Action in Economics: Mathematical Derivation of Laws of Economics from the Principle of Least Action in Physics

Sayan Kombarov ()

MPRA Paper from University Library of Munich, Germany

Abstract: The thesis of this paper is mathematical formulation of the laws of Economics with application of the principle of Least Action of classical mechanics. This paper is proposed as the rigorous mathematical approach to Economics provided by the fundamental principle of the physical science – the Principle of Least Action. This approach introduces the principle of Action into main-stream economics and allows to reconcile the main principles Austrian School of Economics with the laws of market, such Say’s law, marginal value and interest rate theory, with the modern results of mathematical economics, such as Capital Asset Pricing Model (CAPM), game theory and behavioral economics. This principle is well known in classical mechanics as the law of conservation of action that governs any system as a whole and all its components. It led to the revolution in physics, as it allows to derive the laws of Newtonian and quantum mechanics and probability. Ludwig von Mises defined Economics is the science of Human Action. Action is introduced into Economics by the founder of Austrian School of Economic, Carl Menger. Production or acquisition of any goods, services and assets are results of purposeful acts in the form of expenditure of work and energy in the form of flow of money and material resources. Humans take them to achieve certain desired goals with given resources and time. Any economic good and service, financial, productive, or real estate asset is the result of such action.

Keywords: Human Action; Say's law of markets; Principle of least action; Energy of money circulation; velocity of money; gold; exchange; value of use; law of diminishing value; marginal value; value of use; normal distribution; interest rate theory; GDP; Game theory; CAMP; The Prospect Theory (search for similar items in EconPapers)
JEL-codes: A10 A12 A13 A20 C20 C22 C25 C52 C55 C58 C61 C62 C65 C70 C72 D00 D01 D03 D4 D40 D46 D50 D51 D53 D80 D83 D84 D86 D90 F0 G0 G01 G02 G11 G12 G14 (search for similar items in EconPapers)
Date: 2021-08-24
New Economics Papers: this item is included in nep-hpe and nep-upt
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Published in Proceedings of International Conference of Eurasian Economies (2021): pp. 123-129

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