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Tuesday, 14 April 2009

The Physical Foundations of Economics

This weekend I was reading a book called "The Physical Foundations of Economics". The author presents some interesting ideas of economics, and social systems, as type of thermodynamic systems. He sees the systems as attempting to create minimum entropy structures. As information has links with entropy, we can also see economic systems and information system. The author brings in some interesting points about value and sees that as information. Also the author has an information / entropy definition of value and sees systems as either having fixed costs or flexible costs as entropy functions. The author links back to empirical data and shows how an thermodynamic interpretation matches the empirical data better than neoclassical economics.

I have an interest in this because it links to NETs ideas of using thermodynamics as a way to interpret economics as as the foundation of Energy Credits. I think the theroy preseted in the book will offer us a better foundation for ECs and for making a comparison with current economic theory.


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