**From:** Philip Dunn (*pscumnud@DIRCON.CO.UK*)

**Date:** Mon Jun 09 2003 - 08:21:35 EDT

**Next message:**gerald_a_levy: "(OPE-L) Re: Negri on socialization"**Previous message:**gerald_a_levy: "(OPE-L) the _struggle_ over the length of the working day"**In reply to:**Ian Wright: "Re: zero average profit"**Messages sorted by:**[ date ] [ thread ] [ subject ] [ author ] [ attachment ]

Quoting Ian Wright <ian_paul_wright@HOTMAIL.COM>: > For example, I like very much the paper "Statistical Mechanics of Money" > by two physicists working in the field of econophysics: > http://www2.physics.umd.edu/~yakovenk/papers/EPJB-17-723-2000.pdf > Their model is extremely simple: N agents, M money, random encounters of > pairs of agents who randomly transfer an amount of money between them. > That's it. It turns out that the statistical equilibrium of the system > generates > an exponential income distribution (lots of agents with not much money, > and a decreasing number of agents with a great deal). This distribution is > in empirical agreement with a large section of the income distribution in > the > US, as measured from tax returns (the model breaks down for capitalist > incomes, which are better fitted by a power law, not an exponential law, > which is interesting in itself). Their model is exactly analoguous to a > perfect > gas, in which elastic collisions between molecules transfer energy between > them. So this work is very much in the tradition of Farjoun and Machover, > who also apply statistical mechanics to political economy. I wonder > why the physicists' very simple model is able to capture something essential > about the economy, and whether this kind of modelling approach can be > extended. Duncan Foley has written a paper applying thermodynamics to economics, rather than statistical mechanics Classical thermodynamics and economic general equilibrium theory (with Eric Smith) http://cepe.newschool.edu/~foleyd/econthermo.pdf It replaces Walrasiam initial endowments followed by adjustment to equilibrium with the thermodynamic concept of reversible near-equilibrium changes. The analogue of temperature is different from that in "Statistical Mechanics of Money". Econophysics raises questions like 'is capital analogous to heat, or whatever?' Philip Dunn

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