Inequality

Abstract

Physics impresses all of us with its laws, which are few, precise, and universally applicable, valid for any imaginable situation and flow system. Can economics be a more precise and predictive science, like physics? This chapter unveils the physics that underlies the economy. In the simplest terms, movement on the earth’s surface is measured as the amount of fuel spent in order to drive the movement. The physics phenomenon of economies of scale dictates that larger movers must be more efficient. Recent work based on the constructal law has shown that economic activity is closely related to the movement of all the streams of society. The annual domestic economic activity of a country (the GDP) is proportional to the physical movement measured as the amount of fuel consumed annually with purpose in that country. More economic activity (life) means more fuel consumption, not less. Economics and physics are the two facets of the same coin. The consequence is that movement (i.e., wealth) is distributed nonuniformly among the movers. Hierarchy is unavoidable and impossible to efface. The more advanced countries have their income is distributed somewhat more equally. This aspect is an invitation to expanding the “economics as physics” theory into the domain of social organization.