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Misuse of thermodynamic entropy in economics

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  • Kovalev, Andrey V.

Abstract

The direct relationship between thermodynamic entropy and economic scarcity is only valid for a thermodynamically isolated economy. References to the second law of thermodynamics in economics within the context of scarcity ignore the fact that the earth is not an isolated system. The earth interacts with external sources and sinks of entropy and the resulting total entropy fluctuates around a constant. Even if the mankind finally proves unable to recycle industrial waste and close the technological cycle, the economic disruption caused by the depletion of natural resources may happen while the total thermodynamic entropy of the ecosystem remains essentially at the present level, because the transfer of chemically refined products may not increase significantly the total entropy, but it may decrease their recyclability.

Suggested Citation

  • Kovalev, Andrey V., 2016. "Misuse of thermodynamic entropy in economics," Energy, Elsevier, vol. 100(C), pages 129-136.
    • Handle: RePEc:eee:energy:v:100:y:2016:i:c:p:129-136
    DOI: 10.1016/j.energy.2016.01.071
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    References listed on IDEAS

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