The Law of Cycles resolves the problem of tormented Magical Girls transforming into Witches, but not the problem of Entropy itself.

Homura's central struggle is one against Entropy. She's trying to stop Madoka from transforming to save others. But she has shown up far too late to do anything about the original contract that begins the Magical Girl -> Witch cycle. And Madoka can't be convinced to abandon her comrades. She can only be influenced in who else she is willing to martyr herself for.

Madoka's solution works within the bounds of reality, granting relief to her comrades while still utilizing their labors for the benefit of others.

Homura's solution is to displace the cost of Entropy onto others, establishing a tormented caste that is so far away from Madoka that she does not believe her martyrdom is necessary.

The New World is simply a world of ignorance, for Madoka and her friends. It is not better, just blinder. Its very possible that the bulk of the Kyubey population themselves lived as Homura's friends live now. Blissfully unaware of how they benefit from the suffering of others.