The Physics of Capitalism

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People tend to think of capitalism in economic terms. Karl Marx argued that capitalism is a political and economic system that transforms the productivity of human labor into large profits and returns for those who own the means of production. Its proponents contend that capitalism is an economic system that promotes free markets and individual liberty. And opponents and advocates alike most often measure capitalism’s impact in terms of wealth and income, wages and prices, and supply and demand.

However, human economies are complex biophysical systems that interact with the wider natural world, and none can be fully examined apart from their underlying material conditions. By exploring some fundamental concepts in physics, we can develop a better understanding of how all economic systems work, including the ways that the energy-intensive activities of capitalism are changing humanity and the planet.

This article will explain how the fundamental features of both our natural and economic existence depend on the principles of thermodynamics, which studies the relationships between quantities such as energy, work, and heat. A firm grasp of how capitalism works at a physical level can help us understand why our next economic system should be more ecological, prioritising long-run stability and compatibility with the global ecosphere that sustains humanity.

Such an understanding requires a glance at some central concepts in physics. These include energy, entropy, dissipation, and the various rules of nature that bind them together. The central features of our natural existence, as living organisms and as human beings, emerge from the collective interactions described by these core physical realities. Although these concepts can be difficult to define without reference to specific models and theories, their general features can be outlined and analysed to reveal the powerful intersection between physics and economics.

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