production

Production is the irreversible transformation of inputs into joint outputs with higher and lower >entropy by means of intentional >action. Production is the defining feature of economic systems and a circular process, such that at least one output is the input of another >elementary process of production. Output without any further use is called "waste".

According to the laws of thermodynamics, production can only increase or maintain the order of a system if there is an inflow of energy into the system, which is the source of >work. The output with higher entropy is waste. Waste is exported from the system into the environment, which, however, does not necessarily mean that waste has vanished from the system because it can change the selective forces operating on the system. The ultimate form of waste is bounded energy, that is heat. Heat is the limit to any attempt to further extend production via recycling.

Evidently, the EE concept of production is an ecological one. This view is radicalized because in EE there is no independent category of consumption in the sense of the final use of outputs. Fulfilment of human >needs is a part of the entire production process of an economic system.

In >bimodal analysis, production is transformation of knowledge, entailing a partial increase of information. For example, the more outputs are recycled, the more knowledge inheres in the production process,and the more knowledge is embodied in the products. This transformation of knowledge is more complex if producer and user of output differ, because their respective knowledge may not be the same. Production mostly is concomitant with distributed knowledge of the actors involved. The analysis of this knowledge is tantamount to the analysis of >technology.

Production with many actors corresponds to a flow of transactions in their network. Commonly, the implied functional relation between input and output is described by a production function. In EE, these functional relations are differentiated according to their degree of modularity, which reflects the distribution of knowledge among the actors involved. Submodular production processes take place with knowledge being concentrated in few actors who organize the process. Supermodular processes show positive externalities among the actors which reflect distributed knowledge.

Basic References

The ecological view of production as a qualitative transformation of matter-energy has been first developed in the classic:
Nicholas Georgescu-Roegen, The Entropy Law and the Economic Process, Cambridge: Harvard University Press 1971.

The concept of knowledge transformation was introduced by
Ayres, Robert U., Information, Entropy, and Progress. A New Evolutionary Paradigm, New York: AIP Press, 1994.

The analysis of production in terms of networks with different degrees of modularity is inspired by the programmatic paper:
Paul Milgrom and John Roberts, The Economics of Modern Manufacturing: Technology, Strategy, and Organization, in: American Economic Review, Vol. 80, S. 511-528, 1990.

Semantic Field
entropy   knowledge
production
elementary process