The faulty application of the Laws of Thermodynamics and of Economy

By Demosthenes Kyriazis

 The two laws of thermodynamics

 From High School Physics we know that, the production of mechanical work from heat is possible only when the first and the second thermodynamic axiom are applied. Let us remember those two laws.

 According to the first thermodynamic axiom, better known as the Law of Conservation of Energy, "The energy is neither born ex nihilo, nor vanishes, but it is incorruptible." [1] Consequently man has not the possibility of producing energy, but only to transform it from one format to another, e.g., from thermal to mechanical or from heat into electricity.

According to the second thermodynamic axiom, known as the law of Entropy, "The conversion of heat to mechanical work is possible only when there are flow conditions from a fluid tank 1 of high temperature T1 to another tank 2 with a lower temperature T2."  That is, when:  T1 >> T2.

 When we use the Entropy S instead of the temperature, this axiom is written: S2>>S1.  Where S2 is the entropy of tank 2 and S1 the entropy of tank 1.

Both expressions of the second axiom are equivalent. 

The two laws of Economy

In the economy systems, two financial axioms also apply, which in order to be productive, have to be applied both and not one of them. These axioms can be formulated as follows: 

 According to the First financial axiom, "The consumption of people in a closed economic system cannot exceed their production." For example, a family can’t consume more from what it produces. The truth of this axiom is obvious and has been experienced particularly by people who lived in the pre-globalization era, when each State was largely a closed economic system. With the globalization however, the closed systems were expanded, and now "closed system in the Economy" is the set of all states that have accepted the free movement of goods and capitals. [2] So the economic determinism of a state is closer to that of open systems, than to that of a closed one. Recall that, in Thermodynamics closed systems are called the systems that do not interact with the environment and open those which interact. In practice both thermodynamic and economic systems are open. However, the study of closed systems greatly helped in discovering the laws of Thermodynamics and possibly of the Economy. Note that the determinism of closed systems generally does not apply to the open ones, but applies to them in a small to a very large extent, only when some conditions exist.

 According to the Second financial axiom, “The consumption of the members of a closed system is their income; is equal to their income”.  This means that if in a society the consumption is reduced by X%, deterministically, by the same percentage will the people’s income be reduced, and vice versa. In older societies, especially the rural ones, people lived with goods and services of their own main production, unlike in today's societies who live from their own work, but with goods and services produced by others. This means that today's economy is shaped more in accordance with the second axiom than in the past. This change, which is the result of globalization, has led the people of my village to eat kiwis from Chile and garlic from China (!!) and not from their own fields as they did before. We must remember that globalization has advantages and disadvantages. Reasonable and fair therefore is to be judged from its disadvantages and advantages. What is absurd and unjust, is to be assessed only from its disadvantages, or, to want to get its benefits without accepting the drawbacks or our obligation to respect the rules.

The mistakes in understanding and applying the laws

Several decades ago, Physicists and Engineers, when the determinism of Thermodynamics wasn’t sufficiently known, believed that they could build a machine that would convert the enormous amounts of heat existing in oceans into electricity. This effort obviously complies with the first thermodynamic axiom because the thermal energy exist, and therefore the engine would not produce energy from scratch, but would transform the existing oceans thermal energy provided by the "Life-Giver Sun". Soon, however, they understood that the implementation of such a machine was practically utopian, because the machine would indeed be consistent with the Law of Conservation of Energy, but would violate the Law of Entropy (the 2nd thermodynamic axiom). To operate such a machine had to find another water tank to a temperature sufficiently lower of that of the ocean and of a capacity comparable to the ocean one!!. This effort is known as the construction of a Second kind perpetually moving machine that is, of a machine where the second thermodynamic axiom would not apply.

 Some Economists and Politicians today believe that it is possible to overcome the economic crisis by growing the consumption, by applying the second financial axiom and ignoring the implementation of the first one. This strategy, which requires the overcoming of the determinism of the 1st economic axiom, in the notion of a Physicist is equivalent to attempt to build a First kind perpetually moving economic system; an economic system which overcomes the first axiom of economy.

 Similarities and differences

 The determinism and the history of Thermodynamics and Economics, have the following similarities and differences:

 a. The first axiom of Thermodynamics and the first of Economy are deterministic laws; are laws whose overcoming is deterministic impossible and for that absolutely impossible. Unlike the second axiom of Thermodynamics and the second of Economy are statistical laws, are laws whose overcoming is practically impossible. Bear in mind that in modern Physics laws are divided into deterministic and statistical. In the deterministic ones the result has absolute certainty while in the statistical ones very high probability. For example, the fundamental law of Mechanics   F = m.a   is a deterministic one, while the law of entropy (the 2nd thermodynamic axiom ) is a statistical law.

b. Physicists and Engineers, several years ago attempted to develop the perpetually moving machine of second kind; namely attempted to overcome the statistical determinism of the second thermodynamic axiom. Some Politicians and Economists today,  are trying to develop the First kind perpetually moving economic system,  that is they attempt to overcome a deterministic law ( the 1st economic axiom), something which is more attractive but more utopic from the overcoming a statistical law. 

This strange, if not absurd, perception and effort, perhaps is due to the fact that  the transformation of economic systems from closed to open ones, produced from the globalization, has not yet been sufficiently experienced.

Perhaps it is due to the lagged development of Economics and Policy, compared to that of Physics and Technology.

[1] According to today’s notions, Energy (E) and Mass ( m) are same entities linked by the relationship: E = m c². Thus in nature the sum of Energy and Matter remains constant and indestructible.

 [2] It is the policy of the global liberalization of external trade of the GATT and Brussels