Economic Relativity: A Structural Law of Output Under Frictional Constraints

ERM macro analysis and forecasting consultation are available upon request.Fee: USD 200 per session (includes one follow-up Q&A).Contact: [email protected] or [email protected] This paper establishes the foundational structure of the Economic Relativity Model (ERM), a parsimonious structural framework for modeling economic output under systemic friction and incentive constraints. The ERM formalizes output as a nonlinear function of potential production capacity, irreducible costs, price pressure, and institutional inefficiency, yielding a general law of constrained production applicable across micro, meso, and macro economic scales. By introducing the cost–profit ratio as a dimensionless boundary variable, the model captures endogenous transitions between growth, stagnation, and contraction regimes without reliance on equilibrium assumptions or exogenous shock primitives. The framework provides a unified formalism linking behavioral expectations, structural efficiency, and output dynamics, offering a transparent alternative to parameter-heavy macroeconomic models. Empirical validation and predictive performance of the ERM are documented in a companion study using long-horizon and cross-country data, available at:https://zenodo.org/records/18124535 A policy-oriented structural forecasting application of the ERM, illustrating how incentive boundaries translate into divergent national trajectories and strategic inflection points, is provided as an extended case study:https://zenodo.org/records/16825636 A concise micro-level illustrative example of the ERM, designed to clarify the operational logic of the model at the firm level, is provided in a companion paper:https://zenodo.org/records/16741181 An extended theoretical exposition of the ERM, including detailed derivations and broader applications, is available in book form via Kindle:https://www.amazon.com/dp/B0FVRCGRCF A cross-domain structural generalization of the incentive boundary logic underlying the ERM, extending the framework from economic systems to collective behavioral systems more broadly, is developed in: Behavioral Boundary Relativity: Structural Conditions for Stability and Breakdown in Collective Systemshttps://zenodo.org/records/18139321 Official project updates and public discussions related to the Economic Relativity Model (ERM) are available at:https://www.facebook.com/EconomicRelativityResearch/