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A Thermodynamic Theory of Economics

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  • John Bryant

    ()
    (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.

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File URL: http://www.vocat.co.uk/TEFPRV2007.pdf
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Bibliographic Info

Paper provided by Economic Consultancy, Vocat International in its series Working Papers with number tefprv2007.

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Length: 31 pages
Date of creation: Apr 2007
Date of revision:
Publication status: Published in International Journal of Exergy, Vol. 4, No. 3, pp.302-337
Handle: RePEc:voc:wpaper:tefprv2007

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Web page: http://www.vocat.co.uk

Related research

Keywords: Thermodynamics; economics; Le Chatelier; entropy; utility; money; equilibrium; value; energy;

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References

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  1. Sousa, Tania & Domingos, Tiago, 2006. "Is neoclassical microeconomics formally valid? An approach based on an analogy with equilibrium thermodynamics," Ecological Economics, Elsevier, vol. 58(1), pages 160-169, June.
  2. Bryant, J., 1982. "A thermodynamic approach to economics," Energy Economics, Elsevier, vol. 4(1), pages 36-50, January.
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Citations

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Cited by:
  1. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 7 Investment and Economic Entropy," Working Papers tech72012, Economic Consultancy, Vocat International.
  2. Jing Chen, 2013. "Population, Migration, Living Standard and Social Pressure: A Modeling Approach from Thermodynamics," Interdisciplinary Description of Complex Systems - scientific journal, Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu, vol. 11(3), pages 345-349.
  3. George, Michael, 2007. "Predicting the Profit Potential of a Microeconomic Process: An Information Theoretic/Thermodynamic Approach," MPRA Paper 5175, University Library of Munich, Germany, revised 05 Oct 2007.
  4. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 5 Money," Working Papers tech52012, Economic Consultancy, Vocat International.
  5. John Bryant, 2010. "A Thermodynamic Approach to Monetary Economics. A Revision. An application to the UK Economy 1969-2006 and the USA Economy 1966-2006," Working Papers ten5a2010, Economic Consultancy, Vocat International.
  6. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 2 Stock and Flow Processes," Working Papers tech22012, Economic Consultancy, Vocat International.
  7. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 1 Introduction," Working Papers tech12012, Economic Consultancy, Vocat International.
  8. John Bryant, 2008. "Thermodynamics and the Economic Process," Working Papers ten62008, Economic Consultancy, Vocat International.
  9. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 4 Production and Entropy Processes," Working Papers tech42012, Economic Consultancy, Vocat International.
  10. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 3 Thermodynamic Principles," Working Papers tech32012, Economic Consultancy, Vocat International.
  11. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 8 Energy Resources and the Economy," Working Papers tech82012, Economic Consultancy, Vocat International.
  12. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 9 Thermoeconomics and Sustainability," Working Papers tech92012, Economic Consultancy, Vocat International.
  13. John Bryant, 2012. "Thermoeconomics, A Thermodynamic Approach to Economics, Third Edition, Chapter 6 Labour and Unemployment," Working Papers tech62012, Economic Consultancy, Vocat International.

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