Economic Entropy Increase: A Fundamental Principle of Economic Evolution

This paper introduces the Principle of Economic Entropy Increase to elucidate the fundamental mechanism of economic growth: through the expansion of scale and diversification of structure, economic systems overcome both quantitative and structural forms of scarcity. Building on the concept of economic entropy, the study develops a dual-dimensional model—scale entropy and structural entropy—to enable the quantitative assessment of entropy dynamics within economic systems. Economic entropy increase originates from the system’s intrinsic structural demands and determines the macro trajectory of institutional evolution. Accordingly, this paper is the first to propose and systematically demonstrate the core proposition that the market economy constitutes the fundamental trajectory of economic evolution. Market economies, with their superior self-organizing and adaptive capacities, embody high-entropy structures; in contrast, planned economies, constrained by “long-chain interventions” that crowd out market mechanisms, exhibit low-entropy structures and are ultimately to be superseded. This framework offers a new lens for understanding economic growth, institutional selection, and the evolution of complex systems, with significant implications for policy design and economic governance.