From Nature:
quote:Some political systems, say the researchers, contain the seeds of 'wealth condensation'1. This is the process whereby a sizeable fraction of a society's total assets end up in the hands of one super-rich individual.
The super-rich can arise only when average individual wealth exceeds a certain value. Such is the unhappy conclusion of a mathematical model developed by Zdzislaw Burda of Jagiellonian University in Krakow, Poland, and colleagues.
Ironically, the new model suggests that wealth condensation poses the greatest danger to economies that impose constraints on the accumulation of great wealth - broadly speaking, socialist economies. Liberal economies that maintain free and unrestricted trade are less susceptible.
quote:In 2000, two French physicists constructed an economic model which explained how Pareto's law could arise2. The model used some ideas that were developed to describe the behaviour of long-chain polymer molecules. It showed that money becomes frozen in only a few pockets when trading is restricted and returns on transactions are highly variable.
quote: For a social economy, there is a threshold average wealth above which Pareto's law collapses and one person can garner a significant proportion of the total wealth. Burda's team calls this a "physical mechanism for corruption". Below the threshold, money distribution follows the power law. For a liberal economy, on the other hand, this threshold is infinite. So corruption, theoretically speaking, does not occur.
A society does not need to be rolling in cash before gross inequality sets in. But in an abjectly poor society there is simply not enough money around to sustain a growing fortune for any corrupt individual.
Champions of unrestricted free-market trade, meanwhile, might bear in mind that this is the very condition that generates an unequal Pareto distribution in the first place. It places most of the wealth in the hands of a lucky few. |
