From Constraint: A Thermodynamic Theory of Economic Coordination

This paper derives market behavior and coordination mechanisms from a single thermodynamic principle: utility is not intrinsic to objects but emerges from the intersection of object properties and agent constraint vectors. Through agent-based simulations with 12 heterogeneous agents across 8 constraint dimensions (hunger, boredom, shelter, social, status, safety, knowledge, rest), I demonstrate that trade is entropy optimization, not preference matching—markets reduce system entropy by 40.2% compared to random allocation (p < 0.000001), trust mechanisms improve trade efficiency by 52.3% per trade by acting as thermodynamic filters, honesty enables market efficiency (1.70 vs 1.22 entropy per trade for high versus low honesty), revealing that volume is not value, currency’s benefit is context-dependent such that barter achieves four times higher efficiency in dense, high-trust markets, and scarcity shocks increase trade velocity by 51%, demonstrating market resilience through acceleration. The hierarchy of coordination gain dissolves: markets are not efficient because prices are correct; markets are efficient because objects flow toward agents who can extract maximum entropy reduction. Trust, honesty, and currency are thermodynamic coordination technologies with quantifiable efficiency impacts.