entropy

Entropy is the measure of disorder of a system with a constant >state space of its elements. In a closed system, maximum entropy implies that the entire energy in the system is bounded, so that there is no further potential for >work. This state defines the thermodynamic >equilibrium of the system, which is the same as a state with mimimum enformation.

Entropy is a fundamental category in EE to analyze >production, so that the general laws of thermodynamics apply. The first law is that total energy in a closed system is always constant. Since matter and energy are two modes of existence of the same quantity, this means that in a closed system >production cannot change the systems matter-energy. For practical purposes, it is important to note that transformation from matter into energy needs energy so that total recycling is only possible in an open system requiring the constant inflow of energy. This is the reason why ecological production needs to minimize matter throughflow, too, if there are technological limitations to energy use.

The second law of thermodynamics holds that in a closed system entropy does only increase. Without an external source of energy, systems cannot maintain states of lower entropy as compared to the environment. This law is one of the causes of irreversibility of production and of the directedness of >time.

These definitions imply a system can only increase its knowledge via the decrease of entropy, which is only possible through the inflow of matter-energy across the boundaries of the system. Only with an external flow of matter-energy, systems can maintain disequilibrium states as stable structures, simultaneously transforming imported free energy into bounded one, namely heat. These are called dissipative systems.

Entropy is a very general and abstract concept which is difficult to apply on specific problems of production and technology directly. However, it provides the foundation for understanding production in terms of ecology and knowledge change. When using the concept in economic contexts, it is always important to carefully identify the boundaries of the system and the flows of matter-energy between the system and its environment.

Basic References
The classic on this topic is
Nicholas Georgescu-Roegen, The Entropy Law and the Economic Process, Cambridge: Harvard University Press, 1971.
He has extended the entropy concept to include the matter-energy relation, which we accept in our formulation but which is not generally agreed upon.

Since we can only scratch the surface here, I recommend the websites:
Definition of entropy
Entropy website
and another site....
...and a special journal

Semantic Field
entropy
energy   information   time
state space