Worrying trends in econophysics

Econophysics has already made a number of important empirical contributions to our understanding of the social and economic world. These fall mainly into the areas of finance and industrial economics, where in each case there is a large amount of reasonably well-defined data.More recently, Econophysics has also begun to tackle other areas of economics where data is much more sparse and much less reliable. In addition, econophysicists have attempted to apply the theoretical approach of statistical physics to try to understand empirical findings.Our concerns are fourfold. First, a lack of awareness of work that has been done within economics itself. Second, resistance to more rigorous and robust statistical methodology. Third, the belief that universal empirical regularities can be found in many areas of economic activity. Fourth, the theoretical models which are being used to explain empirical phenomena.The latter point is of particular concern. Essentially, the models are based upon models of statistical physics in which energy is conserved in exchange processes. There are examples in economics where the principle of conservation may be a reasonable approximation to reality, such as primitive hunter–gatherer societies. But in the industrialised capitalist economies, income is most definitely not conserved. The process of production and not exchange is responsible for this. Models which focus purely on exchange and not on production cannot by definition offer a realistic description of the generation of income in the capitalist, industrialised economies.