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Abstract:
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The Inequality Process (IP) is a stochastic particle system in which particles exchange a positive quantity, 'wealth'. By hypothesis and evidence, the IP transfers wealth to individuals more productive of wealth, in all economies regardless of location on the arc of techno-cultural evolution. The IP is gauge symmetric. For example, estimates of IP particle parameters from data on worker earnings overlap those from corporate market capitalizations, orders of magnitude apart in wealth amounts. The IP’s parsimony, independence of frames, gauge symmetry, and wide scope of empirical validations, support its candidacy as physical law. The IP was adopted as econophysics in the econophysics literature. Outcomes in the IP's internal (scale free) model are determined by particle parameters. The grand mean of particle wealth is a constant scale factor that can be set to 1.0. In the IP's internal model each particle’s expected wealth is the ratio of the harmonic mean of all particle parameters to the parameter of that particle. The IP implies the validity of the authoritative statement of the “Law of Proportionate Effect” in Aitchison and Brown (1957), a conclusion that falls out of the search for the Lagrangian of the Inequality Process. This search runs into the fact that the Inequality Process’ renormalization, i.e., necessary to keep the IP from freezing kinetic wealth, is unknown. Avoiding freezing kinetic wealth is required to allow the IP to be frame of reference independent and work all over the arc of techno-cultural evolution.
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