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Conservation laws, financial entropy and the Eurozone crisis

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  • Cockshott, Paul
  • Zachariah, David

Abstract

The article starts by examining the idea of conservation laws as applied to market economies. It formulates a measure of financial entropy and gives numerical simula-tions indicating that this tends to rise. We discuss an analogue for free energy released during this process. The concepts of real and symbolic appropriation are introduced as a means to analyse debt and taxation. We then examine the conflict between the conservation laws that apply to commodity exchange with the exponential growth implied by capital accumulation and how these have necessitated a sequence of evolutionary forms for money, and go on to present a simple stochastic model for the formation of rates of interest and a model for the time evolution of the rate of profit.

Suggested Citation

  • Cockshott, Paul & Zachariah, David, 2014. "Conservation laws, financial entropy and the Eurozone crisis," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-55.
    • Handle: RePEc:zbw:ifweej:20145
    DOI: 10.5018/economics-ejournal.ja.2014-5
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    More about this item

    Keywords

    Entropy; Conservation-law; Financial crisis;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises

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