Inderscience Publishers

A thermodynamic theory of economics

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An analogy between thermodynamic and economic theories is developed further, following a previous paper published by the author in 1982. Economic equivalents are set out concerning the ideal gas equation, pressure, temperature, entropy, 1st and 2nd Laws of Thermodynamics and the Le Chatelier Principle. Links to utility, the Law of Diminishing Marginal Utility and the Cobb Douglas function are developed. A trade cycle is constructed, based on the Joule Cycle, with equations for cycle efficiency, growth and entropy gain. A thermodynamic model of a money system is developed. Aspects concerning the measurement of economic value in thermodynamic terms are discussed.

Keywords: thermodynamics, economics theory, Le Chatelier principle, entropy, utility, money, equilibrium, value, energy, exergy, ideal gas equation, pressure, temperature, utility, Law of Diminishing Marginal Utility, Cobb Douglas function, trade cycles, Joule cycle, monetary systems, economic value

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