Closed Systems Always Run Down

“A similar effect, a breakdown in the quality of energy, is well known to students of physics as “entropy.” The energy is still there, but it isn’t available for doing work. The insidious thing about entropy is that within a closed system, it always increases. In other words, closed systems run down.”

“Nobel Laureate Frederick Hayek eloquently makes this case in his book, The Fatal Conceit. Hayek inveighed against the notion of ever being able to plan a productive economy. He argues that formal planning methodologies—which are models of how an economy works—do not capture what really drives a competitive economy, in particular the information processed through decisions made daily by millions of buyers and sellers. Conversely, countries that try to run their economies through a central state planning mechanism cannot process information nearly as well as the multitude of players in a decentralized system. Hayek’s theories were validated in the last half of the 20th century, when countries that relied on Soviet-style planning collapsed in competition with those that evolved decentralized, capitalist economies.”