Thermoeconomics

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This page is both a general description of the concept, and a specific project undertaken by Marc Fawzi.


General Concept

Description

Mike Chege:

"Because every process of production is, at bottom, a transformation of energy and matter, it should come as no surprise that a number of economists have found the laws of thermodynamics to be concepts with considerable relevance for economics. In fact, interest in the laws of thermodynamics has led to the rise of an approach known as Thermoeconomics. Approaches within thermoeconomics range from from those that seek to develop highly technical analytical models of the economy based on the laws of thermodynamics, to those that view thermodynamic concepts as analogies and metaphors. While the analogies–and–metaphors approach may not allow us to make exact and deductive scientific statements about economic systems, it still has merit as a heuristic, with the capacity to allow us to see economic phenomena in a new light and hence stimulate research in new and potentially fruitful directions." (http://www.uic.edu/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/2186/2062)


Bibliography

  1. S. Baumgärtner, 2005. “Thermodynamic models,” In: J. Proops and P. Safonov (editors). Modelling in ecological economics. Northampton, Mass.: Edward Elgar, pp. 102–129, at http://www.eco.uni-heidelberg.de/ng-oeoe/research/publications.html, attached 13 December 2008.
  2. P.A. Corning, 2002. “Thermoeconomics: Beyond the second law,” Institute for the Study of Complex Systems, at http://www.complexsystems.org/publications/pdf/thermoecon.pdf, attached 13 December 2008.
  3. DieOff, “Energy, entropy, economics, and ecology,” at http://dieoff.org/page17.htm, attached 13 December 2008.
  4. N. Georgescu–Roegen, 1971. The entropy law and the economic process. Cambridge, Mass: Harvard University Press.
  5. J. Gowdy and S. Mesner, 1998. “The evolution of Georgescu–Roegen’s bioeconomics,” Review of Social Economy, volume 56, number 2, pp. 136–156, and at http://www.rpi.edu/~gowdyj/mypapers/RSE1998.pdf, attached 13 December 2008.

Marc Fawzi's Thermoeconomics Project

Release

00.04.00

Author

Marc Fawzi, Evolving Trends

Premise

We can define a model of society based on our morals and ideals, but if we do not look at the observed laws of nature (and particularly the laws of thermodynamics), which constrain any model that involves physical resources, the model will run aground sooner or later.

This does not make the social model any less relevant than the observed physical laws. They are both equally important to understand.

In the context of this article, we are concerned with bringing P2P social models and Thermoeconomic models (or thermodynamic models of the economy) together in harmony within a P2P Social Currency model.

Context

Thermoeconomics is a general loosely defined economic model based on the idea that the economic construct of cost is ultimately derived from the cost of energy. This axiom (or starting truth) is then used, along with the laws of thermodynamics, to construct a model of the economy that works with, not against, the laws of nature

The term Thermoeconomics was coined in the 1960s by American engineer Myron Tribus. However, the ideas of thermoeconomics are often arrived at independently and naturally by those who have an interest in both the laws of nature and the economy.

So far, Thermoeconomic theory has focused almost entirely (or entirely) on modeling the economy as a thermodynamic system and not enough focus has been given to social and moral ideals.

This author has been developing a model of P2P social currency that combines the thermodynamic model of the economy with the author's evolving understanding of --and appreciation for-- P2P social theory.

Thus, this article, which strives to reconcile both worlds, is expected to become part of the author's current work on P2P Social Currency for Renewable Energy Economy

Thermodynamic Cost Constraints in a P2P Economy

Laws of Thermodynamics: Definitions

"Thermodynamics is a branch of physics which deals with the energy and work of a system. Thermodynamics deals only with the large-scale response of a given system, not with the response of individual atoms or molecules in the system.

1st Law (also related: conservation of energy, conservation of mass, conservation of momentum):

"Within a given domain, the amount of energy remains constant and energy is neither created nor destroyed. Energy can be converted from one form to another (potential energy can be converted to kinetic energy) but the total energy within the domain remains fixed." (source: NASA website)

2nd Law (as a follow up to the 1st law):

"We can imagine thermodynamic processes which conserve energy but which never occur in nature. For example, if we bring a hot object into contact with a cold object, we observe that the hot object cools down and the cold object heats up until an equilibrium is reached. The transfer of heat goes from the hot object to the cold object.

We can imagine a system, however, in which the heat is instead transferred from the cold object to the hot object, and such a system *does not violate* the *first law* of thermodynamics. The cold object gets colder and the hot object gets hotter, but energy is conserved. Obviously we don't encounter such a system in nature and to explain this and similar observations, thermodynamicists proposed a second law of thermodynamics. Clasius, Kelvin, and Carnot proposed various forms of the second law to describe the particular physics problem that each was studying.

The description of the second law stated here was taken from Halliday and Resnick's textbook, "Physics". It begins with the definition of a new state variable called entropy. Entropy has a variety of physical interpretations, including the statistical disorder of the system (very relevant to thermoeconomic information processing), dispersal of energy, etc, but for our purposes, however you may define entropy (using whatever interpretation), let us consider entropy to be just another property of the system, like (not as) temperature.

What the second law states, is that for a given physical process, the combined entropy of the system and the environment remains a constant if the process can be reversed.

An example of a reversible process is *ideally* forcing a flow through a constricted pipe. "Ideal" means no boundary layer losses, which does not happen in reality. As the flow moves through the constriction, the pressure, temperature and velocity change, but these variables return to their original values downstream of the constriction. The state of the gas returns to its original conditions and the change of entropy of the system is zero. Engineers call such a process an isentropic. Isentropic means constant entropy.

The second law states that if the physical process is irreversible (which all processes in nature are at one level or another) the combined entropy of the system and the environment must increase. The final entropy must be greater than the initial entropy for an irreversible process.

An example of an irreversible process is the problem discussed in the second paragraph. A hot object is put in contact with a cold object. Eventually, they both achieve the same equilibrium temperature. If we then separate the objects they remain at the equilibrium temperature and do not naturally return to their original temperatures. The process of bringing them to the same temperature is irreversible." (excerpted from NASA website with some added clarifications)

(need to add 0th, 3rd, 4th laws)

Laws of Thermodynamics: Implications

When it comes to bits and bytes, which, in an information economy, carry both the transactions for (and the information regarding) the goods and services as well as the digital goods and services themselves, some of the the physical constraints [that follow from the first and second laws of thermodynamics] are:

1. The continuous cost of energy for powering the Internet infrastructure at every point, including the the processing hardware and the communication channels.
2. The continuous cost of energy for maintaining and evolving the energy infrastructure for powering the Internet
3. The continuous cost of energy for maintaining and evolving the Internet at every point, including the processing and communication nodes, underground and undersea cables, wireless and satellite channels, data centers, etc. This includes the energy used in the development and manufacturing of new, improved hardware and software or the production of replacement parts for existing hardware and maintenance (bug fixing) of the software.
4. The continuous cost of energy for powering our human bioware, including our information processing capability (our brain) and our communication channels (our senses), which are necessary for the production and consumption of both physical as well as digital goods and services.
5. The continuous cost of energy for maintaining and evolving our cognitive bioware, including our information processing capability (our brain) and our communication channels (our senses, which are necessary for the production and consumption of both physical as well as digital goods and services.

Making the Case for 'Energy Flow' as Currency

We (and everything else that’s functioning, i.e. everything) have a continuous cost of energy. If we get our energy from fusion we will still need energy to maintain and upgrade the fusion technology, and while that energy can come from the super-efficient reactor itself, for the lifetime of the reactor, we still need to move that energy, at the scale of the economy, from the reactor to the farmer who makes the food for the scientists who then perform the maintenance and upgrades to the reactor. It’s the flow of energy that has to be enabled, on efficient basis, between all nodes within the economy, and the idea of tokenizing the flow of a universal form of energy (i.e. electricity), as we have here (see: Common Energy Bank) allows us to enable the flow of this energy from one node to another alongside the flow of goods and services.

The issue not discussed in current P2P theory is how do we assure the efficient flow of energy through all nodes of the economy in such a way that we get maximum “globally sustainable” productivity from every node.

The case for using renewable, clean energy, e.g. fusion, solar, wind, bio-fuel, as opposed to fission reactors or coal etc is two fold:

1. Renewable energy is abundant which means that it can be accessed and harnessed by everyone. Having said this, it’s important to note that sustainable abundance comes from a regulated whole not unregulated individuals (see: Anti-Dumping and Anti-Monopoly Caps for Energy Production.)
2. Minimal cost to environment.

P2P Energy Economy

Read: P2P Energy Economy