A Nonequilibrium Kinetic Theory of Macroeconomics

Abstract Modern macroeconomics struggles to bridge micro-level behavior with aggregate outcomes, while traditional exchange models often treat transactions as zero-sum particle collisions. Real economic life is non-conservative: voluntary trade generates net value, accumulated assets continuously depreciate, and decentralized exchange halts without liquid cash. We present a kinetic framework modeling the macroeconomy as an out-of-equilibrium flow system governed by three primitives: surplus creation, hard liquidity constraints, and continuous wealth decay. Rather than imposing top-down equilibrium or a representative agent, aggregate observables (including total wealth, velocity, and inflation) emerge as statistical moments of an evolving distribution. We show that macroeconomic stability is a dynamic, stationary state where surplus generation balances continuous decay. When exchange rules heavily favor asset-rich agents, circulating cash pools at the top, triggering an endogenous coordination failure: ordinary transactors run out of liquidity, trade freezes, monetary velocity collapses, and the economy stagnates. Finally, we demonstrate how fiscal and structural policies can be modeled as direct modifications of microscopic interaction rules to restore systemic circulation.