A two-temperature, variable-density, arc model has been developed for description of high-current free-burning arcs, including departures from thermodynamic and chemical equilibrium in the plasma. The treatment includes the arc, the anode and the cathode and considers the separate energy balance of the electrons and the heavy particles, together with the continuity equations for these species throughout the plasma. The output includes a two-dimensional distribution for the temperatures and densities both of the electrons and of the heavy particles, plasma velocity, current density and electrical potential throughout the arc. For a 200 A arc in pure argon at 1 atm, we calculate large differences between the temperatures of the electrons and the heavy particles in the plasma region near the cathode tip, together with large departures from local chemical plasma equilibrium. In the main body of the arc at high plasma temperatures, we predict minor differences between the temperatures of the electrons and the heavy particles, which are inconsistent with recent measurements using laser-scattering techniques showing differences of up to several thousand degrees. However, we find that, for the region in front of the cathode tip, the ground-state level of the neutral atoms is overpopulated relative to the corresponding populations under conditions of LTE, in agreement with experimental observations. These departures from LTE are caused by the injection of a large mass flow of cold gas into the arc core due to arc constriction at the tip of the cathode.