Economic equilibrium

In hmolscience, economic equilibrium is an instantaneous Gibbs free energy minimum differential, on an energy landscape of a given economic system, per extent of reaction of that given system.

Thermodynamics
The use of thermodynamics applied to “economic equilibrium” modelling dates, predominately, to the 1858-1912 theories of Lausanne school of physical economics.

In 1932, Swiss-French economist Georges Guillaume 1932 PhD dissertation "On the Fundamentals of the Economy with Rational Forecasting Techniques", co-written with the "mathematical assistance" of his brother physicist Edouard Guillaume, in which, in critique of the Lausanne school, they employed thermodynamics, supposedly of the Percy Bridgman variety, to emphasized the possibility of the existence of “states of equilibrium in economics” (cf. pgs. 68-69), which, according to John Neumann’s 1934 review, “seem entirely justified”, is an oft-cited early usage of thermodynamics-based economic equilibrium theorizing. [1]

In 2003, American physicist and econophysicist Joseph McCauley comments the following: [2]

“Attempts at neo-classical equilibrium economic analogies with thermodynamics go back to Guilluame and Samuelson. Von Neumann apparently believed that thermodynamic formalism could potentially be useful in computer theory, for formulating a description of intelligence, and was interested in the possibility of a thermodynamics of economics. But presented with Guillaume’s work, he criticized it on the basis of the misidentification of a quantity as entropy.”

The mention of Paul Samuelson here, is reference to his educational background being a product of the Lausanne school turned Harvard Pareto circle.

References
1. (a) Neumann, John. (1934). “Letter to Abraham Flexner”, May 25, Faculty Files, Folder 1933-35. VNIAS.
(b) Leonard, Robert J. (1995). “From Parlor Games to Social Science: von Neumann, Morgenstern, and the Creation of Game Theory, 1928-1944” (abs), Journal of Economic Literature, 33(2): 730-761.
(c) Mirowski, Philip. (2002). Machine Dreams: Economics becomes a Cyborg Science (pg. 104). Cambridge University Press.
2. McCauley, Joseph L. (2003). “Thermodynamic Analogies in Economics and Finance: Instability of Markets.” Physica A, 329 (2003): pp. 199-212.

Further reading
● Sergee, V.M. (2003). “Thermodynamic Approach to the Problem of Economic Equilibrium” (abs), Forma Description of Developing Systems, NATO Science Series, 121:45-58.
● Smith, Eric and Foley, Duncan. (2008). "Classical Thermodynamics and Economic General Equilibrium Theory", Journal of Economic Dynamics and Control, 32:7-65, Department of Economics Graduate Faculty, New School University, 2005 manuscript.

External links
Economic equilibrium – Wikipedia.
List of types of equilibrium (economics) – Wikipedia.

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