Thermodynamic Expression of Economics
The Nature of Money
First published on April 30, 2021. Last updated on April 30, 2021.
In our model of supply and demand, goods and services flow from the supplier to the consumer (demander). This one way flow does not seem natural. In economics, money typically balances the flow.
In thermodynamics, a system maximizes its overall utility to maximizing its total entropy. Moving thermal energy from a hot to cold reservoir does so. Maximizing entropy is a way so saving evening things out.
In economics, we usually mean talk about maximizing economic utility, usually in terms of money. I a physical sense, this ultimately amount to the same thing, since utility is judged by humans, who are biochemical beings who ultimately themselves work to maximize overall entropy. Some scientists call this maximizing power instead of entropy, as in Maxwell’s Maximum Power Principle. (Even if this is not a conscious purpose, it is rather hardwired into people via evolution).