Energy, Evolution, and Economics
By Giora Friede
A Physics-Based Framework for Human Progress and Monetary Integrity
Abstract
This paper posits that humanity’s trajectory toward greater productivity and prosperity is fundamentally rooted in the transformation of energy into productive outputs, culminating in the contemporary era with the conversion of energy into artificial intelligence (AI). As human societies have evolved, so too have their economic and political systems, adapting to the energy-driven advancements of the modern era. Drawing on principles from physics—particularly thermodynamics—this analysis argues that economic systems, including the treatment of money, should align with immutable physical laws governing energy conservation, efficiency, and entropy. Econophysics, a field that applies concepts from statistical mechanics to economic phenomena, provides an interdisciplinary bridge for this alignment. Government intervention through unrestricted money printing is critiqued as a perverse distortion akin to violating thermodynamic principles, leading to artificial inflation that disproportionately harms the most vulnerable populations. By integrating insights from evolutionary biology, econophysics, and monetary theory, as well as ethical traditions such as those in Abrahamic religions that emphasize economic fairness, this paper advocates for sound money systems grounded in physical realities to foster equitable progress.
1. Introduction
Humanity’s quest for advancement has long been intertwined with the mastery of energy. From the harnessing of fire to the Industrial Revolution’s exploitation of fossil fuels, energy transformation has driven significant evolutionary leaps in productivity and societal complexity. In the modern context, this is exemplified by AI, where vast amounts of energy yield intelligent systems that amplify human capabilities. Concurrently, economic and political structures have co-evolved, shifting from feudal hierarchies to market-driven democracies, often in response to these technological shifts. This paper explores these dynamics through a lens inspired by physics principles, emphasising energy as a foundational element of the universe. It contends that money, as a proxy for stored value and economic energy, should adhere to physics-derived rules of scarcity and conservation. Deviations, such as government fiat money expansion, introduce inefficiencies and inequities, mirroring the increase in entropy in isolated systems. A notable real-world example is the prolonged quantitative easing in the aftermath of the 2008 financial crisis, where central banks injected massive liquidity into the economy, contributing to inflated asset prices and widening wealth disparities. The analysis critiques such practices for undermining fairness and exacerbating harm to the most vulnerable societal strata through inflation, which can be viewed as a violation of thermodynamic entropy principles and ethical mandates for just economic systems, as seen in various religious traditions, including Jewish thought.
2. The Historical Role of Energy Transformation in Human Evolution and Productivity
Human evolution is inextricably linked to innovations in energy acquisition and utilisation, a process that has shaped both biological and societal advancements. The early hominids’ mastery of fire marked a pivotal leap, providing warmth, protection, and the ability to cook food, which reduced digestive energy demands and facilitated brain expansion through increased caloric intake (Resilience.org, 2005). This increase in energy efficiency enabled cognitive development and the creation of tools, laying the foundation for cultural and technological progress. As societies evolved, the domestication of animals and the development of agriculture further amplified energy inputs into productive outputs, transitioning humanity from hunter-gatherer subsistence to settled civilisations with specialised labour divisions.
The industrial era unleashed unprecedented energy density through fossil fuels, driving mass production and correlating with exponential growth in population and the economy. This underscores a general theory of evolution driven by energy efficiency: systems that optimise energy conversion prevail (ScienceDirect, 2011). In cultural terms, energy productivity has shaped societal evolution, from rudimentary communities to complex civilisations, as labour efficiency rises. These transformations underscore the foundational role of energy in human progress, with implications for metabolic scaling and disease patterns in contemporary contexts.
A critical yet often overlooked milestone in energy transformation is the harnessing of water as hydraulic energy, a technology that dates to the Palaeolithic era. As discussed by Saylor and Breedlove (2020), hydraulic systems enabled early humans to channel gravitational energy through water, significantly enhancing economic and societal development. For instance, hydraulic techniques were likely used to construct the Egyptian pyramids, where water-filled tubes floated heavy stones to higher levels, demonstrating an early mastery of energy-efficient transport (Saylor & Breedlove, 2020). Similarly, moats and tidal basins served as protective and economic tools, securing settlements and facilitating food production, such as trapping marine life. These innovations increased economic density by concentrating resources—such as water for drinking, irrigation, and sanitation—closer to human settlements, thereby reducing the energy required for survival tasks (Saylor & Breedlove, 2020). This mirrors the broader evolutionary trend of optimising energy use to enhance productivity and societal stability.
Another significant advancement in energy transformation is the invention of the refrigerator, which Saylor highlights as a revolutionary store of value in human history (Saylor & Breedlove, 2020). By preserving food, the fridge effectively stores chemical energy, extending the usability of perishable resources and stabilising economic systems. This innovation reduced food waste and enabled societies to maintain consistent energy supplies, freeing up time and resources for other productive activities. In economic terms, the refrigerator represents a store of value analogous to money, as it preserves energy-derived assets (food) for future use, much like money encapsulates labour and innovation for exchange and storage (Mobus, 2016). This aligns with the paper’s thesis that money, as the highest form of energy abstraction, emerged from such energy-driven surpluses, enabling economic systems to scale and thrive.
These energy-driven advancements—fire, agriculture, hydraulics, fossil fuels, and refrigeration—laid the groundwork for economic systems where money emerged as a sophisticated store of value. By representing accumulated energy efficiencies, money facilitates the exchange and storage of human ingenuity, from the physical labor of early societies to the technological innovations of the modern era. The insights from Saylor and Breedlove (2020) underscore how these transformations, rooted in the mastery of energy, have consistently driven human progress, setting the stage for the economic and political systems that continue to evolve alongside technological advancements.
3. The Emergence of AI as the Latest Iteration of Energy Transformed into Intelligence
Artificial intelligence (AI) marks a pinnacle in energy transformation, converting substantial electrical inputs into computational intelligence that enhances societal productivity. AI systems, powered by energy-intensive data centres, optimise critical processes, such as smart grid management and renewable energy forecasting, driving efficiency in energy sectors (Masanet et al., 2020). This transformation extends the historical trend of harnessing energy to advance human capabilities, aligning with the evolutionary principle of increasing complexity through the efficient use of energy.
AI’s projected productivity gains are transformative, with estimates suggesting a 7–14% boost to global GDP by 2030 through automation and innovation in healthcare, logistics, and manufacturing (Frey & Osborne, 2017; PwC, 2018). For example, AI-driven diagnostics improve patient outcomes by enabling early disease detection, while optimized supply chains reduce resource waste, enhancing quality of life. These advancements convert energy into productive outputs, generating surplus economic value that money, as a store of energy-derived productivity, captures for exchange and storage (Mobus, 2016). This process reinforces money’s role as an abstract representation of energy, facilitating economic scalability.
Yet, AI’s high energy demands—data centres consume gigawatts annually—require alignment with thermodynamic principles to minimise entropy (Masanet et al., 2020). Efficient AI systems reduce systemic disorder by optimising resource use, such as minimising energy losses in industrial applications. Misalignment, however, risks resource strain, increases entropy, and undermines sustainability. Responsible deployment of AI, grounded in physical limits and ethical considerations, ensures that its productivity gains equitably improve lives while supporting stable monetary systems.
4. Physics Principles Governing Economic and Political Systems
Economic systems, like physical ones, operate within the laws of thermodynamics. Econophysics reveals statistical parallels between the distribution of energy among particles in physical systems (such as gases) and the distribution of wealth among individuals in societies. [...]
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📑 Summary Table: Thermodynamic-Consistent vs. Fiat-Distorted Economic Systems
Principle
Thermodynamic-Consistent System
Fiat-Distorted System
Energy Foundation
Anchored in real energy transformation (labor, commodities, production)
Created ex nihilo, decoupled from real energy or productive output
Money Creation
Scarce and mined/earned (e.g., gold, Bitcoin)
Arbitrarily printed by central authorities
Entropy Alignment
Minimizes systemic disorder, maintains informational clarity
Increases economic entropy, blurs price signals
Capital Allocation
Market-driven, efficient signal-based investment
Distorted by interest-rate manipulation and cheap credit
Wealth Distribution
Grows with productivity; transparent
Benefits insiders first (Cantillon Effect); erodes purchasing power
Ethical Basis
Honest measures, rooted in labor-value ethics and natural law
Violates fairness through dilution and hidden taxation
System Stability
Self-correcting, resilient to shocks
Prone to boom-bust cycles and cascading failures
Historical Examples
Classical Gold Standard, energy-backed models
Weimar Republic, Zimbabwe, U.S. QE 2020–2022
Technological Analogy
Closed-loop control system with entropy management
Open-loop system with runaway feedback
Future-Ready Potential
Compatible with decentralized systems like Bitcoin
Incompatible with AI-era demand for trustless and scarce computation
References
Resilience.org. (2005). Energy and Human Evolution.
PMC. (2012). Are humans still evolving?
ScienceDirect. (2011). Energy, Evolution, and Human Diseases.
Saslow, W. M. (1999). An Economic Analogy to Thermodynamics. American Journal of Physics, 67(12), 1239–1247.
Mobus, G. (2016). Money Is Energy. Financial Sense.
New Economics Foundation. (2013). Energising Money.
Bryant, R. C. (2007). A Thermodynamic Theory of Money. ISEE Proceedings.
Georgescu-Roegen, N. (1971). The Entropy Law and the Economic Process. Harvard University Press.
Tamari, M. (1995). With All Your Possessions: Jewish Ethics and Economic Life. Jason Aronson.
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