A Thermodynamic Theory of Economics

John Bryant

Working Papers from Economic Consultancy, Vocat International

Abstract: An analogy between thermodynamic and economic theories and processes is developed further, following a previous paper published by the author in 1982. Economic equivalents are set out concerning the ideal gas equation, the gas constant, pressure, temperature, entropy, work done, specific heat and the 1st and 2nd Laws of Thermodynamics. The law of diminishing marginal utility was derived from thermodynamic first principles. Conditions are set out concerning the relationship of economic processes to entropic gain. A link between the Le Chatelier principle and economic processes is developed, culminating in a derivation of an equation similar in format to that of Cobb Douglas production function, but with an equilibrium constant and a disequilibrium function added to it. A trade cycle is constructed, utilising thermodynamic processes, and equations are derived for cycle efficiency, growth and entropy gain. A thermodynamic model of a money system is set out, and an attempt is made to relate interest rates, the rate of return, money demand and the velocity of circulation to entropy gain. Aspects concerning the measurement of economic value in thermodynamic terms are discussed.

Keywords: Thermodynamics; economics; Le Chatelier; entropy; utility; money; equilibrium; value; energy (search for similar items in EconPapers)
JEL-codes: A1 C02 C68 D5 E O1 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2007-04
New Economics Papers: this item is included in nep-cba, nep-hpe, nep-mac and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published in International Journal of Exergy, Vol. 4, No. 3, pp.302-337

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