Econophysical visualization of Adam Smith’s invisible hand |
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Authors: | Morrel H Cohen Iddo I Eliazar |
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Institution: | 1. Department of Physics and Astronomy, Rutgers University, Piscataway, NJ 08854-8019, USA;2. Department of Chemistry, Princeton University, Princeton, NJ 08544, USA;3. Holon Institute of Technology, P.O. Box 305, Holon 58102, Israel |
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Abstract: | Consider a complex system whose macrostate is statistically observable, but yet whose operating mechanism is an unknown black-box. In this paper we address the problem of inferring, from the system’s macrostate statistics, the system’s intrinsic force yielding the observed statistics. The inference is established via two diametrically opposite approaches which result in the very same intrinsic force: a top-down approach based on the notion of entropy, and a bottom-up approach based on the notion of Langevin dynamics. The general results established are applied to the problem of visualizing the intrinsic socioeconomic force–Adam Smith’s invisible hand–shaping the distribution of wealth in human societies. Our analysis yields quantitative econophysical representations of figurative socioeconomic forces, quantitative definitions of “poor” and “rich”, and a quantitative characterization of the “poor-get-poorer” and the “rich-get-richer” phenomena. |
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Keywords: | Complex systems Intrinsic forces Entropy Langevin equation Distribution of wealth Poor-get-poorer Rich-get-richer |
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