In human thermodynamics, Vilfredo Pareto (1848-1923) was a French-Italian mathematical engineer noted for his social thermodynamics and economic thermodynamics theories outlined, towards the end of the 19th century, on the logic of his mentor French economist Léon Walras, who had spoken of people as "economic molecules", by defining a person explicitly as a human molecule. In his in his 1896 Cours d’Economie Politique, for instance, Pareto states:
"First we separate the study of ophelimity (economic satisfaction) from the diverse forms of utility, then we direct our attention to man himself; stripping him of a large number of his attributes, leaving out the passions, good or bad, reducing him to a kind of molecule that only acts in response to the forces of ophelimity."
This was outlined further in his 1916 Treatise on General Sociology, wherein, according to American physiologist Lawrence Henderson, his goal was to construct a system of sociology analogous in its essential features to the generalized physico-chemical thermodynamics system as outlined in American mathematical physicist Willard Gibbs’ 1876 On the Equilibrium of Heterogeneous Substance, the founding paper of chemical thermodynamics. [1] EntropyIn his discussions and theories on mind and society, Pareto was cognizant of the concept of
entropy but eschewed it, instead relying heavily upon the concept of
equilibrium. [4]
ApplicationsIn the 2003 article “Money in Gas-Like Markets: Gibbs and Pareto Laws”, several authors consider ideal-gas models of trading markets, where each agent is identified with a
gas molecule and each trading as an elastic or
money-conserving (two-body) collision. Unlike in the ideal gas, they introduce a
quantity the “saving propensity” $λ of agents, such that each agent saves a fraction $λ of its money and trades with the rest. They show that steady-state money or wealth distribution in a market is Gibbs-like for relation $λ = 0, has a non-vanishing most-probable
value for $λ ≠ 0, and Pareto-like when $λ is widely distributed among the agents. They compare these results with observations on
wealth distributions of various countries. [2]
In the 2008 article “Pareto and
Boltzmann-Gibbs behavior in a Deterministic Multi-agent System, several authors used a Pareto-Boltzmann-Gibbs logic to develop an economic
dynamics model in which an economy is a deterministic system of interacting agents. They consider the dynamics of the system to be described by a coupled map lattice with near neighbor interactions, in which the
evolution of each agent results from the competition between two factors: the agent's own tendency to grow and the environmental influence that moderates this growth. These authors argue that depending on the values of the parameters that control these factors, the system can display Pareto or Boltzmann-Gibbs statistical behaviors in its asymptotic dynamical regime. [3]
References1. (a) Vilfredo Pareto - Sociological Theory.(b) Henderson, Lawrence J. (1935). Pareto's General Sociology: A Physiologists Interpretation. Harvard University Press.2. Chatterjee , Arnab, Chakrabarti, Bikas K., Manna, S. S. (2003).
“Money in Gas-Like Markets: Gibbs and Pareto Laws”,
Physica Scripta T106 (2003) 36-38.
3. Gonzalez-Estevez, J., Cosenza, MG, R Lopez-Ruiz, Sanchez, JR. (2008). “
Pareto and Boltzmann-Gibbs behaviors in a deterministic multi-agent system” (PDF), Jan 7,
Elsevier.4. (a) Pareto, Vilfredo. (1935).
Mind and Society, Volume IV (pg. 1461). New York: Harcourt, Brace.
(b) Bailey, Kenneth D. (1990).
Social Entropy Theory (section: “Pareto”, pg. 59-61). State University of New York Press.