18 Insights from Thermodynamics for the Analysis of Economic Processes

Abstract

The laws of thermodynamics constrain transformation of materials and energy, and thus have implications for economic processes. This paper provides an overview over the uses and applications of concepts from thermodynamics in economic analysis at the level of individual processes and explores potential constraints at larger system levels – the economy as a whole and the ecosystems within which economies are embedded. Specific emphasis will be placed on the ways in which insights from equilibrium and non-equilibrium thermodynamics can be used to better describe – and understand – economic activity and its interactions with the global environment.