The Nature of Equilibrium: How the Invisible Hand of Free-Market Economics can be “Seen” in Applied Chemistry and Newtonian Physics

In this article, I explore the concept of equilibrium and how there are similarities in the many ways it reveals itself in nature — in economics, between supply and demand in a free market economy, in applied chemistry, between reactants and products in a chemical reaction, and in physics, between forces acting on an inert object in a system.

I also discuss how the driving force behind attaining any kind of equilibrium is based on the same guiding principle — known as “The Invisible hand” in Economics, “Le Chatelier’s Principle” in Chemistry, and “Newton’s Third Law of Motion” in Physics.

First, I explain equilibrium in simple terms and ponder why you’ll get a different definition of equilibrium from an individual based on their educational background.

Second, I explain what economists mean by equilibrium, what they believe drives it and key takeaways.

Third, I explain what chemists mean by equilibrium, what they believe drives it and key takeaways.

Fourth, I explain what physicists mean by equilibrium, what they believe drives it and key takeaways.

Fifth, I summarize the various equilibrium discussed above.

Sixth, conclusion. Equilibrium is balance. And balance is universal, regardless of what is weighed or how it is weighed.

The Concept of Equilibrium

When one thinks of equilibrium, one thinks of balance, stability….erm…*Insert cool synonyms*.

My point is that there is an intuitive understanding of what an equilibrium entails.

Having said that, if and when you search for that word on the web, and by web I mean what any self-respecting individual means (Google), you’ll be asked what specific equilibrium you meant.

Fig 1. A Poor Man’s Premise for this Article

For an economist there’s an equilibrium in the market, usually between supply and demand of some sort.

For a chemist (not the pharmacist kind) there’s equilibrium between reactants and products in chemical reactions.

For a physicist there’s static equilibrium between net forces acting on a body at rest in a system.

As you can see the definition of equilibrium tends to change on the basis of what it is you’re trying to balance. But although the definition changes, the meaning doesn’t change because at the heart of it, it’s all about balance.

Fig 2. A Mematic Representation of The Key Theme of this Article

Market Equilibrium and The Invisible Hand

Let’s talk economics.

Equilibrium is the state in which market supply and demand balance each other, and as a result prices become stable. Generally, an over-supply of goods or services causes prices to go down, which results in higher demand — while an under-supply or shortage causes prices to go up resulting in less demand. The balancing effect of supply and demand results in a state of equilibrium. — Investopedia

Fig 3. A Market Equilibrium (Corporate Finance Institute)

Simply, supply rises when demand falls. Supply falls when demand rises. No rocket science here, at least for now.

Let’s tackle the essence of this trend.

What causes prices to rise when quantity demanded falls? What causes prices to fall when quantity demanded rises?

The answer is The Invisible Hand.

Economists refer to an invisible, intangible force (convenient much?) that resolves this tension between price fluctuations and quantity demanded. Any change in one causes the other to respond in such a way as to balance out the other (The intersection of the supply and demand curves is the equilibrium point).

But again to my question, what causes The Invisible Hand to work or why does this resolution happen in the market?

The Invisible Hand can be thought of as everyone acting in their own self-interest. When everyone, all the producers and consumers, in an economy engage in a way that best fulfills their own self-interest, that cumulative effect is what causes supply and demand to arrive at an equilibrium. Keeping in mind that it is a free market (No Apocalypse, at least for now).

So what you should take away from this is that:

1. Market equilibrium occurs when there is a balance between Supply and Demand in an economy.
2. Market equilibrium is brought about through “The Invisible Hand” which relies on all agents in a free economy to act in their own self-interest.
3. Any change in Supply causes the Invisible Hand to resolve that change by altering Demand.
4. Any change in Demand causes the Invisible Hand to resolve that change by altering Supply.

Chemical Equilibrium and Le Chatelier’s Principle

Okay, let’s talk chemistry.

Chemical Reactions — Irreversible and Reversible

Any and all physical changes in the universe can be visualized as chemical reactions.

From weight-loss to cancer therapy to baking a cake. Literally everything under the sun, including the sun is a result of chemical reactions.

Chemical reactions can be thought of as a combination of algebraic equations and the periodic table of elements. The two sides of a chemical reaction need to be balanced just like in an algebraic equation. The only difference is that the element symbols replace the algebraic x and y.

This is what a simple chemical reaction looks like:

Fig 4. A Representative Example of a Chemical Reaction

On the left side we have Reactants (A and B) and on the right we have the Products (C and D).

In a typical reaction, A and B will combine to form C and D.

Let’s focus on the big green arrow that bridges the reactants to the products.

The arrow points from left to right. This is not a matter of convenience. In this particular case, the direction of the arrow indicates that this is an Irreversible chemical reaction.

A and B can combine to form C and D, however, the opposite is not possible (in the same chemical reaction under the same conditions).

Below is the irreversible chemical reaction that shows the conversion of water and carbon-dioxide to glucose under the influence of sunlight in plants. This is known as Photosynthesis.

Fig 4. Photosynthesis, An Irreversible Chemical Reaction (BBC Bitesize)

Think of irreversible reactions as unfair markets that have no freedom of choice, so there is no scope for attaining a balance.

Reversible Chemical Reactions

Let’s talk reversible reactions. Here, the arrow points in both directions, left to right and right to left.

These are the reactions that can go both ways and hence are the only class that can attain an equilibrium. Think of reversible reactions as the free market, there is scope for attaining an equilibrium.

Take the reaction between Hydrogen gas and Iodine vapor to produce Hydrogen Iodide. (Figure 5)

Fig 5. A Reversible Chemical Reaction

Initially, the concentration of reactants (Hydrogen gas and Iodine vapor) is higher. Why? Because we started with the reactants only.

Now, upon reacting with each other a product is formed (Hydrogen Iodide).

As the reactants concentration decreases the product concentration increases. Why? Because the product only starts forming when the reactants start getting used up.

During the entire reaction the rate at which the product forms will approach the rate at which the reactants get consumed.

Ultimately, a point arrives where the rate of product formation and rate of reactant consumption become equal and both sides of the chemical equation occur simultaneously. An endless cycle of reactants getting used up and products being formed and products decomposing back to reactants until we intervene.

And despite each side’s best efforts, neither will be able to overpower the other and so a chemical equilibrium will be reached. This is the state of balance between the reactant and product concentrations.

But what happens when we force a change on the system?

Suppose we remove some quantity of product formed (Think of this as a price change in an economy).

Here is what happens:

Fig 6. Flowchart of How Chemical Equilibrium is Attained when Product is Removed

Step 1 — Initially we are at a chemical equilibrium.

Step 2 — We reduce some of the product formed. Perhaps we opened a hypothetical chamber that only lets the Hydrogen Iodide out. This results in a decrease in the product concentration.

Step 3 — In response to the vacancy in the product concentration the reactants combine to fill that gap in product concentration. Notice the double-direction arrow changes to a single-direction arrow.

Step 4 —As a result, reactants combine to form more product and the product concentration rises again.

Step 5 — Ultimately, we reach a chemical equilibrium just like the one initially. However, this time we’ll have lesser quantities of both reactants and products.

It becomes easy to see that if we replace Reactants with Supply and Products with Demand what we essentially get is a Chemical Equilibrium instead of a Market Equilibrium.

Hey! What about The Invisible Hand?

So again I ask you, what really causes the reactant and product concentrations to balance when there is a change in either?

The answer is Le Chatelier’s Principle.

“Le Châtelier’s principle states that if a dynamic equilibrium is disturbed by changing the conditions, the position of equilibrium shifts to counteract the change to reestablish an equilibrium. If a chemical reaction is at equilibrium and experiences a change in pressure, temperature, or concentration of products or reactants, the equilibrium shifts in the opposite direction to offset the change.” — Chemistry LibreTexts

E̶c̶o̶n̶o̶m̶i̶s̶t̶s̶ Chemists refer to an invisible, intangible force (again convenient much?) that resolves this tension between p̶r̶i̶c̶e̶ ̶f̶l̶u̶c̶t̶u̶a̶t̶i̶o̶n̶s̶ product concentrations and q̶u̶a̶n̶t̶i̶t̶y̶ ̶d̶e̶m̶a̶n̶d̶e̶d̶ reactant concentrations. Any change in one causes the other to respond in such a way as to balance out the other.

So what you should take away from this is that:

1. Chemical equilibrium occurs when there is a balance between Reactant concentration and Product concentration in a reversible chemical reaction.
2. Chemical equilibrium is brought about through “Le Chatelier’s Principle” which works to offset any change in the system yielding an overall balance.
3. Any change in Reactant Concentration causes Le Chatelier’s Principle to resolve that change by changing Product Concentration.
4. Any change in Product Concentration causes Le Chatelier’s Principle to resolve that change by changing Reactant Concentration.

Static Equilibrium and Newton’s Third Law of Motion

Okay, let’s talk physics.

Everything has a mass (including the tiniest things like atoms and electrons) and exerts a force due to this mass.

If I weigh 80Kgs (erm…hypothetically) that means on Earth I exert a force equal to my weight times the acceleration due to Earth’s gravity (approx. 10 meters/second²):

(80 Kg)(10 m/s²) = 800N or 800 Newtons of Force

Let’s further this example.

Fig 7. A Typical System in Static Equilibrium

I’m standing on top of a table.

Two things are happening simultaneously (not including me embarrassing myself):

1. I am exerting a force of 800N on the table in the downward direction. Why? Because I’m standing on top of it and gravity pulls me down. We’ll call this force as F-object.
2. The table exerts a force equal to the force I’m applying of 800N but it applies this force in the upward direction. This is typically called the Normal force or F-normal and is always perpendicular to the direction of external force applied.

But what happens when we “force” a change on the system?

Suppose I lift a weight of 20 Kg and add an additional 200 N of force on the table (Think of the change in applied force as a price change in the economy).

Here is what happens:

Fig 8. Flowchart of How Static Equilibrium is Attained when Force on Table Increases.

Step 1 — Initially, the system was at a static equilibrium as the force applied (F-object) on the table was countered by the table exerting an equal force but in the opposite direction (F-normal).

Step 2 — An increase in F-object by 200N results in a net downward force of 1000N on the table.

Step 3 — As a result, the normal force increases to 1000N (F-normal) as a response to this additional stress.

Step 4 — Ultimately, the forces negate each other and all “agents” arrive at a new rest state. Another static equilibrium is attained.

It becomes easy to see that if we replace Force Object with Supply and Normal Force with Demand what we essentially get is a Static Equilibrium instead of a Market Equilibrium.

Okay well not exactly analogous to Market Equilibrium, but we’re focusing on the mechanism behind the balancing act.

Again, what of The Invisible Hand?

So once again I ask you, what really causes the Force Object and Normal Force to balance when there is a change in either?

The answer is Newton’s Third Law of Motion.

“Newton’s third law states that when two bodies interact, they apply forces to one another that are equal in magnitude and opposite in direction. The third law is also known as the law of action and reaction.” —Britannica

Every action has an equal and opposite reaction. Increasing the Force Object must increase the Normal Force because the Normal Force is the result of an action.

E̶c̶o̶n̶o̶m̶i̶s̶t̶s̶ Physicists refer to an invisible, intangible force (once again convenient much?) that resolves this tension between p̶r̶i̶c̶e̶ ̶f̶l̶u̶c̶t̶u̶a̶t̶i̶o̶n̶s̶ forces acted and q̶u̶a̶n̶t̶i̶t̶y̶ ̶d̶e̶m̶a̶n̶d̶e̶d̶ forces reacted. Any change in one causes the other to respond in such a way as to balance out the other, provided both stay at rest.

So what you should take away from this is that:

1. Static equilibrium occurs when there is a balance between forces acting and forces reacting on an object at rest.
2. Static equilibrium is brought about through “Newton’s Third Law” which works to offset any change in the system yielding an overall balance.
3. Any increase in Force Object causes Newton’s Third Law to resolve that increase by increasing Normal Force.
4. Any decrease in Force Object causes Newton’s Third Law to resolve that decrease by decreasing Normal Force.

An Overview of Commonality Identified

If you’ve read my previous articles you’ll know I’m all about that pattern.

Here is a summary of how different “club-members” discuss equilibrium using their own “club-exclusive” words.

Fig 9. Table Comparing Various Equilibrium Observed (Not an exhaustive list)

Conclusion and Parting Philosophy

Since all equilibrium is bound to be the same as we use the same term to define them all, it may seem that the premise of this article was pointless.

I couldn’t agree more.

But why do we use the same term at all?

That question led me down this rabbit hole you just read through (hopefully).

It may seem surprising to think that the mechanism of action in all forms of equilibrium are similar, if they’re not essentially the same.

This finding, however, becomes intuitive if you think an equilibrium is nothing but a glorified see-saw. And since a see-saw will work the same way regardless of who builds it or where it is built, similarly, an equilibrium will work the same way regardless of who conceptualizes it or where it is conceptualized.

Ultimately, the collective of human knowledge comes a full circle. The way one thing works in one discipline is pretty close to how another thing works in another discipline.

The laws that govern equilibrium may change but what they govern remains unchanged. Balance is everything and everything must be balanced.

Thank you for attending my TED-Talk!