Looking at Economics Through the Eyes of Thermodynamics: A New Approach to the Second Law of Economics, and Its Main Revelations

The Economics versions of the First and Second Laws of Thermodynamics are crucial for examining Economics through the lens of Thermodynamics. The First Law sets out conservation principles; the Second Law is required to describe what the First Law cannot: the one-way character of processes and the quantification of irreversibility (imperfection). A new approach is proposed to the Second Law of Economics, which includes as its main steps and results (i) a Second Law statement based on the observation that an isolated economic system evolves towards merchandise economic thermal equilibrium; (ii) the need to consider a new property, the merchandise economic entropy; (iii) a definition of the absolute merchandise economic temperature from the condition of maximum merchandise economic entropy for merchandise economic thermal equilibrium; (iv) the same sense of change in the merchandise economic temperature and in the number of traded merchandise units in an economic system; (v) an economic system has its intrinsic demand curve; (vi) a statement of the Third Law of Economics from the profile of the merchandise economic entropy function; (vii) the differential equation defining the merchandise economic entropy; and (viii) the definition of the merchandise economic entropy generation, the best indicator of the irreversibility (imperfection) of an economic process.