HOW PHYSICS SHAPES MARKETS

According to former corporate strategist Szeser’s intricate treatise, the physics of energy flow largely determine how prosperous an economy is.

The author lays out a sweeping vision of economic history informed by the science of energy transformation. He casts the economy as a system in which the energy available in foodstuffs, coal deposits, and other natural resources is converted into useful work. The efficiency with which we convert that energy, which is dependent on our technology, then determines how much we can produce, consume, accumulate as wealth, and invest in infrastructure, he asserts. The growing size and complexity of companies and economies generates new inefficiencies, he says, which can only be alleviated by technological innovations; these, in turn, determine a society’s prosperity and thus constrain its culture and politics. Economies with basic technology and low energy efficiency can only be organized by coercion and predation, Szeser contends, while those with advanced tech and high energy efficiency can afford to be more egalitarian and democratic. He further asserts that capitalism fosters more democratic societies than socialism does, as the latter tends to be mired in inefficiency and authoritarianism. Szeser applies these ideas to a raft of economic phenomena, from the origins of ancient despotic regimes based on irrigated agriculture to the discontent surrounding globalization, which is forcing people to increase their skills and competitiveness to survive in a vastly larger market. Szeser elaborates his principles in often ingenious analyses, including a tour de force account of how cheap, powerful video technologies make it easier for novice directors to make films—and harder for them to draw attention in a glutted market that demands increasingly higher standards of technical proficiency. Szeser’s lucid prose translates sophisticated concepts into evocative metaphors: “One of the more persistent misunderstandings in various economic theories…is the assumption that an economy left largely to itself…will still drift toward disequilibrium. It is as if a boat rocking on waves were, by its very nature, tending toward ever greater rocking and capsizing.” Economists and casual readers alike will find much provocative food for thought in these pages.

A searching reexamination of economic doctrines that draws fresh insights from simple premises.