger.  Jack eats the rest of the burger and Jim finishes the beer. 

Now, if we exclude further scatological or morbid possibilities, none of these men has anything else left to trade. Unless the warden comes by, food will not miraculously appear in their hands. So the amount of available economic tradable goods decreased, hence economic entropy increased as foreseen by the second law of thermodynamics. Even if the men start now trading services, like scratching each other's back, that is still another form of exchanging the same beer and burger in the form of the energy they supplied the men when they got digested (which is a very inefficient use of that energy, according to the same law, since the body taxes heavily this conversion by wasting additional energy to produce movement, body heat, blood circulation, thoughts, growing hair, etc.). The men would eventually just shrivel and die.

Had the men a watch and a flash-light instead of food they could have exchanged them forever (or until they broke and became useless), which would mean economic entropy would have remained constant, as the transaction would always be of the same value (speculation would only postpone or accelerate the transaction but not change its value), but it would never decrease. That is, even if one of the men figured a new way a watch could be used for, besides telling time, it would only still be worth a flash-light. No new economic worthy item would suddenly appear. 

Now, if Jack and Jim are allowed visits and their wives would bring them more food, then the economy (the amount of transactions) inside their cell could grow, and if the supply from the wives would be infinite (suppose it's only limited by the fact that they can only carry a certain amount in their bags on each visit, but they can come visit forever and eventually buy a bigger bag at some point). Then there is no reason why this growth could not be sustained forever. In fact other inmates could join them in the trading, taping from their own wives, thus growing the jail economy even further. Unless, of course, the warden (understood here as government) imposes too many rules on what the wives can supply or takes for himself too high percentage of the goods in the form of taxes, which reduces dramatically the efficiency of the economy in the prison and limits the growth rate. Inmates can even start trading today the delivers they expect to get from their wives next month, increasing even further the economy! Hell, some of them can even sell insurance in case one wive doesn't show up, the economic potential is enormous.

If the wives suddenly became unemployed and unable to bring more food, and the infinite source of supply suddenly fails Jack and Jim are in shit because of thermodynamics, at least until they manage to get themselves new lovers, which they could do by posting adds in a classifieds magazine. However it is not going to be easy for them, considering they're inmates.

Today's economic growth has been sustained on the premise of infinite supply (of oil, food, steel, chips, etc.) within the reasonably foreseeable future and in removing obstacles to the economic transactions thus making them more efficient. The infinite supply is the economical potential - as long as this potential is there, money will flow just like electric current will flow if there is an electrical energy potential and wires to guide it. The speed at which it flows will depend on the resistance it will find along the way. Obviously for the capacitors in this system, which are the capitalists, the less resistance the faster they will accumulate money. 

Now considering Ignacio's (Astroperit) last post, which claims oil's infinity is somewhat limited and considering our economy is so heavily dependent on it, thermodynamics tells us we're in serious trouble 'cause the wives won't deliver and we haven't been exactly posting classifieds. Economic growth is just not possible, just as we have been advocating in this blog. Unless we dramatically change the basis of our economy and tap on the one other source that looks infinite, at least in the expected longevity timeframe of human kind, the Sun and all its other energy manifestations, which do not involve waiting for generation of hydrocarbons: its light, the flowing air masses, the tides, the waves and rivers, even hydrogen from water. With the additional benefit that we would stop unbalancing our atmosphere by messing with the CO2 proportions. Everybody has to start seriously considering energy efficiency and micro-self-generation. In a world of finite resources (and that is where we are right now, because we're so many!), economies can only be sustained by renewable energy sources and recycling. Sure oil is renewable, if you give it a few million years...