Entropy and Entrepreneurship

I was, at best, only an average student of physics much to the disappointment of my professors at Victoria University. They were however sufficiently benevolent to award me a pass at 100 level. I wanted to understand, but it seemed to be mostly about calculus and less about actually describing the (more interesting) theoretical physical models that define our universe and that I later went on to explore in other courses.

One foundational concept that I do remember (ok I’m a wee bit hazy) is that of ‘entropy’. It came up in a conversation with my son recently after we had been sharing a book about space and time (little boys love stars and planets).

I recalled that entropy relates to the distribution of energy throughout a closed ‘system’ and that it tends to increase throughout the universe over time. This has significant implications for thermodynamics. I think it has some philosophical implications as well, especially when you consider that the universe is apparently expanding. Sociological research often draws upon parallels in the natural world, which got me thinking about some possible analogies.

One way of looking at the problem is that, in nature, systems have a tendency to move from uniformity to chaos. By systems we could mean our universe, a refrigerator or even a glass of water falling onto the floor. Mathematicians call it ‘system complexity’.

I explained this to my son by asking him to consider his own bedroom. After Dad does the housework, the bedroom is in a pristine state. However, over time the room becomes gradually more disordered until chaos finally ensues. He seemed to be able to grasp this concept. It then occurred to me that we could also apply this idea to social systems such as business organisations, marriage and political parties. Think about it.

Of course this thought occurred to economists a long time ago, especially when a fellow called Schumpeter wrote something about “creative destruction” and the role of the entrepreneur in disturbing economic equilibrium through innovation.

[tags]entropy, entrepreneurship[/tags]

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