Nicholas Georgescu-Roegen (1906-1994) was a Romanian mathematician, statistician and thermodynamic economist known for his 1971 book The Entropy Law and the Economic Process, which situated the view that economic systems are governed by the second law of thermodynamics. [1] This book helped to found the field of economic thermodynamics. In his general theory, Georgescu-Roegen rejects the older “mechanistic” economics in favor of “thermodynamic” economics, and insists that descriptions of economic phenomena, especially mathematical descriptions, must go beyond relative market prices, namely they must be grounded in reality, i.e. in the physical and social universe of which humans are embedded. [2] His work has stimulated a number of writers, such as Jeremy Rifkin, Jing Chen, and others.

Overview
Georgescu-Roegen’s interest in the possible relation between entropy and economics began with his 1966 introductory essay to a collection of his theoretical papers published in Analytical Economics. [2] He spent the last 25-years of his life researching this topic.

Georgescu-Roegen’s economic entropy theory
The core of Georgescu-Roegen's theory is found in his 1971 book The Entropy Law and the Economic Process. In it, based on verbal versions of the second law of thermodynamics, his basic line of reasoning argues that due to the universal nature of the second law of thermodynamics, which, in the 1882 version of Hermann von Helmholtz, states that usable "free energy" (system energy available to do external work) tends to disperse or become lost in the form of "bound energy" (system internal energy unavailable to do external work), in economic systems natural resources will always tend to deplete. To clarify, in 1976, at the age of 70, Georgescu-Roegen looked back to his earlier experiences in Romania to find the roots of his dissatisfaction with traditional economics and his preoccupation with entropy and irreversible evolutionary change:

“The idea that the economic process is not a mechanical analogue, but an entropic, unidirectional transformation began to turn over in my mind long ago, as I witnessed the oil wells of the Ploesti field of both World Wars’ fame becoming dry one by one and as I grew aware of the Romanian peasant’s struggle against the deterioration of their farming soil by continuous use and by rains as well. However, it was the new representation of a process that enabled me to crystallize my thoughts in describing for the first time the economic process as the entropic transformation of valuable natural recourses (low entropy) into valueless waste (high entropy).” [3]

In caution to the reader, in the simplicity of this theory, however, he states that:

“I may hasten to add … that this is only the material side of the process. The true product of the economic process is an immaterial flux, the enjoyment of life, whose relation with the entropic transformation of matter-energy is still wrapped in mystery.” [3]

Difficulties on theory
The essential difficulty in Georgescu-Roegen’s economic entropy theory is that he uses simple verbal descriptions of the second law of thermodynamics, stemming from the 1882 verbal phrases of Helmholtz, and makes unjustified assumptions of where these verbal terms apply in human social systems. Specifically, he reasons that “free energy” refers to coal or crop soil and that “bound energy” refers to the conversion of that coal energy or food energy into the end products of human consumption, such as the energy spent in using electric appliances or as food or consumer end products as found in a used condition at garbage dumps. The difficulty here is that Georgescu-Roegen makes no connection to the Carnot cycle or Clausius’ 1862 transformation integral:

which is used to quantify irreversibility in the Carnot cycle. Said another way, Georgescu-Roegen never defines either his “working body” (e.g. steam body) or his “boundary” (across which heat, work, or matter may pass) to his economic process. The reader is supposedly assumed to think that the bottom boundary to the human economic system lies several miles underground, below the coal and oil deposits, and to ignore the first law of thermodynamics energy balance to the remainder of the picture.

In modern terms, boundaries to "working bodies" of human systems, i.e. interactive collections of human molecules confined to economic systems, are defined as being the the 90 percent probability regions in which a specific number of socially interactive or energetically-coupled humans are found. In this point of view, the "boundary" does not typically go several miles below ground but rather the surface of the earth, including the soils and natural resource deposits are considered as substrate or catalyst upon which human molecules react. The entropy considered by Georgescu-Roegen is defined as the internal system energy dissipated as humans act on each other, energy that does not find conversion into system external work. [4]

Objections
The use of material entropy, as seeded by Georgescu-Roegen, is generally seen as point of non-logic. Israeli physical chemist Brian Silver, in commentary on what he calls “Georgescu-Roegen’s brainchild”, for instance, states that “the term material entropy is meaningless; it has not the slightest connection with entropy. [5]

In a recent 14-page article “The Three Laws of Thermodynamics”, in Redorbit News, a staff writer takes issue with Georgescu-Roegen's interpretation of the second law of thermodynamics (entropy law) and its relevance to the economics of production. The paper concurs with experts on thermodynamics that Georgescu-Roegen has committed a major error. Namely, Georgescu-Roegen's notion of "material entropy," which he christened as the "fourth law of thermodynamics," is unfounded. They conclude that Georgescu-Roegen's purported law, as the application of the second law to the realm of matter, is a grave conceptual blunder. [6]

References
1. Georgescu-Roegen, Nicholas. (1971). The Entropy Law and the Economic Process. Cambridge, Massachusetts: Harvard University Press.
2. Gowdy, J. and Mesner, S. (1998). “The evolution of Georgescu-Roegen's bioeconomics.” Review of Social Economy Vol. LVI, No. 2.
3. Georgescu-Roegen, Nicholas. (1976). “Foreword,” Energy and Economic Myths, (pgs. ix-xxvi), New York: Pergamon Press.
4. (a) Thims, Libb. (2007). Human Chemistry (Volume One), (preview). Morrisville, NC: LuLu.
(b) Thims, Libb. (2007). Human Chemistry (Volume Two), (preview). Morrisville, NC: LuLu.
5. Silver, Brian L. (1998). The Ascent of Science, (pg. 231). Oxford University Press.
6. Staff Writer. (2004). “The Three Laws of Thermodynamics and the Theory of Production”, RedOrbit News, March 13.