Conservation laws, financial entropy and the eurozone crisis
The article attempts of apply econophysics concepts to the Eurozone crisis. It starts by examining the idea of conservation laws as applied to market economies. It formulates a measure of financial entropy and gives numerical simulations indicating that this tends to rise. We discuss an analogue for free energy released during this process. The concepts of real and symbolic appropriation are introduced as a means to analyse debt and taxation. We then examine the conflict between the conservation laws that apply to commodity exchange with the exponential growth implied by capital accumulation and how these have necessitated a sequence of evolutionary forms for money, and go on to present a simple stochastic model for the formation of rates of interest and a model for the time evolution of the rate of profit. Finally we apply the conservation law model to examining the Euro Crisis and the European Stability pact, arguing that if the laws we hypothesise actually hold, then the goals of the stability pact are unobtainable.
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| Length: | |
| Date of creation: | 2013 |
| Handle: | RePEc:zbw:ifwedp:201336 |
| Contact details of provider: | Postal: Kiellinie 66, D-24105 Kiel Phone: +49 431 8814-1 Fax: +49 431 8814528 Web page: http://www.economics-ejournal.org/ Email: More information through EDIRC
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- Engelbert Stockhammer & Erik Klär, 2011. "Capital accumulation, labour market institutions and unemployment in the medium run," Cambridge Journal of Economics, Oxford University Press, vol. 35(2), pages 437-457.
- Engelbert Stockhammer & Erik Klär, 2008. "Capital Accumulation, Labour Market Institutions, and Unemployment in the Medium Run," Discussion Papers of DIW Berlin 834, DIW Berlin, German Institute for Economic Research.
- Petrovic, Pavle, 1987. "The Deviation of Production Prices from Labour Values: Some Methodology and Empirical Evidence," Cambridge Journal of Economics, Oxford University Press, vol. 11(3), pages 197-210, September.
- Ian Wright, 2008. "The Emergence of the Law of Value in a Dynamic Simple Commodity Economy," Review of Political Economy, Taylor & Francis Journals, vol. 20(3), pages 367-391. Full references (including those not matched with items on IDEAS)
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