The Entropy Law and the Economic Process,   ISBN:9781583486009

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As a classic in the field, the book establishes the bases for sustainable development policies, and can help to cope with the challenges of future energy supply, limits to growth, and climate change.

I deserves deep consideration by those responsible for policies and actions that can influence the next decades scenario.

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There are many great criticisms of neoclassical economics in this book. Georgescu-Roegen (G-R) points out such flaws as
@ regarding the economy as a closed, circular system;
@ neglecting qualitative changes because of the theory's preference for "arithromorhpic" concepts, i.e., concepts organized into distinct and non-overlapping gradations (such as preference/indifference/non-preference), rather than having fuzzy edges or ambiguities (such as real human preferences);
@ failing to attribute value to leisure, and negative value to the drudgery of work (albeit that assuming work must involve drudgery is itself based on some presuppositions not mentioned by G-R); and
@ fallacies in production models, "stock-flow" analysis and input-output tables.
The critique is usually presented with a refreshing brio. G-R isn't afraid to call ideas stupid when he believes them so.

But ... a lot of this book seems to go off the track. There is way more discussion of history of math and physics than seems necessary. Lengthy discussions of eugenics and cloning near the end of the book kind of come out of nowhere. Much of this, especially the biology, is by now very dated, and even that which is less so is often superfluous and bombastic. Some readers may think G-R prophetic because of his occasional allusions to solar power, and I was surprised to see him use the expression "nanotweeze" (as a noun) in 1971 (@351) -- but the book is wrong about so many other forward-looking details that these seem almost like lucky guesses, given the wide range of topics G-R drags into the book.

More substantively, G-R's understanding of physics was quite loose and often wrong. He errs when he talks about how "our whole economic life feeds on low entropy" (@277). Here he seems to be following an error Erwin Schroedinger made in an early edition of his "What is Life?"; Schroedinger corrected the error in a subsequent edition long before G-R's book, but that correction goes unnoticed. G-R's idiosyncratic usage of the terms "free energy," "bound energy" and "polymeres" (sic) will also set your teeth on edge if you come from a natural science background.

G-R does not make a convincing case for the relevance of entropy to economics. There are at least three reasons for this. First is G-R's faulty exposition of the concept, as mentioned above. Second, G-R doesn't adequately motivate the thermodynamics metaphor in economics. As shown in P. Mirowski's "More Heat than Light", the adoption of this metaphor was without empirical motivation, and came in no small part from a kind of "physics envy". It's true the metaphor as adopted didn't include the Second Law (about entropy). But before faulting the model for that omission, one should show why the analogy is appropriate at all. Instead of doing so, G-R mentions a few times that thermodynamics was based on an economics analogy. That's not good enough, especially given the distinctions between physical and social sciences G-R describes in his Chapter XI. Third, even assuming the thermodynamics metaphor can be justified, G-R doesn't address the proper limitations for the metaphor's domain of application. Why just add the Second Law into economics? How about non-equilibrium thermodynamic formalism? How about an analogue to chemical kinetics, which prevent chemical reactions from reaching equilibrium instantly or even at all, and without which we could not be alive? G-R ignores all these, without explanation (indeed, without seeming to be aware of them).

G-R is more convincing in the more limited claim that neoclassical economics models err in considering waste as an "externality", if not ignoring it altogether. That's a significant point, and he deserves credit and gratitude for making it. But this ambitious book does not read today like the grand philosophical synthesis it seems to have been intended to be.

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One of the best books in economic theory ever made. A seminal text that will be a cornerstone in further studies for many generations of economists and social philosophers.
Radmilo Pesic
University of Belgrade

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It must be admitted that Georgescu-Roegen's understanding of entropy was flawed. He, along with many other authors including physicists, thought entropy was a measure of disorder. It is not. That entropy is not a measure of disorder is discussed in a recent scholarly article by chemistry Prof. Frank Lambert, who has a nice web site devoted to the topic. More to the point, it was also discussed in Beard and Lozada's book about Georgescu-Roegen (p. 88, "Economics, Entropy, and the Environment: The Extraordinary Economics of Nicholas Georgescu-Roegen"). It's not easy to say what entropy actually is, but it is straightforward for scientists to measure that, say, the standard entropy of one mole of iron (about 55.8 grams of iron) is 27.7 Joules per Kelvin.

While Georgescu wasn't completely right about all of entropy's aspects, his attacks on Boltzmann's H-Theorem, and on the "information as entropy" school, show completely correct understanding of other aspects of entropy. Furthermore, in his indictment of neoclassical dynamic economics, he was the vanguard of critics who decry slavish devotion to mathematical models which assume we know the future (at least probabalistically). Absorbing Georgescu's lessons would've spared Economics Nobel Laureates Merton and Scholes their disastrous experience running the failed hedge fund Long-Term Capital Management (described in the book "When Genius Failed"): change happens, the past does not always predict the future, and the consequences of one's actions sometimes cannot be imagined by anyone. When investing money, that's a good perspective; when talking about man's effect on the environment, as Georgescu was, it's a perspective that could save the planet.

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Georgescu-Roegen's intentions are laudable, as are many of his proposals. The thermodynamic basis of this work, unfortunately, is unsupportable. This is a pity, as it has left his critique of capitalism open to dismissal, and has contributed to a generation of obfuscation in social and environmental theory.

The problem, simply put, is this: while it sounds convincing to most lay-people (and even many physicists, chemists and engineers) to equate thermodynamic entropy with "disorder", this is based on a meaningless misinterpretation of the second law of thermodynamics. The second law of thermodynamics simply states that energy tends to disperse, if it is not hindered from doing so. It says nothing about "orderliness", and nothing about availability of matter.

Entropy is an extensive property of thermodynamic systems. It is not a property of energy, and certainly not of matter. It is nonsensical to speak of "high- or low-entropy" energy. It is even more nonsensical to speak of "high- or low-entropy" matter. Better to speak of energy quality ("the sun provides us with high-quality energy, and low-quality energy is re-radiated back into space"). Entropy is used to measure the "concentration" (I use this term for illustration only) and hence the usefulness or availability to us of energy, within a given system of matter and energy. The second law of thermodynamics tells us nothing about the tendency of matter to become more or less useful or available to us. There is no thermodynamic basis for reading inevitable decay onto physical, biological or social systems.

Dr. Frank L. Lambert, Professor Emeritus (Chemistry) of Occidental College, Los Angeles, has carried out extensive work over the past few years to demythologise the popular (and, all too frequently, specialist) misunderstanding of the second law of thermodynamics. For anyone contemplating reading "The entropy law and the economic process", I would strongly advise that you first look at Lambert's website: http://www.entropysite.com. He goes through this in detail in multiple format aimed at a range of audiences from lay-person to scientist and engineer.

This review is not intended to be disparaging, towards either Georgescu-Roegen, or others who share the common misunderstanding of the second law of thermodynamics. The problem is deeply entrenched and it will be a long time before the myths around entropy and the second law are dispelled. This is a start.