Profit and Entropy
Photo above: Rudolf Clausius (1822-1888) – founding thermodynamicist and originator of the concept of entropy
Saving Capitalism from Finance
By Richard Goldwater and Arthur Jonath
“Capitalism is the extraordinary belief that the nastiest of men, for the nastiest of reasons, will somehow work for the benefit of us all." --- Attributed to economist John Maynard Keynes
Summary
Thermoeconomics compares an economy to a fuel-driven engine, and profit to the wasted energy known as entropy. In thermoeconomics, profit does not fuel the pursuit of value. Rather, an economy creates value to recycle profit. When profit is not recycled quickly into value production, but is used instead to leverage other profits, the eventual result is useless, "thermofinancial equilibrium", such as we saw in the recent credit collapse. Understanding and applying a thermo economic science among other things will lead to
•creating a theory of profit to supplement the theoretical relation of price to supply and demand;
•introducing a thermoeconomic, demand-to-supply temperature gradient that accounts for buyer
psychology and the profit motive;
•regulating finance because it is necessary, effective, and scientifically defensible;
•reducing the frequency and severity of bubble building-and-bursting events;
•augmenting Keynesian controls that are too slow to be effective in our cloud-computing age of
instantaneous communication;
•introducing tax on value-less profits, which are those multiplied by finance rather than by
reinvestment in production; and
•proving that Carbon Taxation beats Cap-and-Trade for carbon emission control.
Left-click to read the paper or right-click to download a PDF of
Saving Capitalism from Finance (version 8.4.1)
Economic Efficiency and Thermoeconomics
