Market Economics Tagged to Inflation/Deflation not to Debt/Budget

To take Inflation/Deflation as a Data Indicator to adjust Market Development  by using Market Tools one way or another in meaning either accelerating it through Market Leaps and Targeted Investment or slowing it through Sectoral Monetary & Fiscal Policies, Lending Restriction and Temporary Regulation instead of the currently used Debt related Budgetary Economics may look improbable, incomprehensive, revolutionary but actually there are in now days Economics presaging practices such as

  1. Equities Exchanges (Stocks, Securities, others)1*
  1. Quantitative Easing2*
  1. Accrual Accounting3

2 The numbers are daunting if not shocking: $12.3 trillion of money printing, nearly $10 trillion in negative-yielding global bonds, 654 interest rate cuts since Lehman Brothers collapsed in 2008.
3 Definition: Accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged. The term “accrual” refers to any individual entry recording revenue or expense in the absence of a cash transaction .


That are not Budgetary/Debt related*

However, currently Governments, Central Banks, International Finance Institutions use the Orthodox Budgetary (debt related) Economics Policies, Accounting that have performed quite well in the Supply. General Equilibrium driven economies of the 20th Century but have become counterproductive, obsolete in the Demand, Market Parts Equilibrium required 21st Century of ongoing Globalization^ and rising Productivity^, of the Internet^, China’s Industrialization^, and the overall superproduction by the Transnational Corporations in manufacturing, farming, finances, retailing, wholesale, services^. The last 20-25 years have shown increasing accumulation of private, cities, and national Debt, rising Inequality, Poverty, Unemployment, Underemployment, and deteriorating Middle Class that with the exception of China who used an ‘as it comes; as it goes’ Economics, has enveloped the Globe, indeed. The inability of the Capitalistic trickle-down, orthodox, status quo Economics to deal with the 21st Century developments, issues^ has become more than obvious where the Debt could be considered the best indicator of such incoherence, incomprehension. 

To deal with the exogenous and endogenous global market forces coming from the 21st Century Developments^ is necessary a new approach, approaches to apprehend their powers instead of resisting them, thus Market Economics is a Philosophical however Practical system that preserves democratic, individual freedoms, liberties to exploit, use these new Development^ for Global Market Development.

The main, fundamental factor that makes Market Economics not maybe but must be is the Global Warming and the necessary measures to sustain it or even reverse it: clean Pollution, alleviate Poverty by using Environmentally Friendly Technologies^^ in Farming^^, Manufacturing^^, Transportation^^, Tourism^^. The usage of such technologies^^ as main Economic Tools to implement Market Leaps, Targeted Projects is in the foundation of Market Economics. 

Market Economics usage of Inflation /Deflation Data Indicator tagged to Market Development does not differ from the appointed current presaging practices* but rather it extend such practices to the Governments, Central Banks, International Finance Institutions’  Economic Policies, Accounting. The Debt Budgetary Economics is overwritten by first: the need for Environmental Protection^^ and second: by the practical reason to boost business, employment, development. As mentioned above the exogenous and endogenous forces^ have become unsustainable by using the Orthodox Budgetary Economics whereas the Market Economics capitalize on these forces to boost and maintain Market Development; what these forces do the most is preventing markets from Inflation by being capable of flooding the marketplace with products, services a basic 21st Century development. Thus, to apprehend these forces^ the existing budgeted capital and the system of distribution must evolve by first: having the Market Agents: Strict Rule of Law in Business, Unlimited Corporate Liability for the Management, Enhanced Protection Laws in: Insurance, Bonding, Earth Environment, Consumer, Labor implemented that will enhance Market Security** and second: using ‘as it comes; as it goes’ approach Market Tools: Quantitative Easing, SDR, Subsidies, Low Rate Lending, Social Expenses Infrastructural Expenses Market Leaps, Targeted Projects, Markets, Regions Parts Equilibrium Monetary, Fiscal, Regulatory interference by Central Banks, International Finance Institutions indiscriminately as inquired by the current market possibilities; the Debt, Investment, Financing evolves into ‘risk-and-reward’ approach well protected by the high Market Security** but not enforced on national or international approach currently used; the Quantitative Easing, SDR are not distributed by trickling down approach but by Targeted Investment: Market Leaps, Targeted Projects; whereas the National, International Accounting evolves from the current Cash based into Accrual-like based including Social (incl. Educational, Social Security, Medicare, Social Programs, etc.) expenses’ as ‘equities’ and Infrastructural ‘expenses’ as Assets when the Market succeeds Balanced the negative Debt could be either accumulated just on ‘Books’ or written off against ‘equity’, ‘assets’ that approach will clear the Accounting from some Debt that goes against the QE, SDR; however, private Debt must be indicated as Invested and must be returned as ‘Return on Investment’ the ways current Equities, Securities Market Exchanges work. The Central Banks, International Finance Institutions using QE, SDR have to write off debt against achieved, succeeded, accomplished by the Market Leaps, Targeted Projects: Equities, Assets. The Private Investment is Preferred first when the Market Leaps, Projects are Targeted and second, it will be retained as Liability on the Books. The Principle of Market Economics is that on a Micro-market Level the markets should self-adjust based on market competition with minimum or not any outside interference while on Macro-market Level the Governments, Central Banks, International Finance Institutions must use Commercial Banks on setup Matrix to execute Market Leaps, Targeted Projects and use the Market Tools indiscriminately as Parameters to boost or slow down business activity tagged to Inflation/Deflation Data Indicator. 

The 21st Century global marketplace indicators are very complex therefore the principle of Uncertainty is accepted that cannot be apprehended by the Game Theories but the Quantum Market Principle of Parameters is used, though the Nash Equilibrium overall applies on the Parts/Sectors Market Equilibriums (in comparison to the current General Equilibrium practice).

The theory od Modern Economics goes that moderate 2% gives the best economic environment so business have leverage to turn profit; therefore, the Central Banks use mitigating with the Discount Rates (Tier 1) and other Monetary and Fiscal Policies to keep it at this level. Such theory is based on assumption of relatively high return on investment and short term rebuilt after downturns that both do not apply with the 21st Century developments: the very deep 2007-9 Recession, the slow post recession growth, the strong deflationary forces bringing stagnations even when Trillions of Dollars are poured into the most developed economies; thus, the Central Banks keep rates very low even negative and the Banks are constantly in trouble even being given free loads of very low interest Tire 1 loans. 

The Market Economics accept Inflation and Deflation in possibly shortest spam whereas all Market Tools along with boosting business and employment are tagged to Inflation/Deflation variances. The –1….-0.5…..0…..+0.5….+1 are variances considered acceptable; -0.5…0….+0.5 are triggering points. The large quantity of business activities, consumption must compensate the businesses for their effort and Deflation is to adjust prices on a Micro-market Level as a preventive valve of self adjusting market powers. On a Macro-market Level the Central Banks, Governments, International Finance Institutions must fight larger span variances indiscriminately and it must be done on a Parts/Sectors Market Equilibrium!

More detailed research on the Parts/Sectors Market Equilibriums) to follow up!

Joshua Ioji Konov 2017



What really must be stated before starting this essay is that Economics is not self centered but on creating business, employment, assets principle that greatly differs from any Economics used by current reliance on trickle-down of capital, some combination of private market related economics and social governmental distribution, or the governmental involvement and control on business and distribution. Current kinds of Economics are politically and ideologically motivated, directed, and most definitely self centered around ideas, convictions, status quo. What really defines current Economics is the rule of what is expected based on ideologies than the objectivity to reach results; thus the disfunctionality, slow growth are considered either consequences of not imposing enough such Economics principles by the book status-quo convictions or some kind of temporary distortion. Such Economics relies on the investment trickled-down, the improving productivity, the lowering labor and consumer protection and taxes to attract large corporation, investors to boost economic growth; in context some countries, economies have higher government involvement into wealth distribution, business, control than others; however, the principle of ‘hands off’ is widely accepted as the only working. Only, China uses much more flexible economics that have achieved consistent development taking hundred of millions out of poverty, building incredible infrastructure; the China’s approach more chaotic and partial having in mind the usage of the Orthodox Economics as a primary approach and the ‘as it comes; as it goes’ Economics as a secondary, even though very proactive approach when compared to the Market Economics* that uses Orthodox Economics with major amendments as a Micro-market-level approach and artificial hand-on Economics on Macro-market-level. It could be also stated that the Quantitative Easing and Stimulus Packages used by the US, UK, Japan, and later EU are Market Economics’ Tools but there they were even further partial – more like adjusting to prevent the full collapse from the 2007-9 Recession and the slow following economic revival.


The Market Economics* promoted by these research is an ‘as it comes; as it goes’economics adaptable to the most recent exogenous and endogenous forces coming from the globalized marketplace and the improving technologies, productivity – it is non ideological, conviction-like, or status quo. Even though it values democracy, personal freedoms, individual rights it is apolitical by nature relying on flexibly used Market Tools to steer business activities, full employment, market development by capitalizing on environmentally friendly technologies, farming, tourism, development in a high Market Security business competition marketplace.


The Market Agents required (considered unifying) implements:

  • Strict Rule of Law in Business, 
  • Unlimited Corporate Liability for the Management

Enhanced Protection Laws in;

  • Insurance, 
  • Bonding, 
  • Earth Environment
  • Consumer
  • Labor  

that provide the high security market conditions for flexible usage of the Market Tools as Parameters in an uncertain market motion to offset harmful fluctuations ups-and-downs that can bring high inflation/deflation variances. To accelerate and carry-on Market Development with robust business activity, full employment, alleviate poverty, save the Earth environment are flexibly used Market Tools:

  • Quantitative Easing, 
  • SDR, 
  • Subsidies, 
  • Low Rate Lending, 
  • Social Expenses 
  • Infrastructural Expenses 
  • Market Leaps
  • Targeted Projects, Markets, Regions
  • Parts Equilibrium Monetary, Fiscal, Regulatory interference by Central Banks, International Finance Institutions 

pinned to Inflation/Deflation (not to Budgets) are to either accelerated or decelerate consumption in keeping the Inflation/Deflation in strict limits. The Game Theories cannot be explored to setup such limits because the complexity of economic data, the globalization forces, the unevenness in development and therefore the Parameters must be applied on a Quantum Factor principles with extreme flexibility. The Nash Equilibrium can be used on individual Parts/Sectors Level but again not as Game Theories but more like balance between Demand to Supply (the Supply goes second not accidental).

      The theory of Supply driven Economies evolves into Demand, Balance driven Markets;

  • from General Equilibrium – Economics into Parts/Sectors Equilibriums – Market Economics; 
  • from Nationally defined Economies into Level of Development defined Global Markets; 
  • from Budgetary constrained  Economies into Inflation/Deflation constrained Markets;
  • from Shady Business Environment of the Capitalism into Strict Rule of Law such of the Marketism;
  • from hands off Trickle-down Economics to active ‘as it comes; as it goes’ Market Economics;
  • from Macro and Micro Levels General Equilibrium economic intervention by the Central Banks through manipulating the Discount Rates to a only Macro-level Parts Equilibriums all around intervention while on Micro-level the market competition is self-adjusting (market driven);

       The Joshua’s Three Laws in Market Economics:

  1. “If a House needs Painting and a Painter is Available: Market Economics should have the House Painted and the Painter Employed”
  1. “If ‘the House is painted’ and ‘the Painter employed’ in limited Inflation/Deflation and higher than ONE/MINUS ONE ‘J Factor”s market environment: the market Entropy is boosted and Equity is built; therefore, thus Invested Capital/Subsidies/Low Rate Lending prompts Market Development”
  1. If the capabilities of the Market Economics are not explored and used globally under enforced Environmental Protection Laws and the rest ‘J Factor’ Laws & Practices the Earth’s Environment is to deteriorate and the inequality is to rise to the points of no return bringing Environmental Destruction and Global Social Unrest”.

These Three Laws basically explain and direct the ways Market Economic works: thus isn’t about Budgets and a tight leach has been used by the status-quo current practice but it is baout more motionsteared by the necessities, demand for development so, the Market Economy to respond to these necessities through using the Market Tools in a High Market Security Environment that would allow lower interest lending. The need for Earth’s Environment Protection overwrites Budgetary Restraints setting up new principles of handling Economics. 

What does the Market Economics means in practice?

To stear enough business activities, employment, equity built up and to use other than Industrial production methods to protect Earth from pollution thus alleviate Poverty the Market Economics is using an ‘as it comes; as it goes’ Economics in which even though the Market Agents are mandatory, unifying the Market Tools are used flexibly, differently, specifically from market to market compatible to individual markets historical specifications. The Market Tools are used as Parameters mor like in Quantum Mechanics than in Game Theories because of the high Uncertainty in the Global-marketplace where the Data is very complex and insufficient. On a Micro-market-level the Market Economics relies on the free market competition to self-adjust disbalances whereas on Macro-market-level artificial adjustment, interference is used to prompt and carry-on rebust business activities, full employment (down to 1%), accelerated Global Market Development that requires the governments and central banks of the most developed economies along with the international finance institutions (WTO, IMF, others) very active policies that through Commercial Banks access to Markets to setup Matrix to succeed such vigorous activities without limiting individual freedoms, liberties. 


To exploit current possibilities of Globalized marketplace, Improving technologies, robotization, the Internet, the highly concentrated capital the Market Economics uses the Market Tools indiscriminately meaning with no concern or direction to political ideas, motivation: it is all about practical methodology system of Demand to Supply balance under the conditions of accelerated business activities. The Inflation/Deflation is the tagged data indicator: the Market Economics accepts both very low (in the quarter of percent) Inflation or Deflation as normal variances and fight vigorously bigger fluctuations; because, generally in Market Economics the Interest Rates are low the higher Inflation/Deflation may have negative effect on consistent Market Development, and because of the same reason a modest Deflation may establish boosting effect on competition and improve living standards. The current idea that lower Inflation or even Deflation may have very negative effect on the Economy is based on a low economic security and relatively high lending rates particularly to small and medium businesses and investors evolves into a Market Economics in which lower rates, Inflation, Deflation are compatible to the entire market structure. The entirety of projected Market Development relies on boosted a huge business activities on a global-scale that will bring limitless opportunities for investment and companies expansion but it will be on a larger scale than currently experienced. However, in perspective the change from quantity driven global-market-expansion may come into a quality such, but then the market motion will move to new technologies, improvements, higher productivity leaps that may allow certain companies higher profit margins.

The large markets expansion brought by the Market Economics will boost business activities and individual income using natural for the market micro-market competition why the macro-market-level will keep it up and running and preventing for catastrophic exacerbations, redundancies, The Research and Development, Education, overall Living Standards will expand  proportionately establishing prosperity: the ability to apprehend the exogenous and endogenous market forces coming from the ongoing Globalization and rising Productivity will be the main accomplishment. It could be considered utopic such projections but hypothetically said if the market forces of the 21st Century Globalization and Productivity, the Internet, the China’s mighty industrialization, the Transnationals spreading globally in many business sectors of farming, retail, banking, manufacturing, technologies are supported along with rising market development and market related demand the possibilities for expansion of such forces are not just probability but a reality.


Konov, Joshua Ioji, Market Economy Under Rapid Globalization and Rising Productivity (October 4, 2012). Available at SSRN:

Konov, Joshua Ioji, Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, Etc) (January 5, 2012). Available at SSRN:

Konov, Joshua Ioji / JK,. “Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, etc),” MPRA Paper 35714, University Library of Munich, Germany, 2011.

Enhancing Markets Transmissionability to Optimize Monetary Policies: Pro-Demand Indefinitely – the Result of the Ongoing Globalization and Rising Productivity Paperback – January 12, 2017

by Joshua Ioji Konov (A1)

BLOG Philosophy of Market Economics

Joshua Ioji Konov 2017

Governing in Market Economics

The theory of Orthodox Economics makes government either accomplices to shady business environment as per pure Capitalism or an alternative employer, business incubator as per Social Capitalism taking some of the functions of an economic competition. The self-adjusting theory is suppose to help reduce redundancies from the business and governments alike with its final target more competitive overall economy that establish the right conditions: less debt, less bureaucracy, less expenses on government spending to boost investment, business, productivity that finally had proven through centuries to improve living standard, economic power, growth. That’s how the theory goes: a pro-supply economy needs easy business environment to make startups easy, private entrepreneurs supported by trickle down capital would create enough business to employ, improve infrastructure, stabilize fiscal reserves, then ensure some social expenses, pensions, basic education. When an economy goes into down turn, the government expenditures, regulation, employment must be reduced, as mentioned before, to kicks off investment, business, productivity; thus it goes on and on. The dialectic spiralis of such economics should go upward with short downslopes of self-adjusting. 

The right role of a government and the International Finance Institutions in a Market Economics should be an ‘invisible hand’ along with investors: national or foreign; the principles of how a market/economy is organized compiles of Market Agents: strict laws in business, unlimited corporate liability, enhanced and strict environmental, consumer protection, labor, insurance, bonding laws – laws that will create market conditions for competition, boost business activities, increase demand, alleviate poverty, establish middle class; why in the developed markets the governments are the ‘invisible hand’ to succeed Market Development in the poorly organized countries lacking capital the International Finance Institutions through Commercial Banks, Transnational Corporations must target environmentally friendly market developments by separating economics, economies from politics; thus corruption, disorganization, mismanagement do not overrun targeted Market Leaps as it has been experienced. Economic policies must be separated from politics by requiring the implementation of the Market Agents into the market, economies structure: the Rule of Laws in Business! Market Economics in its fundamentals is full implemented Market Agents that raise its Market Security: lend-ability, marginalized advantages of the Big Business and Investors to the Small to Medium Businesses and Investors, marginalizing the advantages most developed markets, countries, economies hold to the developing, underdeveloped, undeveloped markets, countries, economies. However, the big businesses, investors, the most developed markets would play substantial role in the process of market development that will benefit them substantially giving to them even further boost as manufacturing, market, educational, technological, Internet hubs. 

What the Market Economics does is kicking off environmentally friendly business,  employment, consumption, demand, alleviation of poverty by using the globalization and rising productivity to offset inflationary forces. 

To succeed Market Development the market agents are implemented as a compulsory but the market tools are used on an ‘as it comes; as it goes’ approach: used flexibly in synchrony with  the individual market specifications; the Market Tools are the Quantitative Easing, Market Leaps, targeted Subsidies, low interest Lending, Fiscal, Monetary Policies, International and National Investment, Social (including education, pensions, social security, Medicare) and Infrastructural Expenses. The major difference between Market Economics and the Orthodox Economics is the in the usage of such Market Tools not based on political ideas but on purely economic, data, situation. (as an example: if  a market, economy needs to be balanced by expanding Social Expenses, Fiscal, Monetary means to boost consumption, demand the Social Tool as a Market Tool must be used indiscriminately, the other way around goes the same: if the Social Expenses boost inflation counter measures may include not further expanding such, or even reducing some).

Market Economics is using the most enhanced developments in economics, the globalization, the rising productivity to boost business, employment, fiscal reserves in the individual markets, countries through using Market Tools pinned to the Inflation/Deflation variances. Whereas, the Orthodox Economics bases economic growth purely on budget, investment, productivity, self-adjusting approaches pinned to Debt/Deficit. What makes Market Economic possible are the mostly exogenous forces of the Globalization and rising Productivity that offset Inflationary forces; the Market Economics is artificially adjusted on Macroeconomic level, and self-adjusting on Microeconomic level. How is it possible to split Macro and Micro economic levels is by implementing the Market Agents that create unifying market condition for working economics – micro market level independency, competition, self-adjusting. The Market Tools are to be used as parameters in a very complex market environment to either boost business activities on a sectors based approach. The Game Theory may not work in such situations because of the high complexity exogenous forces prompted by the globalization and rising productivity. 

The necessity to find new approaches in economics to handle the 21st Century economy is aggregated by the weighing Global Warming that requires immediate action to protect Earth Environment – the EU most developed countries, China, the US and a few other like Morocco have taken actions to clean environment by using more and more green energies, however, the most polluted cities, countries are not the most developed once but those using old vehicles, mass fossil fuels, wood for heating, the improperly disposed garbage The sources of current pollution lays into widespread poverty, underdevelopment; thus the only conceivable way to reduce, eliminate it goes through the poverty alleviation by not using uncontrolled industrialization, even though by using the improving technologies the widespread industrialization is not probable at all, the robotization, the improving corporate organization, the over all high productivity reduce any possibility for such; however, the shady business laws, the corrupted governments, the need for employment opens the doors for any possible pollution in these developing markets, countries. From any prospective the Earth protection and cleaning is paramount therefore the Market Economics take Environmental Protection, Poverty Alleviation as targets overwriting budgetary constrains – Debt, Deficit, the lack of Capital must not stop Market Economics from actively pushing Market Development so the Global Poverty is alleviated thus the Earth Environmental Protection is accomplished. But these developments are implemented through market competition, preserving individual freedoms, relying on private enterprises not on the governments take over. 

The most developed economies will have to expand Social and Infrastructural expanses much further than it has been accepted to keep market balance in tact: the accelerated business activity are the only alternative to it, and such must be targeted by Stimulus, Lending, Fiscal, Monetary sectoral policies; the Quantitative Easing to become a supportive tools to supply the needed capital; what comes first is not the Capital but the Development, employment, business activities; the Inflation is only indicator that must be taken to limit or expand the active market tools.

Debt, Deficit is the ruling Orthodox Economics indicator – Inflation, Deflation is the ruling Market Economics indicator!

The Investment, Capital is becoming less secure more like current Stock Exchanges, even though the Market Risk is very much limited by the high Market Security succeeded by the implementation of the Market Agents. In the overall market development the volatility on a macro level could be only adjusted by using the Market Tools one way or another as Parameters. The value of investment, capital is not to change the idea that only investment, capital means growth, development must change, however, because the unorthodox tools of accelerating market development such as quantitative easing, SDR, stimulus do not rely on investment, capital only. The unorthodox market tools are necessary to boost enough business, employment, social expenses to succeed alleviation of poverty, consistent market development. 

The International Accounting System has to accommodate all orthodox and unorthodox market tools moving to an Accrual Accounting – the investment, capital, capitalization must be taken in their relation to Market Development, and it must be done Globally. Private Investment, Capital brings Return on Investment that comes with the risk; it should be no such thing as protected by the governments, International Finance Institutions investment whereas they pursue borrowers, impose sanctions, require austerity measures – the role of the governments, international finance institutions is to ensure the Market Agents are fully implemented, and all participants play by its rules that are very simple: the Rule of Law in Business. 

Joshua Ioji Konov 2017

Why It Is That Difficult to Change Economics?


The system Economics has evolved in time into Game Theories based on data mining; conceptions founded, many times, on idiosyncratic endogenous principle conclusions. Mathematics has been used to backup these conclusions: formulas taken as status quo in time. The over all philosophy of the orthodox economics accepts straggle to survival as bringing in individuals, markets the vivid powers to invent, innovate, create, organize, adjust to the changing economic conditions; when exaggerations, redundancies, inefficiencies compile a adjustment, recession occurs that could be self-adjusted by individuals, companies, institutions to a point when a new fun off can start; thus, spinally the economic pressures increase productivity, sufficiency the standard of living, better conditions of infrastructure, education, better life for the many. A minimum unemployment rate needed to carry on enough eagerness for the labor to support the demand for employment, labor without prompting inflation as if the unemployment goes under the % so the labor market is disrupted then high wages are required that boost inflation, high prices and limit businesses ability to increase productivity, production, keep competitive internationally in the US it means interstate, too.

The orthodox economics has evolved into game theories when in time varieties of factors, indicators appear that obviously invoked the need to use probabilities but still in an idiosyncratic, close system. Even though the game theories give certain wider spectrum of data and using that data, the overall scheme of certainty was retained: the principles of debt, investment limits, productivity have never been overwritten or taken in different but the developed trickle-down economics. From the pure Capitalism of the wild wild west to the Social Capitalism of some European Countries, to the Communism of the post communist block economies the system of spinally self-adjusting economic growth – recession – growth has been the status quo – the orthodox economics of the 20th Century. The Keynesians added more monetary through governmental intervention counter cyclical measures to shorten recessions, even accelerate business activities. Same of the game theories added to that by targeting different economic sectors to boost further business. However, the status quo of debt, investment, productivity has been retained and any substitute was considered be done by expanding the governmental role in business activities: the two opposite right to left either asking for less or more governmental intervention, and explaining economic developments by such economic interference; blaming one another for all the gloom and bust.

Actually, the leftists and the rightists of the present are both correct the economy in the developed and with few exceptions in the developing countries is grossly under-performing: debt, inequality, un and under employment, insecurity, diminishing middle class and rising poverty are spreading as a plague. But, when the pure Capitalism approach has been used it did not affect these developments neither prevented it – such as the 2007-9 recession that enveloped the globe, neither the Social Capitalism, not the least the Communism have done it, the Soviet Block disintegrated, the European Union is in a process of disintegration: the Brexit, Italian referendum, Hungary, Romania are good example of what have been the consequences to not working economies. The globalization and the rising Productivity of the 21st Century have changed the pro-supply economic pressers of the past to pro-demand, asking for equilibrium forces of the presence. China’s Industrialization, the Internet have aggregated these new conditions actually started and worked out by the Transnational corporations, the improving Technologies, the hugely accumulated Capital that exploited these new conditions to move, outsourced, expended industrial production, financial services, retail, wholesale, farming, services. The global marketplace has become overtaken by these forces to change the pro-supply economic prevailing force to the pro-demand, pro-equilibrium required such. The economies changed into markets; the economics must change into market economics to apprehend these new developments, but it did not happen: ideologies, status quo, politics have prevented the science of economics to evolve into market economics. That has brought the economic slam elsewhere but China who accommodated an ‘as it comes; as it goes’ economics that worked out the 2007-9 recession and post recession global slow down and instead took out of poverty 600 Million people, and maintained high economic growth.

The China example has not prompted the western politicians, economist to start figuring out what really has happened to adjust and adopt the orthodox economics, but in the opposite, it made them become hardliners insisting that these new developments are temporarily, or a result of not imposing even further austerity, debt restrictions, shady business environment.

The 21st Century calls for flexible market economics that will ensure less inequality, full employment, Earth’s environment protection, open global marketplace, however individual markets developing such flexible policies that can manage consistent market development, alleviation of poverty, saving of the personal freedoms and the democracy for all.

Joshua Ioji Konov 2017

The Most Recent Developments in The Global Economy

With the coming of President Trump in power and with the Brexit, the world is coming to a point of excessive Nationalism, politicizing of Economic, widespread fear of ‘the others’, ‘the different’. The old smooth liberal order is becoming a thing of the past with its nice words, rising GDP, falling Unemployment indicators that by themselves did not include the majority of citizens in the US or other developed countries and even less in the developing world: elsewhere, rising inequality, debt, poverty, lack of business and employment all together bringing an widespread belligerence toward the normal people. Why the politicians have been applauding the ‘incredible’ economic growth and decreasing unemployment of a glorious globalization with IPhone, cheap computers, stores full with goods, professing prosperity; the many, if not the majority were actually out of the loop into a circle of everyday difficulties. In the US, UK, EU, Japan and  the developing world, maybe with the exception of China, Norway, UAE, and a few, the already succeeded economic, political structures have been out casting more and more individuals from the economic competition, calling them ‘left over’ the prosperous global marketplace.

What the current establishments do not understand is that the system does not work thus steering mass harm that is not just a collateral damage of the ‘left over’ by the globalization less educated or adaptable individuals, but a mass breakup of the global economies not being able to provide basic conditions for the many to exist normally: that brings excessiveness: nationalism, xenophobia, radicalization have become natural consequences under these conditions. To expect any natural developments that will change these developments under the trickle down orthodox economics is futile; to expect mass rising productivity, industrialization, countries balancing budgets by providing ‘adequate’ conditions for investment by cutting consumer, labor protection is inconsistent with the reality: the ongoing globalization, the rising productivity, technologies, the Internet, the large transnational corporations in manufacturing, finance, retail, wholesale, farming most definitely cannot and do not provide conditions for such muss industrialization and individual countries improvement. The developed countries are losing their middle class the developing with a few exceptions are not building such middle class: poverty, inequality, debt are the result of  such not working economics.

The European Union are the best example of how the orthodox economics is not working whatsoever!

The 2001 & 2007 Recessions were provoked by these new economic developments, too The severity particularly of 2007-9 Recession that affected the entire world economy in some ways, continued for long period, and could has not fully recover, or has recovered very weak could taken as a warning to how ineffective orthodox economics is to prevent, self-adjust, post-recover the destructive forces of the globalization and the rising productivity, of the exogenous forces in a economics of closed economies. The issues of such 21st Century economics has become so complex that by using the orthodox economics methodology is completely incomprehensive.

The 2001 & 2007 Recessions have additionally accelerated the processes prompted by the 21st Century the globalization and rising productivity to the point of unseen inequality, debt: national and private, poverty, global pollution. The increasingly high productional capacities by the transnationals, China, the fluent sales on the Internet the improving technologies, robotization reduce the industrial related employment that has always been in the foundations of the Capitalism so when these factors changed the trickle-down economics became irrelevant, not working; thus, the recessions of the Past that could had been self-adjusting have become extreme, not rulable, impossible to handle by using this orthodox philosophy. The world has changed for the last 20+ years to a point when the orthodox economic tools must have to evolve too. So, the Quantitative Easing, the Subsidies, the targeted Investment, the bailing outs, even the Social and Infrastructural expenses have become necessary market (to replace economic, economics and market (to replace an economy) tools to be used on a ‘as it comes; as it goes; approach. In the West these new market tools have been used under the pressures of an oncoming crush prevention; whereas, in China such innovative approach has been well developed and used resulting in the higher growth, market development not being so much affected by the recessions; even though, the Chinese political structures lacked the freedom and liberties of the West; the better market economics worked its ways to have China advanced to their competitors.

The Earth Environment issue has become a matter of life or dead to the entire world requiring immediate actions by all countries, but the poverty driven usage of old vehicles, fossil fuel heating, deforestation for heating or agricultural development, the improper garbage disposal have had replaced the industrial production pollution as man pollution: as the developed economies are taking measures to reduce such pollution why the developing, impoverished cannot change without alleviation of poverty, change of the entire system of economics.

So, all of the mentioned and much more was not brings the conclusions that a innovative, market oriented economics must be developed to accommodate all the new global developments to 1. save Earth from destruction by alleviating poverty, and through using environmentally friendly technologies, and 2, establish longer term market developments by using private entrepreneurialship and the power of the globalization and the rising productivity, and 3rd use human ingenuity to improve technologies, management, organization; all of these but by limiting governments economic involvement, saving and enhancing individual freedoms, democracy. And the question remains: is all of these possible, are there such systems to accommodate all very complex global developments?

To ignore the realities and continue using economics as usual has shown particularly in the EU the bastion of the orthodox economics the long lasting harmful consequences that finally brought rising extreme left or right parties, leaders: from Hungary, Poland, Italy, Romania to Brexit the economics has greatly underperformed with high unemployment, eroding middle class, social policies, business activities that brought rigid politicians, parties that are limiting personal freedoms, media, immigration, – the blooming nationalism, zelophobia, radicalization resulted of such weak economies, economics. When deleveraged to the inequality, debt the GDP elsewhere in the EU has shown inadequate approach that could not accelerate individual business involvement enough to employ the majority into productive environment. Instead, the political madling with individual, less developed countries politics has been used to ensure some stability, the continuation of the orthodox trickle down economics that policies obviously failed to prevent the mentioned Brexit, Hungary, etc. The biggest tragedy of the EU is the long term slow down that under the Capitalism spells Debt whereas the 3% Debt/Deficit Rule limits the ability of individual countries to wrestle such harmful developments; it has been more like ‘Catch 22’.

But such developments could be well traced in the United States bringing in power the extreme right in the entire government wings: from the White House, Lower and Higher Senate Chambers, to the Supreme Court that is the last ongoing development. And as in the EU, the US political turbulence can be well traced in the US economic developments: President Trump was elected by the ‘left over’, ‘deplorable’ unemployed, underemployed, not given business opportunities , normal life.

The only country, market, economy that avoided such melt down has been China; but it used ‘as it comes; as it goes’ approaches market economics more successfully than anyone else. It is wrong to think that China manipulated their currency and therefor succeeded; it is more complex a system of 21st Century flexible market economics that achieved such successes.Thus, to first, consider that somehow the trickle down orthodox economics has worked for China is jut not correct, because China used much more flexible market related economics: for example instead of maintaining General Equilibrium theories as all other Central Banks China used Parts Equilibriums theory along with targeting economic, market sectors by using lending, fiscal restrictions, initiatives to either slow down or give boost to targeted market sectors. China used State Owned Corporations to keep rising income, consumption, demand, too; that, approach use to bring inflation, shortages, underdevelopment in the past Communist Blocks now has helped taking out of poverty more than 600 Million Chinese, because the world of real economies has changed from pro Supply driven to a pro Demand or at least Equilibrium driven marketplace. What China has  shown to the world was that even an economy, market lacking freedoms, democratic freedoms if using properly economics it can succeed immensely. But also, if countries, economies, markets do not use proper market related economics the results could be meager, catastrophic, harmful not just to their or the global economy, marketplace but will have political consequences bringing back many years of liberalization, democracy, improvement.

Joshua Ioji Konov 2017

EU’s Economics of Ideas

The underperforming of the European Union economies is a fact not contested by the left or the right spectrum. The meager economic growth following the US spread globally recession has crashed banks and governments alike. Close to call elections miraculously avoided the far right or left parties from taking over – good example was Austria; however, in Hungary the luck ran off, the Brexit, the Italian referendum, or the ravaged Euro barely holding above the Dollar, and many more were the consequences of the EU economic policies, the Euro and  the 3% Debt Rule that did not give any flexibility to national governments, the German rigidity pushing trickle-down liberalism and imposing strict austerity. The EU economics up to the Quantitative Easing by its Central Bank had been by the book, but even by the distribution of the QE such has been continuing consistently: simply enough, the EU economists and policymakers believe in the trickle-down economics of the Capitalism up to un obsession, and when it did not work out the politicians manipulated governments, elections, referendums to prove that the not working is either what is suppose to be, or just a temporary occurrence that most definitely will improve if the policies are even further rigid. The politicians have been so much blinded by their ideology and fellow economists that they tended to blame anyone: nations of being stupid of voting out of the Union, or opposing austerity, the ones on strikes against cruel measures undercutting their benefits and wellbeing, even the economic indicators which month after month and year after year have been showing total underperformance; indeed, their stubbornness have over passed any reason. But most important it has brought general misery to the EU populace that instead of vivid market development and prosperity such approach has brought general stagnation. Some economists have blamed it on the Euro or other technicalities being afraid to call it an inadequate economics that could not apprehend the forces of globalization and high productivity to spur business activities and responsive consumption/demand. The pro supply driven EU economics is founded on proven by the history philosophy that built economic powers from the US to Germany and Japan; but why the system has not been working out for the recession and post recession times, or it could not have been done any better?

In the world exists a big diversion that on macro-level large businesses: manufacturers, financiers, high tech and service companies, etc would have the markets / economies self-adjust, the recessions should be short synonyms for such corrections. The tight leach of debt prevents from redundancies and inflations; whereas, economies are run on budgetary principles. Then the 2007-9 recession came out roaring over the US and other countries invoking more actions by the Central Banks and Governments: Quantitative Easing, Subsidies, bailing Large Banks, Corporations, extending Unemployment Benefits, Foreclosures, and other countercyclical measures that finally helped stabilizing economies. Though the results differ from region to region, from country to country: some like China withstood these winds just by slowing growth, others like the US, UK, and Japan managed to come out on clear with even short of full recoveries modestly higher growth and lower unemployment, and third as the EU that the growth is small to nothing and the unemployment in places like  Greece, Spain runs in the 25% and on youth over the 50% and over all the EU is on the double digits unemployment rate. Between 1993 and 2005, 98% of households in 25 advanced economies experienced rising real incomes. But in recent years this trend has ground to a halt, and even gone into reverse. The pressure of the globalization and technologies has been accelerating progressively therefore the ability of the self adjusting austerity economics to keep employment and debt in the normal levels have become less effective: the artificial interference by the governments and central banks of the most advance economies is a good example of such process. The off-hand economics must evolve into invisible-hand ‘as it comes; as it goes’ economics; however, there comes the question are the governments capable to generate and hold on concerning their inflexibility and incompetence when it comes to markets and business? – a legit question! The governments and central banks could only jump start business activities either by market leaps or/and targeted investment, but only business competition on a micro-level posses the functionalities to succeed market development with lasting effect. However, some countries like China, Norway have more developed government structures than others like the US, UK, so, as mentioned before countries, markets with governments too involved in business must withdraw on a micro-level, let the business competition compete and adjust. In the opposite example the complete hands off by the governments and central banks when it comes to social and infrastructure is ineffective thus these governments and central banks must get more involved by ensuring social improvement. The balance of involvement is in the point of market success and equilibrium.

Practically, how to manage Market Equilibrium? – from one side it is full employment and fair market competition and from another it is limited Inflation/Deflation – the Market Tools are used to either spur or slow market development to prevent high Inflation/Deflation volatility. Debt and inequality are secondary effects on a functional or dysfunctional market development: logistically when functional market development debt and inequality will be low to moderate and the way around. Market development builds equity thus creating opportunities for return on investment, high inequality is a product of not fluent market development: either underemployment is very high or market competition is unfair, therefore, if Market Agents are adapted the micro-level market forces will naturally for the market distribute wealth more fair and debt will be more limited. The ideas that tight leach on access to financing to prevent inflation/deflation is the only approach had worked in a pro supply economy and no concerns about Earth pollution, thus the system must evolve into a worldwide markets development to offset Inflation/Deflation – the Global exogenous to most  markets forces must sustain the demand driven Inflation; the ongoing market competition should offset Deflation. However, on a Macro-level market tools must be used as parameters to prevent, diminish Inflation/Deflation built ups.

If the EU is an example of how inadequate orthodox economics has been, and China of using flexible economics has performed, the theory of economics should practically comprehend the real economic reasons for such developments. Why in the near past the Soviet Block ran by the governments economies experienced constant goods and services’ shortages lacking innovation while the Capitalism succeeded in establishing high living standards and high productivity; then why the turn around the nowadays China using mixed free market competition and state governed ones have better improvement? Is it because the Capitalism is not performing anymore or the Social distribution in combination with the free markets betters? – well, I believe, it is some of the above but not in the ways of Socialism to Capitalism comparison: it is the Marketism I.e. Market Economics that at the moment is adapted by China or even more, it is the Marketism not being adapted by the EU that by the way has much more advanced structures to boost market development on the first place; it is the stubborn EU economists and politicians that are to blame for it, not the way around. The Marketism is closer to the Capitalism than to any other philosophical system. The personal freedoms are great advantage when developing markets, if properly given the opportunities, and disadvantage if not.

Joshua Ioji Konov 2016

The Relativity and Uncertainty of Market Economics

Economics is a philosophical system of taking statistical data on individual technical indicators consequential to subjective conclusions: example of such: Gross Domestic Product  variations call % positive or negative growth while two consecutive quarters of the second calls a recession. Although the GDP does not indicate the distribution of gained or lost wealth or many economic activities such as at home labor and any transactions that do not exchange cash. Other example is the Unemployment Rate The official unemployment rate (technically called U3) simply divides the number of people who are not working, want to work, and have been actively applying for jobs (defined as having applied to at least two different employers within the last month) by the sum of the people working and those defined as unemployed. Thus, lots of people who are unemployed by many reasonable definitions do not count as such in the official government statistic. Using the government’s own definition, workers who are discouraged or marginally attached to the labor market do not count in the official unemployment rate. There are different, broader, unemployment measures available, but they do not get the headlines.

However insufficient, the GDP, Unemployment Rate, and other statistical indicators are used to draw ‘at the moment’ situational picture on an economy that provides the Central Banks parameters to trigger Monetary, Fiscal or other Policies. When recession persist going even deeper into red the actions take even very unorthodox actions such as Quantitative Easing, saving individual Banks, Corporations, extending Unemployment Benefits, etc.

What ‘modern’ economics lacks? – first the inability to call economic indicators: trigger flags into a system of relativity and uncertainty where ‘market tools’ must be used not based on believes or ideologies but on ‘counter’ or ‘pro’ cyclical pragmatic measures – parameters into an unstable market environment; and second, the prioritize on at the moment actual market tools to accelerate or prevent relative market developments. Let say that a market e.d. economy is running into stagnation with diminishing demand: seemingly it must trigger pro-demand measures; or a market is running under strong inflationary forces: such should take measures to boost the supply driving market forces. The relativity of demand to supply or the way around is balanced by market equilibriums in which situation the market resistance is at it’s the least force. So to speak, when market tools are used as parameters on an ‘as it comes; as it goes’ approach triggered by ‘at the time’ market developments; such pragmatic approach may prevent the real economy from violent market variations.

The relativity of real economy’s market developments is not unconditional because of the high uncertainty of economic realities; however, by isolating ‘at the moment’ developments then acting to smooth or accelerate these developments: let say, a market is running stagnation (deflationary forces) while the consumption/demand is indicated then the pro-expanding demand market tools should be used to steer higher employment, income, and consumption. The action strength will depend from the strength of the indicated variations.

Market Agents such as the Environmental Protection that are unconditional – thus any other market actions must comply with. Less demanding but not the least important are Poverty Alleviation; or Consumer & Costumer Protection, the Rule of Law in Business, and Insurance & Bonding that will help saving Earth, raise market security to allow SME and Investors lower rates lend-ability, raise the level of quality of business activities.

Market Tools as triggered Market Leaps through Direct Investment, Subsidies, Low rate Financing, or Social and Infrastructural Expenses, Sectoral Monetary Policies, Fiscal and Lending Policies, Prevailing Wages or just maintaining market equilibrium by using these Market Tools as Parameters under Uncertainty. Inflation/Deflation are fundamental Market/Economic Indicators that can trigger actions on the Demand or Supply Sides. Minimum Unemployment is down to Full Employment relying mostly on Small to Medium Businesses and Investors to steer enough business activity; however, governmental and other means for employment are feasible: balancing private employment. Some markets where the governments are more involved in employment could evolve into more private employment, other may follow the way around: ‘the means justify the deeds’; however, free entrepreneurship performs as best in in market development and manage at best market equilibrium; the inflexible bureaucracies cannot compete private entrepreneurial organization such. There are market sectors that common hold property is must to ensure fair common services, and the percentage of non private employment will probably rise – the fiscal reserves that support such employment must also be flexible, sometime not debt related but market demand driven. Overall, to succeed full employment in a highly technologically developed and developing world the idea of National Debt should evolve into the ideas of protecting Earth Environment and alleviation of Poverty to support it, the entire market economics should be founded on two bases: first is the Micro –level that is directly market forces compliant and adjusted by the by competing market participants and second is the Macro-level that is not only market adjusted: the appointed factors of Earth Protection and Poverty Alleviation will overwrite it, but also even the existing market forces could not let it self-adjust as it is seen by the 2007-9 Recession that required enactment of many counter-cyclical  governments actions such as the Stimulus  packages, the QE, the bailing of ‘too big to fail’ Banks. The Market Tools usage could be adjusted on Macro-level to eventually slow-down an overheating market by targeting individual market sectors (example of such interference is the way China cooled down their Real Estate in post recession time by limiting lending access to 50% LTV on first property and prohibiting lending on a second property, also not allowing for the Developers to change prices from the previously listed ones. The targeted actions by the Central Banks should not be limited to Discount Rates or even Quantitative Easing but should go to individual sectors and fix the redundancies or shortages.

The ongoing Globalization and rising Productivity have put strong market exogenous forces over national economies in the 21st Century as seen it has prompted excessive national debt and rising inequality. The Transnational Corporation in manufacturing, financing, services have flourished under these new conditions by outsourcing and moving business elsewhere; in addition the China’s Industrialization and the Internet have aggregated these market processes of changing the pro-supply forces well handled by the economics of Capitalism into a pro-demand and pro-supply new forces ravaging many markets because the inability a new system of market economics be implemented.

To include these exogenous market forces along with the endogenous such of technologies and highly sufficient management, and the Earth Protection very expensive and uncompetitive means, and the needed Poverty alleviation on a currently used Budgetary Economics is going to be impossible: if the whole economics is ruled by debt and budgetary approaches the many issues arousing from these 21st Century developments cannot be properly dealt, and therefore an evolution to a Market Economics adjusted to Inflation/Deflation must be apprehended. To overcome the head winds coming from the new developments to stay on Austerity adjusted Debt economics is impossible by nature, neither all economies can industrialize to fulfil their Fiscal shortages nor by cutting on expenses can take these to some balance to the necessary investments to build the required infrastructure, full employment, stop polluting by focal fuels, old vehicles,  stop woodcutting, garbage disposal, invest substantial money into green energies and technologies. To succeed Market Development the Debt stigma can not apply, the lending, financing, shareholding, are private issues based on ‘risk’ or ‘reward’ principles that must become national and international investment principles too:

How governments will handle these highly demanding new expanses? – Foreign Direct Investment, available other capital: Public or Private, the Quantitative Easing, the SDR issues by large Central Banks and International Finance Institutions are the one to provide and control proper investment and execution, even though, this is not going to change the current economic order in complete it will create some very unknown market conditions.

How the government will make sure not prompting at the moment Inflation? – the Market Leaps are targeted environmentally friendly project developments that target infrastructure build up, construction employment, maintenance employment, other employment: double targets as could be seen; what such project must sustain is not prompting excessive Inflation and consequential diminishing employment: the complexity of making projections should include the scenario of having large manufacturers, banks, wholesalers and retailers be included in the project as auxiliary  filling the blanks to prevent Inflation, also a project should include green farming, tourism, apprenticeships, courses in management, finances, agriculture, to prompt employment and teach the locals to manage themselves – the Prevailing Wages, Residential Requirements, SME lending parameters are necessary too. Such project will employ  in the beginning many foreign managers, instructors, teachers, and specialists that will provide the needed expertise but all mid-management, labor, support must be done by the trained locals in prospective all the positions must be occupied by trained local staff. The discussed project imply some underdeveloped markets with lack of proper education and skills, however, when a Market Leap is done in an developed market the need for outside specialists could be limited.

Most developed markets may not need Market Leaps but just acceleration of the existing green energies projects; however, employment is an issue in these markets too, so to prompt business and employment many new approaches must be used that will boost SME activities, will create opportunities for all – meaning full employment that consequently will give more Fiscal power and revive the optimism and the desire to succeed. The motion, when created, will employ the positive energy of many skilled currently underemployed or unemployed people.

In details, the developed markets have many channels to shake up business, social and infrastructural expenses are not excluded as a market tool’ the Market Agent apply to these markets as well to developing ones in their entire powers; they are the foundations for higher market security that will allow low interest lend-ability to small and medium businesses and investors, and establish high requirements for consumer and labor protection changing the ‘quantity’ development into ‘quality’ development. Under higher quality requirements more education, professionalism, is going to be required to compete, but better rewards will follow up. The globalizing marketplace will provide plentiful of opportunities for highly educated specialists.

To ensure modest Inflation the developed markets artificially boosted Market Development should be done in a complex manner by engaging more diverse measures: from manufacturing, service sector, farming, tourism to all go green – protecting the Earth environment. The substantial capital needed

such actions must come mostly through QE, but investors will get involved after the project starts. The commercial financing must be done through commercial banks on setup terms and subsidies (in the beginning) why letter the high security at the markets will make such low interest rating market compatible. The Market development literally means developing markets: developed or developing by using Market Tools for targeted Market Leaps or accelerated economic activities under implemented Market Agents business environment. These projects differ from country to country and from market in a country to another market could be in the same country (example: South of Chicago and North of Chicago could be considered different markets: differing in education level, access to employment, safety, property values, opportunities for business development – even though neighboring, having the same currencies, language, etc even under GDP, Unemployment, and other current indicators the difference is substantial; thus to approach these two markets requires dissimilar planning, financing, and executing: the planning for North of Chicago will improve already developing green infrastructure, by vehicles replacement with electrical, solar and wind power generation, renovation of buildings aiming  isolations, finance existing small and medium businesses to expand, using fiscal breaks to leave more money for consumption, higher social pension, Medicare, helping for high education, schools, etc that much of the project could be financed by direct and indirect investors. The strong middle class markets require upgrading to more business opportunities, green infrastructure, electric means of transportation, zero pollution.

Whereas, the South of Chicago is needed ground up planning for a Market Leap closer to one in the developing than in the developed worlds formerly explained.

Marketism calls economies markets so the less advanced parts of an economy could be qualified into markets with their specifics that require individual planning and actions.

The governments involvement and interfering with economic activities or the control on business vary substantially from country to country as mentioned before. Markets like China have strong State Companies competing straight with private companies whereas markets like the US does not run State Companies and the competition is among private companies, markets like the Scandinavian have very strong social protection system with public Medicare  far different than the more individual US such. These examples are to show how diverse the world markets are and therefor, the Marketism should use compatible Market Tools to their specific business activities, employment, environmental protection.

Market Agents are required by the need for markets unification, for marginalizing competition disadvantages to Small and Medium Businesses and Investors, and for higher market security. In the world of so much diversity the basic rules of Market Agents are more than enough to stabilize international business and financing to allow the proportionate usage of Market Tools to steer enough business activities, local investment, employment, alleviation of poverty, and finally protection of the Earth environment by market means.

Up to now the tight budgetary leach on economies prevented or were suppose to do so from exacerbations in business and governments, modest recessions were suppose to cut dead branches of redundancies by painful but necessary self-adjusting. Then the 2007-9 ‘Great’ Recession hit the economy so hard that the multiple interference by the Central Banks and the Government was necessary to prevent from total melt down. The ‘certainty’ of the science of economics evolved into ‘uncertainty’ – so, instead the measures (pro-cyclical) follow the trickle-down philosophy of the Capitalism, the ‘as it comes; as it goes’ counter-cyclical approach of using market tools as parameters was used. The Keynesian interference could be considered closer to the methodology used by the Central Banks means but the Quantitative Easing, for example, was far beyond it; the complexity of the interference into the economy went far unorthodox, but it saved the world economic order from destruction. The showed the level of ‘uncertainty’ prompted under the new global conditions that exceed the conceptions. After substantial amounts cash was infused by the Central Banks Inflation was predicted by the orthodox economics, however, such did not come: the exogenous forces more powerful than even huge quantities of money prevailed. How strong are these forces though? And if Inflation has evolved into chronical Deflation where is the turning point?

Thus from one side the Globalization and rising Productivity have been taking away the fundamental industrial jobs from another it has pushed prices and Inflationary pressures down. The ideas of certainty by letting these developments self-adjust cannot be considered practical. Example of sticking to the orthodox ideas was the European Union insisted by Germany: the weak results of a barely improving EU markets are a good example how such philosophy underperforms. Example for using more flexibly economics is China that even though it had highly dependent on export economy it gradually been changing by exploring QE, targeted stimulus, subsidies, on the supply as well on the demand sides; thus raising living standards and boosting consumption.

The question how to prompt the right market development by not triggering excessive Inflation in the most fundamental for an ‘as it comes; as it goes’ economics; the diversity of markets structures further complicate any setup system. Actually, there isn’t any possibilities for a ‘setup’ system – it is about using Market Tools as Parameters to boost business activities and employment while preventing excessive Inflation. In principle, as mentioned before, if Market Leaps are used these must be more complex having in account all sides of a market while balancing demand to supply. The excessive capabilities of the Transnational Corporations to expand global production, financing, outsourcing, and moving are preventive valves to short term inflation; in a longer term, the steering of market competition on micro-level could self-adjust, on a Macro-level prompt actions to cool overheating market sectors must be preventively used. The game economics can not comprehend the complexity of data from endogenous and exogenous prospective to setup a system working for the appointed diversity in market varieties, only based on parameters that slow or accelerate certain market sectors the system may localize and address effects and consequences for a market, particularly in a short term; in a long term for a market that has overgone market leaps or targeted business activities boost the micro-level market competition should let such market self-adjust business activities; the interference on macro-level should boost environmentally friendly business activities in any possible varieties and if needed to use Social expenses along with Subsidies to maintain full employment, that is considered paramount by Market Economics.

The full employment of Market Economics is not in the 2-3% level but in the single 1% . To have such high employment is the target: in less developed markets such employment consists of less advance jobs but yet giving the individuals the ability to maintain normal life to the local standard of living. It is obvious that the most developed markets will have more access to high education and high-tech jobs, at least of the beginning of such global market development. Industrialization is not considered by Market Economic as the way to Global Markets Development – the Market Agents consist strict Environmental, Consumer, and Labor Laws thus not giving to the Transnationals the initiative of deregulated markets. The non-industrial market development is the most fundamental difference between Market Economics (Marketism) and the Capitalism. The artificial Market Leaps and targeted Projects which are not self-adjusting on a Macro-level are the second big difference – in this case the Environmental Protection targeted by Market Economics overwrites the Debt controlled self-adjusting Capitalism.

Market Economics I.e. Marketism is based on free entrepreneurship as a vivid force for global development; the Market Tools use many artificial approaches such as Subsidies but on Micro-level the market competition is ruling, thus the finance institutions and governments are the ‘invisible hand’ to prompting business activities not the overhand of making business or money. Freedom of capital flows, labor, recourses, private ownership, freedom of speech and ideas are paramount for Market Economics to succeed in a long term.

Joshua Ioji Konov 2016

The EU 3% Deficit Limit

2015 Conference – Association for Heterodox Economics : AHE .

Joshua Konov
Market Economy under Rapid Globalization and Rising Productivity

The European Union’s Deficit/Debt Rule considered fundamental for members economies harmonic development through raising Productivity and cutting the dead branches of bureaucracy and governments spending:

The Stability and Growth Pact (SGP) is an agreement, among the 28 Member states of the European Union, to facilitate and maintain the stability of the Economic and Monetary Union (EMU). Based primarily on Articles 121 and 126[1] of the Treaty on the Functioning of the European Union, it consists of fiscal monitoring of members by the European Commission and the Council of Ministers, and the issuing of a yearly recommendation for policy actions to ensure a full compliance with the SGP also in the medium-term. If a Member State breaches the SGP’s outlined maximum limit for government deficit and debt, the surveillance and request for corrective action will intensify through the declaration of an Excessive Deficit Procedure (EDP); and if these corrective actions continue to remain absent after multiple warnings, the Member State can ultimately be issued economic sanctions.[2] The pact was outlined by a resolution and two council regulations in July 1997.[3]The first regulation “on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies”, known as the “preventive arm”, entered into force 1 July 1998.[4]

“In the ‘corrective arm’ of the SGP, the Excessive Deficit Procedure (EDP) ensures the correction of excessive budget deficits or excessive public debt levels. It is a step-by-step approach for reining in excessive deficits and reducing excessive debts.

The EU Treaty defines an excessive budget deficit as one greater than 3 % of GDP. Public debt is considered excessive under the Treaty if it exceeds 60 % of GDP without diminishing at an adequate rate (defined as a decrease of the excess debt by 5 % per year on average over three years).”

The two directions this Rule should ‘help’ individual members and the union overall is thus by obeying the Rule the countries are constrained from balking up unsustainable debt (in case over 60% of its GDP) and to the Union to overall setting common ground for such unification.

The Rule has become the economies measurement for righteousness in terms of balanced economic growth and therefore many if not all other EU economic policies have been designed and implemented in compliance with the Rule. And, for example, when Banks were receiving funds for re-balancing on very low interest rate most of the governments were not given access to such. The principle is to steer business not government spending, to raise productivity not social programs, particularly by less developed economies of the Union that have lower productivity and weak organization. Thus, business must be boosted in places of underdevelopment – not through governments spending but through market activities. The Transnationals are considered front-runners to spread economic activities and prompt productivity. The Trickle-down Libertarian Economics is the philosophy of the EU economics: the preferential status Transnationals and Large Investors in the EU is supported by High VAT pushed by the EU particularly to the Periphery along with Low Profit Taxation. thus the idea also goes that these Transnationals mostly coming from the most developed EU economies will spread out economic progress. The most advanced economies apply constant pressure on the EU government to keep on such direction. (TO BE CONTINUED)

Part II

2007-9 Recession and Post Recession Observations on the EU Deficit/Debt Rule’s Effect

On Macro level the Central Banks use Monetary and Fiscal Policies to adjust redundancies and shortages: over and under capitalization, and thus to prevent building up of balloons that can burst to recessions, or at least it goes in theory. The most recent usage of Quantitative Easing to pumping money into the system, even used since 2001 by Bank of Japan was a relatively new market tool until 2008-9 when the US Federal Reserve started using it on a large scale coming up to 89 Million USD per Month.

Over all, either by issuing long term bonds or by quantitative easing the Central Banks of the US, Japan, EU or UK;s or the China have pumped money through Tier One prime Banks, Financial Institutions, or even Large Corporations into government spending, finance and business activities to sustain the decline caused by the 2007-9 Recession and consequently boost economic growth.

The Central Banks analysis when changing economic policies have used Monetary and Fiscal Policies predominantly influenced by an Economics of Neoliberalism relying on the Large Transnational Financial Institutions and Corporations to help boosting productivity and business that consequently should have brought reduction of the unemployment, underemployment, and thus prompt consumption not by empowering further the governments involvement into business but mostly on the private sector in case on the large finance and corporate organizations.

The theory that have built the most prosperous economies of the US, UK, Germany, and Japan was considered solid enough to raise any doubts in its ability to prompt enough such business and than consumption: it (the theory) is a supply driven growth of ups-and-downs runs pf a trickle-down Capitalism. Life should have continued as usual.

“Eurostat released estimates of first quarter GDP for the Eurozone a little over a week ago (here), showing modest growth of 0.5% for the more inclusive measure of European countries. This is the 12th quarter in a row that the Eurozone has exhibited positive growth after suffering nearly two years of negative growth 2011-2013. The truth is, however, that the Eurozone has only barely recovered to its pre-recession levels. Furthermore, this growth has been driven by core economies, with countries on the periphery still years away from a full recovery.”

The economic growth of the post-recession EU could be considered anemic in it’s best. High underemployment, in some places high unemployment, rising inequality, declining middle class, rising poverty and debt: both personal and national have appropriated the period after 2007-9 up to now (2016). And this is not even the reality, because there are other factors to a bleaker situation, indeed!

debt poverty

A combination of factors that can paint the real picture of an economy/market:

– the Real-time Air Quality Index

– Pollution Index

– the Human Development Index

– Human Poverty Index

– the real employment and underemployment figures

– the Inflation/Deflation

– the inequality ( Gini Coefficient)

– the GDP Growth Rate

must be considered such the real effect certain GDP growth has on the market: whereas the GDP growth is just one of these, and if for example the Gini Coefficient is high and the GDP growth must deduct it (the Gini Coefficient) or at best adjust the GDP growth effect on that market the GDP growth’s effect must be substantially reduced!

The EU Periphery runs high and higher than the most developed EU markets with the exception of the UK Gini Coefficient; Periphery that also is with a low GDP growth, high employment and underemployment, etc that could be considered results of the EU general economic policies effect: the 3% Deficit/Debt Rule is a fundamental EU policy along with the imposed high VAT, low business taxes and social expenses, raising the retirement age, removing labor protection regulations, etc.

 The conclusions drawn from the data is that Budgetary Economic as used by the EU insisted by Germany that is an exporting economy have holding effect to any possible growth. The Market Agents that could boost growth under the ongoing Globalization and rising Productivity differ from the Agents and Tools insisted by the EU: the weakening labor laws, expanding pension age, protection, lowered business taxation, and over the board privatization on discount prices, the high VAT are counter-productive under these new conditions of fierce exogenous market forces: by lowering the equities values and living standards thus farther diminishing the labor markets , consumption, and demand! The conception that by imposing tightening rules over an economy will boost foreign investment and then productivity is not performing under these new conditions, because when the marketplace loses consumption it moves foreign direct investment to expanding consumption markets like China, India, or Vietnam. The ideas of Transnationals being attracted just buy lower taxes and they can boost any market to adequate employment are as archaic when the need for labor has been declining disproportionately to the value of high equity markets with rising consumption.

The Budgetary economics of the Rule keeps tight leach on the indebted less-developed economies; however, as seen it also establishes conditions for high inequality and poverty, unemployment and underemployment. The two approaches to the 3% Rule by those that obey it like Bulgaria keeping lower deficit and those braking it constantly like Italy results seem just keeping the status quo of lower growth of underdeveloped Bulgaria and drifting toward similar but yet with higher standard of living Italy, or crashing down Greece. There could be well concluded that both approaches are not working showing fundamental structural issues in these non functioning markets: the limit of monetary policies is well seen elsewhere: from the US to Japan, where the Prime Rates are underground with fairly limited results. But, the more stubborn EU 3% Rule goes further by even weaker economic results of a prolonged in and out recessen into the 1% growth.

The EU Poverty well matches the Inequality; however, it differs in its Debt data sets: the Debt reduction means no Development, Poverty reduction, and Prosperity in conflict with the Economic theory. .

A Market/Economy combines equity, government expenditures, and consumption from its demand side and business activities and global exposure from its supply such (TO BE CONTINUED)

The balance of a markets must be don by using the market forces self-adjusting on Micro-level – the interference by governments and investors must be done on a Macro-level such adjusting is much more complex and needs interference because of the exogenous and endogenous forces over the real economy, forces being accelerated by the increasing flexibility though moving and outsourcing by the large transnational (TNC) corporations, the technologies that reduced labor expenses by mechanizing farming, production, and services. China that sharply developed its industrial production structures and trading abilities, the Internet that allowed access to information for the many, and not the least the access to capital and foreign direct investment for the large corporations.

The globalization seemingly change the trend from time of the mostly developed economies holding industrial production and technologies to now when large Transnationals do move and outsource wherever they considered it profitable: to places of limited environmental, labor, or consumer protection. In context, China differs from the formal statement and actually the Chinese companies are following the same trend, but many smaller countries are ready to compromise any regulations and laws to attract big business. The TNC employ in the very single digits globally however more than 80% FDI goes to them. The tax avoidance by the TNC is another side effect that literally have them established as above governance by countries entities being able to move capital and infrastructure from country to country in their convenience. Another, major factor that boosted Transnational’s productivity has been the consulting company such as Boston Consulting Group that evaluated entities on a large scale, compared them to their competitors, and then help them lift up productivity by improving management, technologies, and sales practices. The critical powers of these consulting companies may ell be considered in the same level of the technologies, because without proper information for their competitors the difference in proficiency would be wider, than productivity lower in general.

The access to capital through Public Financing or Foreign Direct Investment, or/and Governments subsidies and initiatives have been fundamental for the Transnationals global reach. The global financial structures have covered the entire global marketplace by taking advantage of any opportunities: acquiring assets, building infrastructure, developing markets. What really happened has been a global expansion of the vivid and flexible Capitalism from the more developed markets to elsewhere. The capabilities of the Transnational in combination with the large Chinese Corporations have brought a tipping off that turned around the pro supply market to a pro demand driven such. Occurrence never experienced in history that also brought some graving disadvantages to most world markets: such as inequality, debt, declining middle class, and more poverty. The conceptional inability of the trickle-down economics to deal with these new forces are to be blamed for the poor or very poor results. Some market like Chinese adapted better by manipulating economics using a ‘as it comes; as it goes’ approach of sharply imposed subsidies, tax breaks, or imposing restrictions and farther scrutinizes holding about the 6.8% growth. Another markets like the US and the UK poured huge amount of cash into the system and even though not using the Chinese flexibility succeeded moderate rebound holding 2-3% growth; third markets like the EU ones stuck to the trickle-down budgetary economics and kept in and out from recession and deepened into underdevelopment.

The entire bleak global growth, however, brought rising nationalism, xenophobia, racism, and religious radicalism that consequences in many conflicts, terrorism, and in general instability.

The thing, however, that has been the most harmful affected by these development was the Earth Environment’s Pollution that have brought Global Warming with extreme weather, floods, drought, etc that most definitely must be sustained by alleviation of Poverty through global development but not by uncontrollable industrialization. The usage of old vehicles, the fossil fuels heating, the deforestation, the uncontrolled garbage disposal are byproducts of the poverty, underdevelopment, and lack of opportunities.

 The 3% Deficit/Debt EU rule is the worst trickle-down approach in such global environment, and it is not because the governments should spend endlessly by mostly wasting it, but because the policies through EU’s QE, high VAT, lower labor protection, or bailing banks are even worst by redistributing from the haves to the have not’s when the steering of general business development through SME and Investors should be a primary target along with a relatively fair market competition that is totally ignored. (TO BE CONTINUED)

The Budget Economics is a mindset continuation of controlling borrowers by the lenders; in a way the very old tradition and thinking. Up until the pointed new development in the world the supply driven countries were necessary to obey rules to retain stability. The control by the lenders was the stone to an economy’s success. But, as it was mentioned above, the things have changed to a pro-demand pro-market balance market economics of paramount environmental protection. This new world calls for discontinuation of the budget driven economics by adapting flexibilities to sustain long term Markets Development. Whereas the Rule of Law in Business is a founding Market Agent to succeeding Market Development the budgetary

approach is not primary but a secondary. The everyone’s access to Employment under the conditions of moderate to low Inflation/Deflation are the primary. The Investment by individuals, institutions, or governments must be on a risk-and-reward consistency the way public investment has been. However, subsidies and fiscal initiatives to reach such full employment are must, the Earth environmental protection must overwrite any other priorities, too.

The question: how social and global order could be retained anther such new market condition maybe unanswered by the imposition of the Market Agents as compulsory for participation in the global marketplace; thus, the Rule of Laws in business will replace multiple and many times avoiding countries’ business laws. High protected Environmental, Consumer, Costumer, Labor, Insurance, Bonding, Intellectual, and other laws are Market Agents, too.

The Market Tools, however, used by different markets are compulsory vary from market to market: example is if a market is more socialized than it should be the social market tools should be less applied than the private business ones: the targets, however, are exactly the same: to steer business activities and employment by a self-adjusting on micro-level marketplace.

The Globalization and rising Productivity are pivotal for achieving such targets that conceptually differs Market Economics from the Capitalism or Social-capitalism’s Economics! When on the Micro-level the market forces are free roaming on a Macro-level these forces are adjusted by using parameters – not allowing over or under capitalization excessiveness. The markets expansion is considered a force prompting and maintaining high business activities by developed and developing countries alike. The division of labor where in the developing markets high education, organization, and technologies will benefit straightforward from the developing markets expansion into environmentally friendly farming, tourism, construction, etc the usage of subsidies and targeted market leaps will lower interest rate on all lending under the higher market security while Market Agents are implemented that in longer terms will move from subsidies to micro-level market financing. It cannot be ignored the powers markets invoke when given the opportunities, therefor acting on time to prevent quick acceleration up or down wards is going to be paramount in succeeding such longer-term Market Development; however, its believed that if a market evolves in sectors’ relative harmonic ways the upheaval even when could not be prevented will be far from the overwhelming such under the exp 2007-9 Recession when the Real Estate alone with Construction and Financing were the only market sectors in development – whereas the rest were either just hanging around or on a down-slope.

The Market Tools (explained in detail at my other articles) are parameters used flexibly to prevent or overcome access; therefore, it is considered by me that the ‘uncertainty rule’ applies to modern day markets whereas ‘parameters’ are used more-like in Quantum Mechanics’ approaches than in ‘game theory’ such. I do not believe the ‘Game Theory could not appropriately apply because of the variety of factors that built variety of pressures on the real markets. The game theory implies to similar possibilities why the Quantum Economics’ Theory implies to ‘uncertainty’s situation that the principles are used more-like on ‘as it comes; as it goes; principles of an theory of dispersing of energies: meaning that the built up market energies might be dispersed into the rest of the market and globally when the rest of the sectors are kept ‘healthy; thus, a market must be seen from most angles to be censured in a certain position. The fundamental Market Tools are financial. lending, fiscal and some regulation that let say would shrink or expand access to some production or purchasing of i.e. products, services; the Central Banks current Monetary Policies of raising or lowering Prime Rates are considered to general equilibrium by having effect on all sectors in many cases that are not overheating or too underfunded – the Market Economics considers using Sectors i.e. Parts Equilibriums to fighting over or under heating of these Sectors! Approach currently used by the Chinese Central Bank to prevent the Real-Estate Overheating they raised the LTV requirement on the first house, and actually prohibited the second home landing simultaneously not allowing the developers to play with unit pricing – to hold on the declared prices. The idea was to cool down the supply alone with the demand until the dead brunches of oversupply is extinguished. It is considered a successful approach.

The probabilities for Market Development without prompting high Inflation/Deflation is not unrealistic and somehow was done by China: by targeted subsidies and by the State owned Companies’ raisin salaries to raise income is successful to certain extend; even though, China has one of the world’s highest levels of income inequality, with the richest 1 per cent of households owning a third of the country’s wealth, a report from Peking University has found. The poorest 25 per cent of Chinese households own just 1 per cent of the country’s total wealth, the study found, the Disposable Personal Income in China increased to 31195 CNY in 2015 from 28844 CNY in 2014. Disposable Personal Income in China averaged 8046.18 CNY from 1978 until 2015, reaching an all time high of 31195 CNY in 2015 and a record low of 343.40 CNY in 1978. Disposable Personal Income in China is reported by the National Bureau of Statistics of China. That in all accounts must be considered successful, yet.

Market Economics will work at best a open democratic market: the freedom of ideas and the avoidance of any oppression make individuals advanced and more initiative risk taking, advantageous and forwarding who put under the right conditions would advance far beyond the alternative thinking.

The Perception and Psychology of Economics

The US Feds are well accounting when putting out decisions and explanations of their policies; it is clear that perception proceeds real actions: let say that the mentioning of possible real actions definitely affects markets. Investors always act in advance of probable actions trying to predict these actions and get ahead of the curve. The rightly explained economic policies are taken by the investors weighted by them on the effect such would have on the overall economy. It is considered that investors actions reflect the estimated effect on the business activities and the return on the invested capital.

Clearly, and what the Investors value the most are the relative market stability of the political and demand such! When the developed markets can be considered politically stable the demand such becomes the main value taken in consideration; thus, if business activities and employment are slow to boost such demand the market stability is down therefor the investors are to look elsewhere to invest for ROE. Under the conditions of a supply driven market the demand was always bigger than the supply, then the investment was more politically motivated than market such. The conclusions of a tipping off from supply to a demand driven markets has been well presented in most developed and some considered developing economies: rising inequality among individuals and countries alike has added to such processes of eroding demand – the declining Middle Class, the marginalized income growth, the rising poverty are accelerating by the ongoing Globalization, rising Productivity, the Internet, and the Chinese industrial growth: exogenous and endogenous factors that have never but in the 21st Century had a profound market effect. The Capitalism a Social-Market structure founded on industrial production of supply driven markets could not apprehend the powers of these new developments thus greatly under-performing. The Foreign Direct Investment into huge Transnational Corporations or by lending to emerging markets’ governments have both way contributed to the inequality by bringing huge returns to the very few prompting the productivity by improving technologies and more proficient management, but also by lower salaries and weak consumer, labor, and environmental protection laws. The ‘Catch 22’ of from one side rising Productivity and from another the decreasing demand and good paid employment have hit markets whereas the 2007-9 Recession is a good example of how harmful over-capitalization of a few sectors of a market in the case the Real Estate, the Construction, and the Capital Markets have overrun and left behind most of the rest market sectors, thus real estate prices in residential and commercial sectors rose so high that the supporting income that was suppose to match these prices were left well behind. The Recession hit the entire market with a unparalleled vengeance, indeed. The role of the easy money trickling up and down through up to 110 LTV loans aggregated the insufficiency of the US market inflating the huge balloon that finally burst.

The trickle-down Economics is based on such ups and downs to supposedly self-adjust by cutting the dead brunches of overheating markets; however, the Capitalism has been affected by the incredible exogenous and powers of the 21st Century that almost brought to destruction the US and many other markets, drained billions from pension funds, and impoverished many. Well, if the Earth Environment has not become in great concerns, maybe the self-adjusting could work their ways around, but with the Global Weather Changes that brought accelerating Global Warming and all the consequential disasters the probabilities for a natural trickle-down self-adjustment without total Earth destruction are bleak. The need for alleviation of Poverty, establishing stable Middle Class all over the world must be accomplished ASAP to reduce pollution, deforestation, careless disposal, etc. Such quick response could be done only by using active market economics that must exploit Environmentally friendly approaches of all human activities but yest succeed consistent Market Development and yet preserve Freedom, Liberties, and Democracy!

 The Philosophy of Market Economics is exploring the opportunities of current days economic structures to accomplish the targeted Earth Preservation! 

Joshua Ioji Konov, 09-2016


The New World of 21st Century

The modern day’s economic developments have brought the following very new and enhanced some already existing powers with a force never seen before.: the Internet, the worldwide globalization along with the hugely empowered Transnational corporations and Foreign Direct Investment mostly hold by Big Investors, the Chinese Industrialization that shifted industrial production from the supply to the demand side of Macroeconomics, the highly improving technologies and corporate organization that reduced insufficiency and labor force.

Life, as known, has changed forever, the supply driven philosophies of Communism, Social-Capitalism, and Capitalism deepened in economic incoherence and under-performance: rising inequality, national and private debt have come naturally causal of such not performing Economics. History has shown that anytime excessive economic deficiencies bring extreme political ideologies and current situation from the Middle East to Donald Trump, through rising Far Right and Left Parties confirm such conclusions. The trend to attack the weak, the refugees and immigrants, the different in view or religion has been the same for centuries, but what makes it really different lately has been the speed with which such trends have been developing: nationalism, chauvinism, xenophobia, racism, and ext just broadened to excesses and blindness only such could bring!

The declining US Middle Class looks for someone like Trump to reduce immigration and eventually bring prosperity by using his experience even when he filed 4 bankruptcy and ruined hundreds of businesses! Whereas, in Brussels and Berlin the weak EU economics is directed to all the wrong reasons: from Debt to Productivity: pushing the weak countries to dismantle labor and social protection with the only idea of triggering consistent growth; however, the weakness prevails instead – thus the Brexit, the on the brink of collapse Greece, the high unemployment and underemployment, lost generations and political instabilities in Northern and Southern Post Communist Countries. On top of all the refugees that are flooding most developed economies. The EU Periphery has been the best example of poorly handled economics: high VAT and Subsidies that redistribute taking from the have not’s and giving it to the have’s. While the trickle-down effect has become more like an illusion than reality, indeed. The people in charge, however, have not stopped using all political and financial control means insisting that early or later the system will start working!?

The system of the Chinese economics seems to be the most adequate in comparison to the rest, and guess what if personal freedoms and democracy have been under-performing to a centralized practical Chinese approach many openly deny it by even calling Second or First depends of the view Economy still developing just to not answer the question how such thing happened and is happening? Why deregulated capitalism under-performs to a centralized China?

The same ‘Economists’ that predicted the collapse of the UK economy after the Brexit, wondering why this did not happen, or even before that ‘overlooked’ the 2007-9 Great Recession, mishandled Greek economy and overall the entire EU, or the Abe’s Second Arrow of raising taxes that undermine the Japanese economy revival resulted of his first arrow even though the flow of Quantitative Easing capital could not trickle-down choked by the system.

In the US the economic growth give to the very few the majority of it: the inequality, marginally leveraging income kept the Middle Class further deteriorating and Poverty rising. The lowering unemployment has not helped these development to reverse.

The gross reality is that ‘orthodox’ approaches in economics have brought nothing but even more debt and inequality; underemployment and hard times that finally brought Mr. Trump who ‘has a quick solution’ to any problem: from underemployment and poverty to crime he ‘can fix’ it for a week or two, just entrust him with the Presidency!?

The Chinese economy is bettering others because of its ‘as it comes; as it goes’ approach that has been using any market tools to boost sectors or slow them down. The practicality and flexibility with which these economic tools can work in different economies differ, however the principles are the same: boost Small and Medium Enterprises and Investors under a stable market competition environment: prompt environmentally friendly industries to save Earth, boost consumption but not by blind industrialization and pollution!

The 21st Century has brought exogenous and endogenous forces unknown and powerful with the Globalization and rising Productivity: if these forces are properly used the global market development may eliminate pollution, poverty, and bring stability!

Joshua Ioji Konov, Sep 2016

Marketism – To Avoid Environmental Disaster

Eventually the current system of economics may naturally evolve to accommodate the strong exogenous and endogenous market i.e. economic forces consequential of the ongoing Globalization, rising Productivity,  Chinese Industrialization, and the Internet; however,the fastly developing global warming and occurring sharp temperature variances and disasters urge more quick and radical interference to prevent Earth destruction. The developed economies are taking action by enhancing green energies usage thus gradually cleaning their environment; whereas, the most polluted cities have been moving into the developing world mostly invoked by usage of old vehicles, fossil fuels heating, and the following deforestation, water pollution, and widespread garbage disposal!

 Economically, the poverty and deteriorating (if any) middle class are the driving forces behind such pollution that may destroy Earth in a short term, and therefore prompt actions are necessary for prevention: alleviation of poverty and establishing of middle class but without deregulated industrialization – the Market Leaps are needed to accomplish such targets and the Marketism is one of the ways that will do it without governmental take over, as we all know how inadequate the governments might be when handling business!

 Taking business from the large corporations and investors to the small and medium such by saving micro economic competition, individual freedoms and democracy is the ways of Marketism.

The market balancing forces are the most important particularly on Microeconomic level: their self-adjusting powers limit markets from exacerbations,worthless items and services, and financial balloons; they also boost market development and productivity. On Macroeconomic level such forces are not capable to self-adjust without interference because of the exogenous and endogenous forces of the globalization, the rising productivity prompted by improving technologies, China’s super-productional abilities, and the Internet. The trend of reducing labor because of the global competition is natural for the markets: the high proficiency is enhanced by the high education: the graduating CEO’s, managers, and consultants are evaluating and comparing how companies function labor and technology’s wise. It is natural for market competition to always reach new heights in proficiency – that raises productivity and profitability. The globalization has opened some unknown doors for foreign direct investment, moving and outsourcing of industrial production, and financial services that give to the large corporations and investors access to cheaper labor and quick setup of such production and  services. Whereas, the weak international and national for some countries business jurisprudence gave some tax avoidance and money laundering. The lack of reinvestment broke the trickle-down path thus basically creating unfavorable business conditions for the middle and starting up employment.

This market pattern is highly improbable to be reversed but if the small and medium companies and investors are let into the competition by marginalizing the market advantages given to the large corporations and investors: which are these advantages? – the supply trickle-driven economics relied on the down-up concentration of capital and therefore the large corporations enjoyed limited liability corporate structures, shady business laws in contracting, costumer and labor protection, insurance and bonding, environmental protection and other laws. Such disadvantages keep the market security and the following lend-ability in the margins mainly hurting the small and medium businesses and investors:

 On a Macro level, however, the market forces could be used along with market ‘parameters’  to prevent harmful recession, and avoid slangish Market Development: the most important targets of such conditions should be full employment and moderate inflation/deflation – the productivity is important, too: however, considered micro market competition on full swing the market forces will accelerate productivity – on a macro level the targeted Market Leaps into predominantly environmentally friendly energies and industries will steer business activities building equity. 

Joshua Ioji Konov 2016

The Balancing Weights in Market Economics

The developing technologies in a highly organized and globalized marketplace have established conditions of overproduction simultaneously diminishing demand resulted of same these technologies, excessive capital for the large transnationals and investors. The Capitalism’s trickle-down economics was founded on industrial production with wide margins that is underperforming under these new conditions of reducing industrial labor and low percentage profitability. Therefore, debt, inequality, and declining middle class income have become fundamental issues: the service employment is generally less paid. China’s targeted economic policies are exception of the rule; but everywhere else from the most rigid EU economics through the US and UK down to the least rigid Japan the ideology of the budget trickle-down economics has been bringing stagnation, debt, slow development (i.e. growth), declining middle class, thus all the ‘goods’ of inadequate economics that cannot take advantage of the 21st Century’s globalization and rising  productivity. Along with the economic underperformance has come general radicalization based on national, racial, religious, etc differences: the 2007-9 Recession and the Middle Eastern Unrest have aggregated these developments that brought ISIL, refugees, Brexit, Donald Trump, and all similar extremes.

 For balancing market weights, there should be considered two directions of adopting these new global developments: Globalization and rising Productivity –  first approach goes toward more governmental business involvement and wealth distribution and second toward prompting Small to Medium Businesses and Investors by boosting business activities and letting microeconomic forces work its ways out. However, the ways a particular economy should be directed to is individual for this market i.e. economy: meaning some need enhancing social and infrastructural expenses others may need the opposite  way; but, it is going to be a mixup of economic policies and measures of an ‘as it comes; as it goes’ Market Economics.

 Market Agents and Market Tools are to be used in steering business and enhancing activities:

 The Market Agents (follows) are mandatory to establish relatively fair global market competition.

  1. Strict rule of law in business contracting, financing and full corporate liability

  2. Strict laws in Environmental, Consumer, Labor Protection

  3. Strict laws in Insurance and Bonding

  4. Strict laws in antitrust, intellectual property, anticorruption

  5. Strict laws in open market,

Thus when these Agents are implemented the high Market Security would allow lower rate lending to SME and Investors

 The Market Tools (follows) are flexible in usage differing from market to market

  1. Foreign Direct Investment

  2. Bank Lending

  3. Public Financing

  4. Targeted Subsidies

  5. Social and Infrastructural Expenses

  6. Market Leaps

  7. Fiscal and Monetary Policies

Tools to be at an ‘as it comes; as it goes’ approach individual for markets i.e. economies.

 Marketism i.e. Market Economy is not strictly budgetary constrained whereas investment and lending are on risk and reward principle; even the Business laws are strict it is not responsibility of governments to impose restrictions or weights based on belonging to nationality or an economic bloc. The Rule of Law in Business must equally apply to all participants.

 On a Microeconomic level the market forces should be decisive for market balance; however, on Macroeconomic level – priorities as environmental protection should overwrite market forces by being used as main economic i.e. market agent/tool for targeted development.

Accelerated Market Development under the balance between the Supply to the Consumption in the conditions of Moderate Inflation/Deflation is what Marketism i.e. Market Economics is all about and since different economies actually differ in the involvement of these variables Market Tools; therefore, the action and taken should change weight depending of their individual characteristics.

The Marketplace must have relatively fair competition under the Rule of Laws in Business whereas employment and development should be done by engaging the majority without damaging Earth Environment. Budgetary economics must evolve into targeted but still market driven on a micro level Market Development: stability and poverty alleviation are paramount.

 By steering the SME & Investors business activities and proactive Government as  an Invisible Hand a consequential employment/demand/consumption/anatropy will expand the Marketplace for the Large Corporations and Investors: the natural for the Micro market balancing forces are going to be very uplifting and prolific for Fiscal and Monetary Reserves, Social and Infrastructure Policy On a Microeconomic level the market forces should be decisive for micro market balance; however, priorities as environmental protection should overwrite market forces by being used as main economic i.e. market agent/tool for targeted development.

Joshua Ioji Konov 2016

Real Market Economics

Disproportionate Rising Inequality in the 21st Century shows the inability of the Capitalism to apprehend the powers of the ongoing Globalization and rising Productivity into a productive force to improve living standards and alleviate poverty!


The Industrialization of a Trickle-down Economics is the culmination of the Capitalism; however, such could not workout under these new global developments without destroying Humanity! Only by using Environmentally Friendly Technologies such destruction can be avoided!

The theory of Marketism i.e. Market Economics  is all about Market Equilibrium: a Demand that grows proportionately to the Supply capabilities (not the way around when it comes to most Globalized Markets) under moderate Inflation/Deflation. Whereas General Equilibrium is the target and compilation of the Parts i.e. Sectors Equilibriums (meaning contradictory to the current Central Banks policies of varying Prime Interest Rate). Marketism, however, does not reflect only Monetary and Fiscal Polities i.e. used by the Keynesian or Liberal approaches; it changes and enhances the Market i.e. Economic Structures to adapt to the exogenous and endogenous forces arousing by the ongoing Globalization and rising Productivity. The principle of Marketism is free flow of people and resources, freedom of speech and respect for human rights. Its main difference from the Capitalism is the dimming of existing ‘trickle-down’ economics into an ‘as it comes; as it goes’ economics meaning to not relying on the concentration of capital and related investment that mostly relates Large Corporations and Investors that benefit from such system; but, such system that deleverage such advantages into a ‘more just’ economic system that establish condition where Small and Medium Businesses and Investors would have similar access to capital and market competition. For such conditions to succeed the Rule of Law in Business should be firmly adopted along with Environmental Protection, Consumer Protection, Labor Protection, Insurance, Bonding Laws must be enhanced too, for supporting such deleveraging. Marketism obliges the Central Banks alone with the IMF and the World Bank to use not just discount rate but number of Economic (Fiscal, Monetary, and some new) tools either to prompt Market Development i.e. Economic Growth or to slaw such in case of exploding Inflation/Deflation occasions. The Social, Educational, Medical, Infrastructural expenses in Marketism are considered Equities under the conditions of moderate Inflation/Deflation, the development of Environmentally friendly technologies, farming, and tourism are paramount Economic Tools to be used to prompt such Development in the same limits.

The Market Economics takes market competition and re-balancing to a Microeconomic Level from the Macroeconomic such because of the same exogenous and endogenous forces formally mentioned: the economic tools used indiscriminately (not politically or ideologically motivated) to either boost Market Development through or slow such – whereas main indicator (trigger engaging) is the Inflation/Deflation fluctuations:  the currently used debt constrained Economics is to change into Inflation/Deflation constrained such. Market Leaps through targeting  artificially and semi-artificially boosted Environmentally friendly Market Development on National and Global scales is from one side to alleviate poverty and inequality, and from another to protect Earth Environment while such accelerated Market Development is succeeded. mThe Debt under Market Economic becomes Private Issue moderated by the Courts than the Governmental issue of the Present when the World Bank and IMF are backed by the Most developed Countries Governments. Lending, Crediting, Public and Private financing are risk taking enterprise that cannot and should not be individual nations issue; however, the strict Rule of Laws in Business of the Marketism ensure better Investment and Bonding Insurance along with Business Protection Laws: the difference is in the separation of National Governments from International Investment. The currently used Debt Controlling Policies constrain Economies from development not taking in consideration the exogenous forces of the ongoing Globalization and the endogenous forces of the rising Productivity that are bringing inequality, diminishing Middle Class, rising Poverty and Underdevelopment that affect straightforward the Earth Environment through polluting it and not implementing the more expensive environmentally friendly technologies: and from another side, bringing xenophobia, racism, nationalism, religious fanaticism, wars and dictators: the Middle East, Ukraine, Mr. Putin, and now Mr. Trump.

We should have seen a decrease in inequality with globalization, but that’s not what has happened in the last 25 years, according to Nobel Laureate and Harvard Professor Eric Maskin. While there are a number of reasons to care about inequality, he says there is a high correlation between high inequality and social and political unrest, with consequences for a country’s political and economic stability. tfNthGCPJzJj5lxFsPSkcAsFVeT6JS33gbTZ2RSIW-g

 The Large Transnational Corporations and Investors have been beneficiary of the underdeveloped economy supply driven and trickle-down for generations – system that had performed well ever before the 21st Century because the economies had run shortages and the pro–supply forces were overwhelmingly strong thus justifying such system. there how Western Europe, United States, and Japan succeeded incredible economic development.

The expanding Globalization and rising Productivity, the Chinese Industrialization and the Internet tipped-off the pro-supply predominant forces in economics to a pro-equilibrium on the demand side economics where the exogenous and endogenous forces of overproduction overrun the supply shortages market forces and thus the Social Economics (trickle-down) that worked in the Past have become inadequate – lacking the flexibility to ensure a commutative demand. The 2001 and 2007 Recessions reminiscent the powers of these new forces and accelerated the negative effects of the Capitalism’s incomprehensibility under these new conditions bringing inequality and rising poverty, diminishing the existing Middle Class, and finally xenophobia, religious fanaticism, wars and revolutions from the Middle East, Africa and Ukraine .

 There are just two fundamental ways to boost the demand side: either by expanding the governments interference in markets i.e. economies or to let the market competition create competitive conditions enough to prompt employment, income, and alleviate poverty on a national and global levels. However, the Large Transnationals and Investors under the Economics of just Productivity and Investment cannot prompt enough business activities, that must be environmentally friendly, too, to make this happen. The moving and outsourcing production prompts instead corruption, pollution, and inequality – the advanced technologies and desperate governments to give up anything to ensure some employment add to these new processes. The Internet Companies’ stocks busted balloon in 2001 and the Real Estate such in 2007 are a natural effect of not working US Economy that the lack of adequate business activities allowed the over-capitalization of the two pointed sectors. The letting markets competition in prompting enough business activity and raise income must be considered the most adequate to saving personal freedoms and most importantly flexible enough to avoid recessions and upheavals – so, a system of new economics must appropriate ways to allow market system that will allow competition to predominantly balance market equilibrium instead of giving these functions to inflexible, politically motivated governments do it.

The Small and Medium Businesses and Investors have become a leading market i.e. economic agent under these new conditions while the employment, income, and related fiscal and monetary effects have become paramount to succeed Market Development; however, under the conditions of ‘shady’ business laws of the Capitalism the markets i.e. economies treat unequally them comparing their large competitors.  Whereas Large Transnationals and Investors have access to lower rate lending, public financing, corporate pork, lower taxation, and etc the SME and Investors are lacked into a circle of high interest lending if any possible financing and lack of contract and other business laws to protect them from predatory actions. The interrelation between Business Laws and Financing is streight – the market i.e. economic security comprise the risk in lending: by improving the market security a market i.e. economy enhances finance-ability of in the case SME and Investors.

 Marketism is a Market Economics the enhanced Business Laws, (Insurance, Bonding, Environmental, Labor, Consumer Protection, etc Laws) improves Market Security and thus easier Financing to SME and Investors: Final result of such actions must be a natural to the market competition boosting business and investment activities, income and equity. These market Agents are mandatory for all markets i.e. economies, whereas the usage of Market Tools such as Stimulus Packages (National and Global), Social (incl. educational, medical, retirement) and Infrastructural Investment, Targeted Investment, Market Leaps, etc. vary from market i.e. economy to market i.e. economy because of the accent needed on individual to any market specificity (expl. China needs less accent on Social and Infrastructural targeted investment as it has already been developed than the US where it must expand further). The Principle of treating markets compatible to their specifications apply globally!

The limitation of the currently used Economics, in particular the EU orthodoxy may is well presented in: Vítor Constâncio: In defense of monetary policy “Opinion piece by Mr Vítor Constâncio, Vice-President of the European Central Bank, 11 March 2016.” One of the best example of how the Capitalism’s ideologically inclined Economics underperform and is hard to fix I consider The G20 has appealed for the use of other policies, notably fiscal and structural reforms. While other policies would certainly be welcome, one can have justified doubts about their implementation. For a start, active stabilising fiscal policy is restricted by law in the EU and by politics in the US. More generally, countries that could use fiscal space, won’t; and many that would use it, shouldn’t. That leaves us with structural reforms. Some, like upgrading education and judicial efficiency, are important but take a long time to implement and to produce results. The structural reforms economists often have in mind (i.e. liberalization and deregulation of markets) lead to lower wages and prices in the short-term, which does not help inflation normalisation. And concerning unemployment, higher productivity often initially implies labour saving. Structural reforms are essential for long-term potential growth, but it is difficult to see how they could spur growth significantly in the next two years, especially when the current problem is lack of global demand. And as regards their delivery by governments, we should recall the embarrassing results of the G20 plan agreed in Brisbane to generate an additional 2% in world growth via a long concrete list of reforms put forward by the IMF and the OECD. In fact, the world economy now risks not even attaining what was then considered the baseline scenario.”

However, the formal conclusions even brilliant do not lead Mr. Constancio to major changes on the structural economics but points into more aggressive Monetary Policies, which is a washout because the practical economic tools considered at the moment as well the market structures cannot accommodate Capital in away to boost business activities, income, and equity to a point of needed 90+% employment by using environmentally friendly approaches. Aggressive Monetary Policies in a low level transmissionability can only  create excessive over-capitalization, balloons, and economic upheaval.

The G20’s structural reform agenda should address income gap and financial system fragility BY: DATE: MARCH 15, 2016 “Traditional macroeconomic policies have been important in stabilizing the global economy, but they are no longer enough to addressing the fragility and low growth of the current economic environment. In particular, they cannot sustainably address the persistent weakness of demand, let alone drive new productivity growth. Such policies have far more limited ammunition now than 8 years ago, when the global crisis erupted. Monetary policy in numerous large countries is at the zero lower bound, and interest rates can hardly be lowered further. Fiscal policies are more constrained in some countries now than they were before the crisis.”
Everybody agrees: wages need to grow if Japan is to make a definite escape from deflation. Full- time wages have increased by a mere 0.3 percent since 1995! For example, despite its record profits, Toyota increased its base salary only by 1.1 percent last year. The average of 219 Keidanren firms managed just 0.44 percent. Clearly, an increase in base wages, colloquially referred to as “base up”, is long overdue.

The current Global Markets i.e. Economies situation vary from bad to worst the very exception is China that uses an aggressive method of Economics similar to this promoted by the Marketism; and when the debt-to-gdp ratios observed the negativity goes even step further – the Capitalism, as formally stated: is inflexible to anyhow accommodate the exogenous force coming from the Globalization and both exogenous and endogenous force of the rising Productivity; and thus running into a constant stagnation. On top of it the pollution result of driving old vehicles, using primitive heating, unsustainable woodcutting, etc may bring Environmental disaster before the Economic such to arrive.

The only way for the world to survive under these new conditions stands at apprehending these exogenous and endogenous forces to alleviate poverty, keep very low unemployment and underemployment, maintain and build sustainable Middle Class under strict Environmental protection Market Development: that is the Marketism – a Market System of Human Improvement in place of the Social System of the Capitalism, Social-Capitalism, or the Communism.

The End of the Social Level with the Beginning of the Market Level of Human Development

The Globalization and rising Productivity along the Internet and the rise of China have created very new economic worldwide conditions where aggregating national debt and inequality brought unknown powers to the practiced by the Social Level – trickle-down Capitalism: system built on rising productivity that prompts Investment that mostly capitalize on large transnational corporations, investors, and favoritism under the conditions of shady business practices to concentrate capital that would have countries prompt business activities that in time will crystalize into industrial and high-tech production. The way Brussels and Berlin have pushed Greece to reduce its Labor laws, adapt further austerity and increase its Value Added Tax to provide better conditions to the Large Transnationals and Investors to prompt Greece’s competitiveness and productivity could be considered a good example of the Social Level philosophy – however, the barely growing EU economy, the increasing inequality and national debt, and the ongoing global stagnation accompanied by the out of balance demand have indicated the inability of such philosophy to perform on national or global levels alike for such to be considered the status-quo it is. Why in the past the economies were driven by such supply sided philosophy into building such great economy like the US, Germany’s, or Japan’s ones, through and after the 2007-9 Great Recession economic policies have shown that the more interference by the governments by using stimulus packages, quantitative easing, and etc. the more successful into overcoming the recession and prompting economic growth they have been; and in the opposite: the more neoliberal pro austerity ( EU is the best example of such) the least successful they have accomplished. Whereas China has been the best example of using ‘random’ an ‘as it comes; as it goes economics’ in succeeding the highest growth of them all. Thus, naturally, the conclusion that the 21st Century’s global market conditions have brought the exogenous interference with national economies to the point when the supply powers have greatly overcome the demand side of these thus prompting unsuitable for the Capitalism market conditions, therefor the inequality increase substantially along with widespread debt: national and private.

There are not that many options to overcome these new developments but the governments taking over further over the market forces, or the market economics to comprehend and apprehend these forces into an improved system of market development – here in particular: the economies are replaced by markets and the economic growth by market development! And, because it is well known the inabilities of any government to run markets and business, it is well known their inflexibilities and corruptness, it is obvious a need for a market driven system to maintain market equilibriums and long term market development.

The difference between such Market Economics and the Capitalism is not in the ways of appropriating someone’s recourses to be distributed or redistributed by social means, but into the very much enhanced level of Business, Consumer Protection, Environmental Protection, Labor, Insurance, and etc. Laws to deleverage the existing market disadvantages for the Small to Medium Businesses and Investors in compression to the Large such that will establish more secure market conditions to boost business activates naturally enhancing the demand; however, because Market Economic uses an ‘as it comes; as it goes’ approach the ‘Invisible Hand’ of subsidies and direct investment, fiscal and monetary stimulus, social and infrastructural expenses are well included as market tools to balance market equilibriums when needed, indeed.

Targeted Environmental Protection must be used as a main tool for Market Development nationally as well globally by using market tools into Market Leaps to prompt and maintain Market Development. Total ban on pollution and deforestation can be succeeded only by overcoming poverty and providing conditions for employment to everyone – the theories of ‘healthy’ 4+ percent unemployment, or the limited resources keeping many to access such creates conditions for wars and extremism to finally destroy Earth environmentally!

To maintain markets in equilibrium in an ‘as it comes; as it goes’ business environment the market tools must be used as parameters more like a Quantum Factor approach however remote it may looks like the Uncertainty Principle applies onto these new market conditions than the Trickle-down one, or the Governmentally run one. The complexity of Market Economics could be only overcome by adjusting market fluctuations in a quantum environment like; because, by aggressively prompting business activities and thus the demand side the possibilities for market fluctuations arises!

The supply side Social Level of development prompted economic growth by keeping low inflation and eventually by allowing overheating economies accept limited recessions to rebalance excessive production and management; whereas, the market equilibrium Market Level succeeds Market Development by allowing self-adjusting only on Microeconomic level whereas it interferes wherever unbalances affect general equilibriums; therefore, the Central Banks practice to balance general equilibrium by raising or lowering interest rate changes into a system of Central Banks interfering on microeconomic sections level by number of stimulus or restricting tools!

Joshua Ioji Konov, 2015

Market Economy Under Rapid Globalization and Rising Productivity

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VOL 2, NO 9 (2015)




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Joshua Ioji Konov



Which are the worst current economics’ compatibility points to the present accelerating globalization and rising productivity? By Joshua Konov, 2012

  • Relying on high productivity as main economic/market agent for growth (1/f noise), whereas, many economic/market agents and tools should be considered “noise” to diversify business activities to maintain economic/market development

Someone has to lose money,” Guo Qigang, the plant’s general manager, said in a recent interview. “We’re a state-owned corporation, and it’s our social responsibility.”…

  • just as occurred decades ago with agriculture, the declining role in our economy of manufacturing, which over the last half-century is down from 32 percent of the work force to 9 percent, will continue. Let’s also recognize that retreating into protectionism would turn a win-lose into a lose-lose.

Tallying the Toll of U.S.-China Trade Many Americans believe low-priced Chinese imports kill U.S. factory jobs. Most economists say the benefits of the trade far outweigh its costs. But new research suggests the damage to the U.S. has been deeper than these economists have supposed.

A typical General Motors worker costs the company about $56 per hour, which includes benefits. In Mexico, a worker costs the company $7 per hour; in China, $4.50 an hour, and in India, $1 per hour. While G.M. doesn’t (yet) achieve United States-level productivity in China and India, its Mexican plants are today at least as efficient as those in the United States.

‘In this perspicacious and persuasive book, Tom Palley shows how Conventional Economic Thinking led ultimately to the disaster of the Great Recession and how it is now threatening to culminate in the Great Stagnation. His thoughts on how to avoid that and how to recover are compelling and important.’ Clyde Prestowitz, President, Economic Strategy Institute

  • Low economic/market security founded on the shady business practices and lack of rule of law that gives major advantage to the large transnational corporations, and grieving disadvantages to the small and medium businesses

Small Business Majority and the American Sustainable Business Council reports that’s not the case. On the contrary, 78 percent of small-business owners in the study think regulation is important to help level the playing field with big business, and 76 percent believe existing regulations should be enforced.

Whenever government wants more power it ignores the regulations that are in place, and then everything goes to hell. I don’t believe in a lot of regulation but I do believe you’ve got to have the proper structure in place to minimize the conflicts of interest involving greed and corruption. But regulations are not worth the paper they are written on if they are not enforced

  • High interest rates lending to the small and medium businesses and investors that’s is accumulative in short term cyclical adjustments, and dysfunctional in another way

Struggling euro-zone economies like Greece, Portugal, Spain and Italy cannot cut their way back to growth. Demanding rigid austerity from them as the price of European support has lengthened and deepened their recessions. It has made their debts harder, not easier, to pay off.…

  • Industrial production as a main and fundamental economic/market agent for fiscal reserves that could have worked-out short term downturns, whereas, well exampled by the last 2007-09 Recession, the downturns are neither short, nor moderate, and could be followed by long rebuilding term

a study released on Wednesday found that entry-level wages for students who graduated from college in 2010 was lower than a decade earlier, after adjusting for inflation.

Technology and cheaper goods from overseas have replaced many of the not-especially-creative professions. A tax accountant loses clients to TurboTax; many graphic designers have been replaced by Photoshop; and the small shopkeeper by Home Depot, Walmart or Duane Reade. Though a lottery economy is valuable to various industries, the thought of an entire lottery-based economy

  • Business cycles as main and fundamental economic/market agent for adjusting economic/market redundancies, whereas the economies/markets fluctuations are less predictable and cycles progressively untraceable, the economic agents and tools should be used much more random “as it comes, as it goes, instead

Companies are focused on jittery consumer confidence, an unstable stock market, perceived obstacles to business expansion like government regulation and, above all, swings in demand for their products.

It is encouraging to see the Bank of England, the Bank of Japan, and the Federal Reserve all working to raise growth through stimulus primarily focused on the domestic economy. (While Japan’s central bankers would surely be happy to see the yen fall, they’re not, for the moment, following Professor Ben Bernanke’s advice to print yen and buy foreign exchange.

(VIDEO: Watch From Davos: Is Capitalism Failing? A TIME Discussion With the World’s Top Business Leaders) Third, and most importantly, the evidence is mounting that the austerity-led reform programs are not working to help countries exit the crisis. Take a look at Portugal Read more:…

  • The trickle-down approach of capital supported by political and fiscal economic/market agents that in the time of China and rising productivities carries on and accelerated wealth concentration into progressively the very few, in large disadvantage to the middle class in national plan, and less developed economies/markets in global such

 President Obama issued his sharpest warning yet about the German-led solution. He said the focus on long-term political and economic change was well and good, but emphasized that failure to react quickly and strongly enough to market forces threatened the euro’s survival in the coming months Unlike ·…

Lacking such evidence, the obvious conclusion seems to be that economic growth, and employment growth, would have been significantly stronger over the last two years without government cuts. But I’d invite readers to point us to any research that bears on the question, one way or the other.…

  • Short term investment and capitalization by business practices prompted by the high interest rate lending, and the corporate structures business practices of short term profit and distribution
  • Practiced corporate limited liability laws mainly serving large transnational corporations thus giving to these competitive advantages and lowering market security over all

Large corporations can often squelch their competition. They can minimize their costs by dumping waste products into the environment, contributing to pollution and global warming. They can use their profits to buy political influence. If they don’t like the regulatory policies of one nation-state, they can simply shift their operations to another.…

  • Hurting the earth environment short term investment and capitalization business practices, by the high interest rate landing, by the shady business, by the lack of liability and accountability transnational corporations, by the deepening devising between poor and rich people and countries, by the imposed by the developed countries and the international organizations: WB, IMF, WTO austerity and restructuring measures on the less developed and developing economies

Waning Support for Wind and Solar By DIANE CARDWELL Wind and solar companies say they need more government support to be competitive. But in Washington, there’s little enthusiasm for more subsidies.

  • The governments growing inept involvement in finances and business actually making the gap between rich and poor wider

The currency intervention also functions as a massive inequality-creation machine. U.S.-based behemoths, which own or use many of those exporting Chinese factories, benefit, as do their shareholders. And because more than 90 percent of U. S. stocks are owned by the wealthiest 20 percent, the spoils are disproportionately concentrated at the top

  • The bureaucratization of economic/market agents well presented in the European Union VAT and the EU funds for development that prompt corruption, politicization, and injustice

The campaign group says there are 1,212 farm subsidy millionaires across Europe, including 268 in Germany, 174 in France and 29 in Britain. Charities such as the RSPB and corporations such as Nestle are believed to receive more than £1m a year. The Queen qualified for £473,500 in farm aid in 2009 for Sandringham farms.

Economy: Rich Countries’ Farm Subsidies Benefiting Royals by Julio Godoy (Paris)Friday, August 06, 2010 Inter Press Service Subsidies for agriculture in the industrialised countries of the world grew again in 2009, benefiting the largest companies and land owners, such as Prince Albert of Monaco and Queen Elizabeth of Britain.

  • The lack of laws preventing market and commodity exchanges from shady transactions and activities that gives market advantage to the large investors, and greatly hurts the small and medium investors

JPMorgan Sees Clients With Less Than $100K as Unprofitable – By Laura Marcinek – Tue Feb 28 16:54:17 GMT 2012 Enlarge image Jamie Dimon Jamie Dimon, chief executive officer of JPMorgan Chase & Co., center, at the World Economic Forum (WEF) in Davos, Switzerl…

  • Debit/Credit finance accounting, which because of the low economy/market security keeps very tight economic/market development, whereas the transnational corporation are expected to expand business and raise productivities attracted by lower taxes and unregulated labor marked: the transnationals not only raise money on the public market exchanges but also are credited on very low interest rate, however under these new conditions transnationals cannot maintain or expand industrial production any closer to the global markets need of employment

Mr. Fillon “made clear it had not been his intention to call into question the U.K.’s rating but to highlight that ratings agencies appeared more focused on economic governance than deficit levels,” Mr. Clegg’s office said.

  • The pro-supply a priory economics cannot maintain balanced market demand-to-supply under this new emerging markets environment

The economists that I spoke to estimated that China’s currency policy has cost the U.S. between 200,000 and 3 million jobs. Of course, the wide range suggests that these are little more than educated guesses. But a broad picture does emerge. U.S. manufacturing employment has fallen by around 6 million over the last decade. If China had allowed its currency to adjust naturally, life might be much b

by Joshua Konov, 2012


State and Private Debt of Market Economics

In recent economics debt is in the foundations of business and equity – state debt limits governments’ expenses, social, educational, infrastructure, policies and international relations – private debt limits individuals’ expenditures, abilities to access better education, housing, and etc; however, ‘credit’ that could fall into ‘debt’ is a main market tool giving governments and individuals the abilities to expand infrastructure, business, equity, and etc using capital, which could not be approachable but by through crediting. The difference between ‘credit’ and ‘debt’ is in the momentum – whereas ‘credit’ is targeted investment considered in motion, a ‘debt’ is a negative after deficiency market imbalance. The distinction between working ‘credit’ and accumulating ‘debt’ is a thin line that could be crossed by global recessions, works of nature, or political turbulence. Between ‘credit’ and ‘debit’ comes public financing – in case the ‘risk’ is taken partially by the investors thus limiting the issuers (could be governments or corporations) liability; however, in cases like “Bond holders against Argentina”,

CAMBRIDGE – Argentina and its bankers have been barred from making payments to fulfill debt-restructuring agreements reached with the country’s creditors, unless the 7% of creditors who rejected the agreements are paid in full – a judgment that is likely to stick, now that the US Supreme Court has upheld it. Read more at

or “IMF, ECB, Germany and other lenders against Greece” bonds are capitalized into loans and the governments of Argentina and Greece are required to pay these in full.

There are many historical occasions when ‘debt’ on countries level was forgiven or let it die in time:

The revolutionary war setup the United States’ new monetary system – all partially causal to the austerity measures and trade restrictions on the Colonies implemented by the Minister George Grenville – by year 1763 Britain’s national debt had risen to £122 million, or over 150 percent of the Gross Domestic Product that prompted strict austerity and trade restrictive policies:

“Grenville passed the Currency Act of 1764, which forbade the colonies to emit any new currency. Finally, in 1765, Grenville ushered the American Stamp Act through the House of Commons, a measure that was designed in part to restrict the colonial land market.” se 1776: The Revolt Against Austerity”

Germany after the Second World War  and Poland after the fall of Communism are the best example of such …

Yet debt forgiveness has an established historical precedent in Europe. Poland, for example, had accrued external debts of about 57% of GDP by the time the Communist system had collapsed, with the majority of that debt (around $33 billion) being owed to Western governments. Poland’s largest creditor at the time was Germany, which reluctantly agreed in 1991 (under pressure from the United States) to go along with the “Paris Club” of creditor nations and forgive half of Poland’s debt to the West (though this was less than the 80% write-off Poland had originally been seeking). An even more dramatic example is provided by Germany itself. Historically, Germany has been described as the biggest “debt transgressor” of the 20th Century, with restructurings in 1924, 1929, 1932 and 1953. Total debt forgiveness for Germany between 1947 and 1953 amounted to somewhere in the region of 280% of GDP, according to economic historian Albrecht Ritschl of the London School of Economics. Today, Greece has an external debt-to-GDP ratio of roughly 175% (by comparison, Germany’s external debts currently stand at about 145% of GDP).

On individuals or corporate level ‘debt’ has been washed out by bankruptcy procedures – in the US bankruptcy courts are much speedier and over all easier than these in the EU, that some economists consider a main reason for the better way US economy has performed in post 2007-9 Recession times. By giving debtors a second chance bankruptcy courts play some fundamental role in taking individuals and businesses out of the big hole of debt into the market opportunities, thus boosting business and consumption.

The most unorthodox economic approaches to flood capital into underperforming markets is the used by the US, UK, Japan and now EU central banks so called ‘quantitative easing’, while instead of borrowing publicly or privately capital to revive their economies these central banks ‘produced’ such capital from ‘thin air’ into the system. The ‘status quo’ economics predicts that additional capital – such not product of an economy market activities (debit/credit) – would prompt inflation; however, no inflations but deflations have occurred in the post recession times? Neither, the huge debt accumulations by Japan, the US, many EU countries, and others have prompted inflations either! Thus, neither the quantitative easing nor the huge debt has yet created sweeping inflationary forces. In context with the ‘status quo’ economics are the ways government accounting is done by not properly deducting QE from the overall debt even so the capital infusion by QE writes off debt by acquiring issued bonds? In referring to inflationary forces or the lock of it for the last 20 plus years the ongoing Globalization, rising Productivity, China’s Industrialization, and the Internet could be considered causing the increasing exogenous economic pressures over national economies indicated in by their deficit adding to their debt.

The world is crippled by too much debt. The borrowings of global households, governments, companies and financial firms have risen from 246% of GDP in 2000 to 286% today. Since the financial crisis began in 2007, debt-to-GDP has risen in 41 of 47 big economies. For every extra dollar of output, the world cranks out more than a dollar of debt. The Economist explains why the world is addicted to debt

As simple as things may look like the results of this system of economics not being able to accommodate these exogenous forces cause fundamental global market imbalances – unemployment, declining middle class, small business and investment, and accumulation of high national debt.[1]

Market Economics employs exogenous market forces and thus capitalize on the 21th Century irreversible developments by not only enhancing the international accounting but further by employing the immense powers these exogenous forces posses to boosting national and global Market Development through alleviation of poverty and environmental Earth protection.

The countries debts are considered by Market Economics as the present corporate and individual debts involving bankruptcy, mitigations, negotiations, and etc; whereas investors take their reward and risk; however, Foreign Direct Investment and Productivity are not considered primary force for global development but supplementary such, because the more important consideration such as Earth protection requires poverty alleviation by not prompting mass industrialization.

The Capitalism uses foreign direct investment by transnational corporations to raise productivity and bring return on this investment that could be only achieved through industrialization, and the global accounting system is setup on these principles;

The Marketism uses subsidies, low interest financing, and etc along with foreign direct investment to prompt environmentally friendly Market Development that will alleviate global poverty and thus save Earth from destruction using market principles and saving individual freedoms.   Joshua Konov 2015 [1]

Parameters – Market Agents and Tools – of Market Economics

Market Economics uses environmentally friendly approaches to steer business and employment of a democratic societies that consequences into poverty alleviation and middle class growth on a global scale. It is founded of the existing principles of the Capitalism, however, it changes the shady ‘easy’ business into strict law of business to deleverage the inequality of market competition to raise ‘market security’ and the small businesses and investors lend-ability that differs from the currently economics.

If Market Economics accepts ‘uncertainty’ as an ongoing and growing market (economic) development – product of the ongoing exogenous for individual markets (economies) forces coming from the ongoing Globalization, rising Productivity, Chinese Industrialization, and the Internet – to manage such ‘uncertainty’ an ‘as it comes; as it goes’ approach is needed that could be only achieved if market (economic) tools are used as ‘parameters’ to prevent the global marketplace from exasperations that could bring upheaval.

The ‘market agents’ are status quo necessities required for raising the ‘market security’ by marginalizing the existing inequality in current market competition – how ‘small and medium businesses and investors’ are affected by the business laws and conditions in comparison to the ‘large businesses and investors’. For the ‘market economics’ to enhance ‘capital transmission-ability’ and thus boost business activities – employment and fiscal abilities – the acceptance of more fair ‘market agents’ is paramount: enhanced business, liability, contract, environmental, consumer protection, bankruptcy, insurance, bonding, and labor laws will raise ‘market security’ allowing lower rates of lending.

However, the ‘market tools’ are used as ‘parameters’ to balance market equilibriums in synchrony with the ongoing deflation/inflation forces in the real economy – flexible capital infusion through FDI but also through Subsidies, Low Interest Lending using ‘market leaps’ mostly by developing alternative: energies, tourism, and farming should go global. Social, educational, research and development, and infrastructural expenses, prevailing wages, and etc are also such ‘market tools’,

To save Earth the alleviation of poverty is necessary; however, achieving it not through the industrialization of the present Capitalism but through targeted ‘leaps’ of diverse environmentally friendly businesses of the Marketism (Market Economics).

The Marketism will work under high ‘market security’ with enhanced ‘market agents’ whereas the ‘market tools’ are used indiscriminately in comparison to the ideological approaches or current budgetary economics – the debt issues will resemble the individuals/businesses system of lender/debtor approach in which governments and countries will have less intrusion in economics being more on the controlling side than on the capital transmission such – Commercial Banks and International Financial Institutions will approach directly markets thus reducing corruption and politically motivated investment of the Presence.

The ‘parameters’ are flexible in nature: some on the supply side such as targeted subsidies and low interest business financing another on the demand side such as social, infrastructural, educational, prevailing wages, and etc expenses. Balancing ‘market equilibrium’ because of increasingly relevant exogenous market forces will be targeted through market sectors ‘parts equilibrium’ than the currently used ‘general market equilibrium’ – thus monetary policies will not work by varying discount interest rates of the Central Banks but by expanding or reducing individual market sectors lending rates and/or fiscal initiatives. If markets are taken as ‘demand to supply’ (not to be mistaken with ‘supply to demand’) places for business competition the long-term ‘market development’ depends on the relative ‘stable’ market environment that is only possible by mitigating the excessive market/economic fluctuations through using the ‘parameters’ to prevent ‘big waves’ of excessiveness – the market forces on sectored/partial level – natural to the market competition are the best ways for keeping ‘marketing equilibrium’; however, the fierce variations experienced in the last 2007-9 Recession lesson goes to active usage of these ‘parameters’ to prevent such harmful consequences of a ‘as it comes; as it goes’ economics.

Joshua Konov 2015

Joshua’s First Law of Market Economics

See also Market Leap of ‘As It Comes; As It Goes’ Market Economics

“If a House needs Painting and a Painter is Available: Market Economics should have the House Painted and the Painter Employed”

By using an “invisible hand” (could be private or/and public investment; targeted subsidies or/and fiscal and monetary initiatives) a house that needs painting gets painted and a painter who needs employment employed: the Demand is ‘the House’, and the Supply is ‘the Painter’. Having such done without exceeding the targeted inflation/deflation boosts ‘entropy’ to naturally evolve into ‘equity’ of a seasoned Market Development made possible because of the ongoing globalization and rising productivity. While an ‘as it comes; as it goes’ system of economics is used to prompt business activities. Such approach differs from currently practiced economics by not being budgetary constrained, but tagged to the inflation/deflation variations.

^Market Agents* for the First Law’s Realization and Maintaining:

                             Demand                                  Supply
By-Sectors Monetary Policies in Lending

Consumer Protection Laws

Environmental Protection Laws

Insurance Laws


Infrastructure on Projects Investment

Social Policies (including: Pensions, Social Security, Unemployment Benefits, Medicare, etc.)

High Market SecurityHigh Education

Research and Development

Unlimited Liability Corporate Laws

Business Contracting Laws


Intellectual Property Laws

Bonding Laws

The level of the Market Agents*’ implementation in an economy will also give the ‘J Factor’ deviation which vary from ‘-2 to +2’ when -2 is lack of such implementation and +2 is completed implementation, thus if for example 4 is the invested capital in the project in a functioning economy 4 is multiplied by the ‘J Factor’ to give the gained ‘equity’ or if it (the invested capital) is done in a dysfunctional economy it adds to a loss.

Example of a gain: 4 x 1.25 = 5 (the gained amount is 1) 

Example of a loss: 4 x 0.75 = 3 (the lost amount is 1)

So, when ‘a house is painted’ and ‘a painter is employed’ the Return on Invested Capital in the Project could vary emulating the level of Market Agents* implementation. The ‘J Factor’ accumulates and projects different kinds of return for the effect an investment has on the economy/market: the ‘equity’ value added to such market is not necessary cash related, it could add to the market value of such property, to the consumption by the ‘painter’ resulted of received salary, and to fiscal gain from such project; However, plus the Market Agents* there are number of Market Tools** that must be used as Parameters in an ever fluctuating marketplace to prevent from sharp market fluctuations – such as the one that brought the 2007-9 Recession – which is a subject of an in progress Quantum Economics Research. In a well developed market with highly implemented Market Agents* the Market Tools** are very sensitive to manage variations and the market forces adjust such fluctuations. But, proactive actions in case of substantial fluctuations are necessary; as well a prevention system is required.

^^Market Tools** used as Parameters to manage Consistent Market Development (Project or Sector Targeted):

                               Demand                             Supply
·      Fiscal Expenses·      Low Interest Lending

·      Investment

·      Monetary Subsidies

·      Insurance Expenses

·      Social Expenses

·      Infrastructural Expenses

·      Educational Expenses  

·      Fiscal Breaks·      Stimulus Packages

·      Investment

·      Targeted Inflation/Deflation Prevention Interest Rates

·      Lending Rates

·      Borrowing Rates

·      Prevailing Wages

·      Bonding on Market Prices

·     Access to Public Financing

 The Joshua’s First Law of Economics allows an expanded if not full employment when properly implemented. Such is made possible by the exogenous forces from the Globalization and rising Productivity of a technologically advancing world. There are possibilities of both inflation and deflation to be used for accelerating and maintaining long-term Market Development that differs from currently considered limited-inflation driven Economic Growth. (A subject of another Research)

Joshua Ioji Konov, 2014

Joshua’s Second Law of Market Economics

“If ‘the House is painted’ and ‘the Painter employed’ in limited Inflation/Deflation and higher than ONE/MINUS ONE ‘J Factor”s market environment: the market Entropy is boosted and Equity is built; therefore, thus Invested Capital/Subsidies/Low Rate Lending prompts Market Development”

There are a few ways to finance Demand:

  • Investment
  • Low Rate Lending
  • Fiscal Initiatives
  • Subsidies
  • Social (Including Social Security, Pensions, Education, Unemployment Benefits, etc.) Expenses
  • Infrastructural Expenses

Whereas, the returns vary from straight return on the Investment to built in the market equity; the higher Market Security lowers lending rates and the return on the invested capital. The Monetary Policies on lending, Environmental Protection Laws, Consumer Protection Laws, Business Contracting Laws, Intellectual Property Laws, Personal Corporate Liability, and the Insurance & Bonding Laws guarantee Environmental Protection and proper Business Practices therefore higher than ONE/MINUS ONE ‘J Factor’. Market Economy under Market Development works mostly in low interest rate monetary environment. Any ascend of Market Development increases Consumption, lowers Unemployment, and replenish Fiscal Reserves; it is Seasoned Entropy and Equity’s Growth. The Invested Capital goes through ‘the House’ to ‘the Painter’ in materials, equipment, and proceeds; it adds to the market value and requires more goods, services, education, and improved infrastructure; it gives opportunities for development of many economies now undeveloped and impoverished. Current globalized marketplace and ever-rising productivity has the manufacturing and organizational potentials to offset excessive inflation/deflation in a way never experienced in history that made possible the Second Law of Market Economics.

Joshua Ioji Konov, 2014

Joshua’s Third Law of Market Economics

If the capabilities of the Market Economics are not explored and used globally under enforced Environmental Protection Laws and the rest ‘J Factor’ Laws & Practices the Earth’s Environment is to deteriorate and the inequality is to rise to the points of no return bringing Environmental Destruction and Global Social Unrest”.

This Third Law is consequential to the First and Second Laws and conclusive of the market imbalances that overwhelmed the global market with the 2007-9 Recession, the sluggish recoveries, the rising inequality between rich end poor: countries and individuals., the growing radicalization, discrimination and social impatiens. Why inaction is considered futile? – Answers come to:

  1. The Globalization and rising Productivity diminishes the adequacy of the pro-supply Capitalism to manage long-term economic growth, as done in the Past.
  2. The Internet and other communications bring to the world open communications and information.
  3. And not the least, the Global worming caused by pollution and underdevelopment calls for immediate action for eradicating poverty that makes people destroy natural recourses as woods, drive old vehicles, dispose garbage elsewhere, and alternative energies inaccessible.

Joshua Ioji Konov,2014

The Market Equilibrium Trend changes from Supply-to-Demand to Demand-to-Supply Ascendancy

In number of articles, I presented the theory of Market Economics as based on the conception of the tipped-off, from a Supply to a Demand driven Global Market Trend to a Demand-to-Supply Trend that was prompted by the ongoing Globalization and rising Productivity, which new Trend is consequential to the improving Technologies, the China’s Industrialization, the Outsourcing and Moving of Manufacturing, the Internet and etc developments that have accelerated these processes for the last 20-25 years.

Job automation will ultimately propel more people toward higher-paying, more productive employment that is better suited to the new era of “talentism,” when human imagination and innovation, not capital or natural resources, drive economic growth. But, if workers fail to acquire the skills to fill these new positions, they will be left behind.

This article uses available data and respectful papers to prove the validity of such conception. And, brings upfront the necessity of comprehensive assessments and the needed changes of Economics to meet these new challenges. The beginning of the 21st Century showed the tremendous effect, technologies and globalization, has on the concentration of industrial production into a few players globally.

The economic model that dominated most of the twentieth century was mass production by the many, for mass consumption by the many. Workers were consumers; consumers were workers. As paychecks rose, people had more money to buy all the things they and others produced — like Kodak cameras. That resulted in more jobs and even higher pay. That virtuous cycle is now falling apart. A future of almost unlimited production by a handful, for consumption by whoever can afford it, is a recipe for economic and social collapse. Our underlying problem won’t be the number of jobs. It will be – it already is — the allocation of income and wealth.

The transnational corporation along with the Chinese state enterprises have succeeded in achieving immense capacities and potentials for swift expansion by using a large pool of international capital, improving technologies, better controlled management, and by outsourcing and moving of production (for transnational corporations mostly).

The global economy is awash as never before in commodities like oil, cotton and iron ore, but also with capital and labor—a glut that presents several challenges as policy makers struggle to stoke demand.

“What we’re looking at is a low-growth, low-inflation, low-rate environment,” said Megan Greene, chief economist of John Hancock Asset Management, who added that the global economy could spend the next decade “working this off.”

… “The classic notion is that you cannot have a condition of oversupply,” said Daniel Alpert,an investment banker and author of a book, “The Age of Oversupply,” on what all this abundance means. “The science of economics is all based on shortages.”

Consulting companies, e.g. BCG, Ernst & Young, Deloitte Consulting, contributed globally to share competitive practices, compare managerial and technological approaches that boosted competition and productivity.
The diversion between the large transnational corporation and Chinese state owned companies from one side and the small and medium companies and most developing economies from another has grown larger than ever, living the last in competitive disadvantage and thus prompting inequality not just between rich and poor in the most developed economies, but also between developed economies (including China) and the most developing ones. Even further, the success of their improvements has reduced the employment elsewhere, ironically “supported” by a shrinking and inadequate global demand, more like a “Catch 22’s perpetuum mobile”.

In fact, over the last few years there has been massive capital investment at a global level in developing new iron ore mining sites. This investment paid off in the beginning, thanks to the initial increase in demand for ore, mainly in China. However, circumstances have now changed, the pace of growth in China – the world’s largest consumer of steel and ore – has slowed markedly and consequently the global market is burdened by considerable excess supply.2 As there do not appear to be any immediate efforts (such as a rapid market adjustment on the supply side) to address the causes at the moment, prices for iron ore will remain under pressure with little prospect of them rising.3

2 For details, see Synagowitz, Bastian et al (2015a). Steel-Making Materials. Deutsche Bank Markets Research. Commodities Quarterly. March 31, pp. 92-113, 122. According to this analysis, global demand for iron ore may fall slightly in 2015 for the first time since 2009. It is therefore entirely possible that iron ore prices could fall below USD 50 per tonne in the second and third quarters. 

3 See also Synagowitz, Bastian (2015b). Negative momentum in iron ore and US prices continues. Deutsche Bank Markets Research. Steel Price Tracker. March 31.  

It has been argued that the “bottom billion may be trapped in poverty” (Collier 2007). The undeveloped markets i.d. economies along with the deteriorating such as Detroit will have to wait for their turn, until the giant industrial economies like China become rich and uncompetitive in manufacturing. When the technological changes have made manufacturing more capital and skill intensive. So, it is creating fewer jobs. Some form of pre-mature deindustrialization seems to have set in (Rodrik, 2013, Subramanian 2014). This might be because consumers and households in developed countries now spend a lot less on manufactured goods than they do on services. This can put a limit to how fast the latecomers to development can grow through industrialization. While jobs in the industrial sector are shrinking globally.
In the past, technological and structural underdevelopment consisted of shortages that provoked inflation; however, in the presence, excessive manufacturing capacity and rising productivity brings high unemployment and prompts deflations.


Large retailers have penetrated markets and Internet sales have brought international goods to most markets, aiding the high manufacturing capacity. The market equilibrium on a macro economic level has become less perceptive to Supply than to Demand factor. [1] (see Drawing 1) Large Transnational Corporations employ about 0.82% of the global workforce taking more than a quarter of the global wealth adding to the widespread poverty [2], deteriorating middle class, rising inequality, and the Earth pollution, whereas poverty brings primitive fossil fuels heating, woods cutting, old car usage[3], and etc[4].; and, deteriorating middle class adds to the poor; what about excessive inequality? – It just accelerates the whole process, but most important it prompts the overall economic stagnation: market disequilibrium caused by inadequate demand.

Most of the Emerging Markets are hit by the same problems as the poor in the Developed Markets are, whereas the results are all the same no difference between Detroit and many Undeveloped or Emerging Markets: factors affecting the market equilibrium from the demand side, expanding Earth pollution, rising Discrimination and Radicalization caused by the economic upheaval of the 2007-9 recession and sluggish recovery. While the existing middle class has shrunk the poor was not given opportunities of rising to a middle class.

Shrinking fiscal reserves and trickle-down ideologies have imposed austerity policies to infrastructures, social and educational expenses, thus holding high unemployment from Spain, Portugal, and Italy to Greece, the living standards are free falling, or Bulgaria, and Romania in the European Union, where slow business activities and lack of vivid improvement prevails. However, from Guyana, Peru, and Ecuador to Bolivia, Paraguay and Colombia in South America, from Guinea-Bissau, and São Tomé and Príncipe to Republic of the Congo, Chad, and Zimbabwe in Africa, from Afghanistan, Tajikistan, and Yemen to Pakistan, Uzbekistan, and Iraq in the Middle East, etc. markets are underdeveloped, infrastructure is either undeveloped or deteriorating, corruption is roaring along with poverty and disarray!

The world was never better, but it had never possessed the technologies nor the organization to be any better, but for the last few decades. In the past, the weak technologies and markets were a natural promoters of underdevelopment, poverty and the related discrimination and nationalism, but with the great technological inventions and improvements, the Internet and WIFI, the open globalized marketplace, and etc to have such roaring poverty and underdevelopment is inexcusable, thus I consider that if these if properly used these new developments would make the world advancing into a new era of prosperity; however, only a new system of economics that apprehends these new developments and abstract itself from the trickle-down philosophy would succeed in such improvement.

Joshua Konov, 2014

[1] [PDF] Global steel 2014 – Ernst & Young Excess capacity is the biggest threat to the sector While there are signs that the outlook for demand is slowly improving, excess capacity remains the biggest threat to the steel sector. The sector is straining under the relentless pressure caused by years of excess steelmaking capacity and low margins. While some capacity is expected to be removed over the next decade, the announced addition of capacity by steelmakers out to 2020 shows that investment is still alive and well. To counteract the investment in new steelmaking capacity, we estimate that about 300 million tonnes of steelmaking capacity needs to be closed for the industry’s profit margin to reach unsustainable level, and raise the capacity utilization rate for the sector globally, from below 80% to more than 85%. Permanent shutdown of capacity is the only real solution to bring balance to the market but in the short term it is difficult to see this happening given state participation in many countries and additional political incentive to retain employment, regardless of profitability. The overall net effect, however, has been an increase in steel making capacity despite the Chinese Government mandating 80 million tonnes of capacity to be removed restructuring and consolidation in the Chinese market, a handful of large Chinese steel players will emerge, leading to global competition intensifying. “Steel producers should test the vulnerability of their business models and the resilience of their strategies to ensure sustainable growth.“ Anjani Agrawal

[2] “It has been argued for more than 200 years that economic growth is associated with the manufacturing sector (Baumol 1967, Dercon 2014, Gelb 2014, Kaldor 1966, Rodrik and McMillan 2011, De Vries et al 2013, Winters 2010, UNIDO 2009). Services have been considered non-tradable, menial, low productivity, and low-innovation (McCredie and Bubner 2010). The East Asian Tigers are the classic success stories about how the conventional path to growth goes through industrialization. However, this conventional path to development seems to have hit a roadblock in other regions, especially low-income countries in Africa and South Asia. Indeed, several high level reports on Africa—the 2014 African Transformation Report, the African Union’s Agenda 2063, the African Development Bank’s long-term strategy, the UN Economic Commission for Africa’s 2013 report, and UNCTAD’s 2012 report—have all raised concern about limited industrialization and technological progress. Indeed, in many African economies, manufacturing—the sector that led rapid development in East Asia—is declining as a share of GDP. The worry is that without a major transformation, Africa’s recent growth spurt may soon run out of steam.”

[3] Mongolia is the world’s most polluted country and also home to one of the world’s most polluted cities — Ulaanbaatar. The country’s main sources of pollution are its traditional coal-fueled stoves and boilers used for heating and cooking, as well as congested traffic and old cars. Heating is essential for the survival of its people for about eight months of year. The country uses everything from coal, wood to refuse, such as black tar-dipped bricks and old car tires to fuel stoves and boilers World’s Most Polluted Countries

[4] Neither of the top 10 polluted sites are in the U.S., Japan or western Europe. However, a lot of the pollution in poorer countries has to do with the lifestyles of richer ones, noted Stephan Robinson of Green Cross Switzerland—for example, a tannery in Bangladesh that provides leather for shoes made in Italy that are sold in New York City or Zurich. “The pollution we see is not coming from the major global industrial companies, it’s all from small mom-and-pop shops, which prepare the raw materials that we then later use,” Robinson said. Or, in the case of Agbogbloshie, Ghanaians are polluted by the electronic devices Westerners have already used. Local people in such areas, Robinson added, “are very often polluting their environment not because they think it is fun but because it is a question of survival.”

Drawing 1 With the raised demand (from D1 to D2) the high Elasticity of the supply that has come with the ongoing Globalization and rising Productivity matches the demand by expanding (from S1 to S2) and thus living the same market equilibrium price (P1&P2). Such Supply Elasticity is probable to a certain turning point which approximate quantities are estimated (see next paper on “Probability Factors of Quantities Proximity”) DtoS

Capital – Investment, Debt, Employment to Market Equilibrium before and in the 21st Century

market* – equals – economic, economy, macroeconomic marketplace

demand^ – equals – income, macroeconomic demand

market development** – equals – economic growth

In the currently used Economics, the employment is still considered as a market consequence to a natural investment of capital with rising productivity, whereas tight monetary supply keeps a “hungry” pool of unemployed making them under pressure to comply with the market* driven supply-to-demand labor and otherwise market*, therefore, a full employment was considered as counter-productive for the market* growth to be maintained, moreover, the inflationary forces of an over-demand would be sustained. The Economics of Scarce Resources of anytime before the 21st Century with relatively less developed technologies, limited globalization, political divisions, etc (the rest of the points will be given in later) had worked in proper for such successful Capitalism by the markets* of US, some EU countries, UK, and Japan.

Then the most developed markets* had used their mostly manufacturing capabilities empowered by the best at its time technologies and well developed labor market to dominate on a less developed, struggling to improve global market*.

However, the 21st Century has brought a few market developments that are new by nature to affect the real economy: developing and undeveloped markets* by tipping off the supply-to-demand market pressure into a demand-to-supply such.


  • Ongoing Globalization – sharply expanded by the end of the cold war.
  • Rising Productivity: accelerated by the Internet.
  • China’s Industrialization and WTO membership.
  • Transnational Corporations’ Moving and Outsourcing of Industrial Production from the Developed Countries.
  • Capital FDI mostly through the Transnational Corporations.


The 21st Century came with very high productivity and large pool of capital to a globalized market* taken literally by the Transnationals for a ride; with the exception of China, which well run market* policies boosted its internal market demand^ to properly capitalize on its long-run trade surplus: Stimulus packages into Infrastructure and targeted less-developed (internal) markets*, Fiscal breaks to targeted market* sectors and less developed areas, to SME (Small and Medium Enterprises), the usage of State-owned Enterprises to lower unemployment and raise salaries; or of Germany, which highly-competitive export oriented manufacturing kept it afloat in times of the 2007+ Recession and Post-Recession times to not accumulate excessive National Debt; or of a few markets* such as some of the OPEC countries and Norway e.g. The rest of the world has gone through the deepest 2007+ Recession followed by slow Post-recovery, increasing inequality and national debt, declining middle class, high unemployment, and most important: the over all lack of vivid market development** that could be improving the global market in environmentally friendly ways to provide to the majority a sustained probable access to employment and the related goods and services. The austerity measure that followed the ongoing theory in economics are pro-cyclical by nature, the trickle-down philosophy of lower taxation, the subsidies particularly in the EU: all prompted inequality lowered the market demand and established conditions of market imbalance that policies resulted in their worst in the most of the EU markets* slum, indeed. Casual of high unemployment, deficit, longer-term recession. What the US, UK and Japan did through Quantitative Easing, Stimulus Packages, Fiscal measures generally counter-cyclical measures have been avoided by the EU, and therefore, it could be said with certainty that these market* policies have helped these markets* to keep however sluggish market development** following the 2007-9 Recessions (the 2009 is added to these markets* performance while the EU is not included). With certainty the more active policies with a consistent long term the better performance e.g. China tops them all with very proactive and consistent market policies

the policy rate is but one of many instruments in thePBC’s toolkit. The PBC had traditionally deployedmultiple tools, including window guidance, softloan quotas, regulatory rules, reserve require-ments, issuance of PBC bills, open market opera-tions, relending and interest rates, both marketand administered — the interactions of whichcould reinforce or offset the policy effect (Ma, Yanand Liu, 2012)”. PBC tested a few new weapons in its arsenal, such asthe ‘Short-term Liquidity Operations’ (SLO), ‘Stand-ing Lending Facility’ (SLF), ‘Medium-term LendingFacility’ (MLF), ‘Pledged Supplementary Lending’(PSL) and ‘Pledged Relending’ (PRL), probably inan attempt to influence market-based interestrates in an environment of volatile two-way capitalflows and more liberalised interest rates. ,

Japan follows with the Abenomocs in action whereas the PM Abe holds firm powers, the US and UK follow less successful casual of using unorthodox methods more-like preventive as post-recession ones, than proactive “as it come; as it goes” market* policies, then finally it comes the EU with the most rigid orthodox market* policies based on deficit reduction and austerity measures that resulted in prolonged recession up to the end of 2013, high unemployment and slow recovery. Most of this information is supported by reliable data sources by “The (not so) Unconventional Monetary Policy of the European Central Bank since 2008″ | Read more at Bruegel

The utilization on the conclusions made by the previous section of this article clearly shows that pro-active market* policies by a government or governments brings better results to more consistent Market Development, whereas inactive policies, or ones based on the orthodox economics prolongs recessions and slow recoveries. However, contrary to this conclusion: in different levels all governments lack business sense and flexibility to manage economics, whereas populism and ideological polarization, mostly in the plural democracies, add substantially to the governments’ inconsistency in their market* policies, and it could be stated with surety that governments could be blamed for their offhand deregulation policies particularly in the financial sector that prompted the 2007 Recession; therefore, to rely just on the governmental market* intervention will be incoherent.

Second, the governments are not proficient enough to maintain adequate market* activities with low unemployment and underemployment, thus bringing fiscal shortages and rising social expenses and inequality.

The success of the most developed markets with the exception of EU to wrestle the 2007-9 Recession is real, but it was necessary because the system of economics well supported by the governments themselves was not proficient enough to do not allow it happening in the first place? The possible prevention was not activated whereas the needed reforms were not implemented on time.

The expectations of a shorter and milder market correction managed by the self-adjusting cyclical powers of the Capitalism did not work it out?

Therefore, when leveraging the positive to the negative effect of the governmental involvement: it appears the governments’ intervention was necessary, and when for the future: if the system of economics does not succeed to prompt enough business activities the governments will be the only saviors by using total market interventions?

What the Capitalism misses under the ongoing globalization and rising productivity to manage market equilibrium is the ability to properly use market tools to steer enough business activity matching the needed demand; unless in long human history, when the supply was the ruling market element alone with always boiling inflation; however, under the new conditions, the demand alone with ever pushing deflation is that issue. Therefore, deficit and national debt alone with inequality are on a rise, the globalization has had allowed large transnational corporation to access inexpensive labor-pool, low taxation, lack of consumer and environmental protection…. for the few large transnational corporations and large investors under such conditions the system has performed well, but for the many it has not had at all: declining middle class, high personal debt, unemployment and underemployment….., expanding governmental market intervention to prevent from total collapse in the recession time, and in attempts to boost growth in post recession time.

What distinguished China as the best performing market of the all developed ones has been the combination of social distribution well inherited in Socialists’ ideologies, combined with active market policies, however, even the Chinese policies and performance has been and still are the best, under the conditions of the very developed US, UK, EU and Japan on a global scale if their system of economics is enhanced by using more proficiently the variable market tools the results could be very advancing, indeed. What China has been and now Japan are following an “as it comes; as it goes” flexible economic policies adapting the ongoing and upcoming market* realities; policies that have been highly recommended by all my articles.

However, even recommending the governmental involvement as an “invisible hand” to boost and maintain market development** particularly into environmentally friendly energies and industries, for such policies’ longer term market equilibrium some definite changes and enchantments are necessary: thus whereas the current Capitalism relies on the large transnational corporations to “export” development under the conditions of shady business; lower taxation, environmental and consumer protections, the so called Market Economics relies on Small and Medium Enterprises to steer business activities, and thus prompt employment and Fiscal stability whereas a strict rule of law in business; enhanced environmental and consumer protection laws are considered as preconditions for marginalizing the unfair market* competition and thus raising their market* security and lend-ability. The pro-active and counter-cyclical governmental “invisible hand” is considered necessary to keep deleveraging wealth inequality through social redistribution; however, the usage of the market forces for maintaining market equilibrium is paramount thus imbalances are prevented. Moreover, a system of probability in economics when economic tools are used as parameters is also necessary for succeeding such relative market equilibrium, because the mathematical principles would not work in such a complex market* environment. In my works the so-called Quantum Economics i.e. Market Economics is a foundation for making possible the rest of the market* approaches be implemented without causing major market* upheavals. The “as it comes; as it goes”’ economics could only logically work if Quantum Factors are used to leverage or deleverage markets*’ buildups when the needs arises, and my works uses such approaches to setup a market* system of economics called Market Economics. System that peaches for full employment boosted by market* noise of a relatively fair market competition supported by targeted investment national and global into environmentally friendly industries and products, and carried on mostly by small and medium enterprises and investors, whereas the large businesses and investors are not discounted in anyway: in the opposite their role is substantial. Social and infrastructural expanses are not considered just expenses anymore, but partial equities used to leverage the market variances: as market* tools, indeed.

The Market Economics comprehends ongoing globalization and rising productivity as main motors for market development by environmentally friendly approaches on a global scale in an interdependent and interconnected world. It is not a Budgetary and Scares Recourses Economics, even so market competition on micro and macro economic levels well complies with such economic principle, however, on a larger scale neither budgetary nor scarce recourses as economic principles are considered bounding. Capital and Debt are considered secondary to Environmental Protection and Market Development whose are attached to the Inflation/Deflation instead. Market* tools are used as parameters to maintain full or close to employment when protecting the Earth environment, Globally.

Joshua Ioji Konov, 2014

Globalization and Consumer Protection

In the system of trickle-down capitalism the consumer protection is counterproductive: along with the business taxation, the strict business laws and environmental protection laws. To succeed quick economic growth a market should lower weight on businesses and investors. The most developed economies under the pressure of democratically elected officials and the public opinion have developed stricter than the developing and undeveloped economies consumer protection laws: entailed by constant struggle between lobbyists and public pressure. In some developing economies the consumer protection is consciously avoided whereas in undeveloped such it is ignored all together to attract foreign investors and large transnational corporations.

For years the developed economies and their Central Banks, and the international financial institutions such as WTO and IMF, ignored the subject of promoting strict consumer protection laws to the rest of the world with the very simple idea to let the transnational corporation roar free that finally should have prompted global economic growth. However, the ongoing Globalization and rising Productivity, the Transnationals the Chinese Industrialization, the Internet, and the outsourcing and moving of Industrial Production have brought a new global market of close economic intercorrelation, and of a tipping off point of global industrial overproduction limiting the ability of many developed and developing countries to manage the necessarily for their fiscal stability economic growth, thus the global economy has come from a pro-supply factor to rule economics to a pro-equilibrium on the demand side factor. The weak consumer protection laws was an market i.e. economic agent that could prompt fast economic growth, which market agent is becoming counterproductive under these new global market conditions, whereas in the opposite an enhanced strict consumer protection laws’ market agent would bring more employment to a market i.e. economy and globally so. This change of values was proved by the widespread indebtedness of many developed, developing and undeveloped economies, which are straggling to keep their rising social and infrastructural expenses with their under-performing economic structures: the inequality, the deteriorating middle class, the increasing environmental pollution particularly by the undeveloped and some developing markets where the use of fossil fuels and old cars is substantial. The weak consumer protection laws are supply related while the new problems are lack of demand related, whereas the struggling to keep adequate employment markets is a pro-supply economics.

The consumer protection laws are demand related that will improve the quality of goods and services, cutting on officials and corporate managements’ corruption and fraud by giving to the consumers rights and voice. It will press businesses to carry out more responsible products and services development and promotion. It will boost the goods and services quality that will require more R&D and therefore more educated employment. On a global scale it will cut down on white collar crime: human rights violations. It finally will bring economic growth based on natural market forces. The quantitative supply economics of limited-mostly-national marketplaces and lower productivity of still undeveloped technologies evolved into a quality demand economics of globalized marketplace and rising productivity of high technologies, therefor, the pro growth system boosted by lack of consumer protection laws must change to a pro market development one boosted by an enhanced consumer protection laws that will unify the globalized marketplace under similar rules for business, quality and the rule of law; the highly sophisticated and succeeded by the most-developed economies achievements will apply to the rest of the world in their best bringing business and social improvement.

By Joshua Ioji Konov 2014


Market Development Verses Economic Growth

Market Development Verses Economic Growth

 The global industrial overproduction capabilities have been gaining momentum accelerated by ongoing globalization, rising productivity, China’s industrialization, the Internet and mostly by the vastly improving high technologies in manufacturing, communications, and international trade. The Transnationals have been given great advantages to find new cheaper markets that they could relocate or outsource industrial production, whereas the huge Chinese marketplace has provided them the needed demand to expand and aggregate their capitalization and economic health even in the time of 2007-9 Recession and post recession time. Simultaneously to the rising profit of the transnationals and big investors, declining industrial employment, middle class, and fiscal reserves have been observed in the United States, many European countries, and Japan, the manufacturing jobs that used to replenish fiscal reserves and maintain large middle class have largely disappeared being moved and outsourced, moreover the industrial jobs still left in there have been highly robotized bringing down salaries and numbers of employed. The low paid jobs that have been gaining in post recession time could not compensate to the lost high paid industrial jobs from the past. In general, capitalism relied on industrial jobs and high interest lending rates to raise profits, boost economic growth and replenishes fiscal reserves; however, none of these three points is working under the conditions of most recent market developments, whereas aggregated super-production, moving, outsourcing, the long-term and deep 2007-9 recession and post recession time, and e.g., made these three points, which are founding for the capitalism, obscure and under-performing. Hence, the governments are keeping their discount tier one interest rates close to zero, but the poor transmissibility of the economies is establishing the condition for new market bubbles instead of boosting higher percentage economic growth with high employment and salaries in manufacturing. The idea that manufacturing will come back to the US, or most European countries to employ the high single and double digits unemployed is unrealistic in its nature. The austerity measures in UK and Europe, the quantitative easing and stimulus packages in the US, UK and Japan, and the stimulus programs in China are temporarily economics tools capable of reviving business activities of mostly lower paid jobs in service sector, however the majority highly paid industrial jobs are gone forever being undercut by high technologies, and moved or outsourced elsewhere, therefore the capitalism could not work out these economies to sustain adequate economic growth to balance rising fiscal social and infrastructural expenses.

 The main carriers of economic growth in the capitalism are big transnational corporations and big investors, which were suppose to stir economic growth by raising productivity supported by trickling down capital. Moving and outsourcing industrial production to wherever cheaper and qualified labor is found, these two economic agents are considered the noise in (1=f noise) formula for every country/market economic development that is suppose to close underdeveloped economies to the developed industrial ones. Hence, low taxes, low regulations, shady not particularly clear business laws, and corporate contracting are the keys to progress, industrial employment, and economic growth. However, for the last 20 years the system of capitalism greatly under-performed the 1=f noise formula has not worked, the middle class deteriorated, the manufacturing jobs are gone, and the business activities are shrinking lacking demand balanced marketplace.

 Moreover, the economic growth, which was suppose to keep at the least as high as to compensate for the natural energy related price rising could not keep up marginalizing into the very low, or like in EU into the recessionary minuses. The deflationary forces have been gaining strength, whereas Japan is the good example of it. Thus, the market forces pressure has degenerated economic growth into market development, however neither the overall financial system, business laws, lending approaches or market security have been adapted to the natural processes of this ongoing change, thus instead of a sustained market development be succeeded and maintained the economies continue accumulating fiscal debt, and under-performing with high unemployment and underemployment. The ideologies are ruling over the clear indicators of a system, which has exhausted its growth generating powers.

 Economic growth differentiates from market development by its fundamental change of priority from big business and investors as main economic agent for economic growth to small and medium businesses and investors as main market agent for market development. Hence, the economic tools such as high lending rates, shady business laws, deregulated financial system, tax breaks for the rich, limited liability corporate structures, cutting down on social and infrastructural expenses, e.g. that worked to boost economic growth are to change into more sophisticated deleveraging diverse business environment using market tools such as enhanced business laws, unlimited liability corporate structures (to the decision making corporate structures – not to the investors), higher market security allowing lower lending rates, using social and infrastructural expenses as an extra equity demand, e.g. that overall will provide better balance to demand-to-supply markets. Market development is an enhanced version of the trickle down capitalism that rely basically on market forces to balance markets demand-to-supply but uses indiscriminately market tools to keep this balance in marginal proximity.

Joshua Ioji Konov 2012

Social and Infrastructural Expenses to Help Balancing Markets i.e. Economies

Social and Infrastructural Expenses to Help Balancing Markets i.e. Economies

 social expenses include social benefits, pensions, educational, unemployment expenses
market equals economy, economic
Market Economics is about Demand and Supply (it is not an error of the Supply and Demand of the past) of goods and services that have gone Global, which complicates the ways Economics explains these processes. Some market sectors have become less Nationally dependent than Globally such, therefore the inflationary forces could not be explained anymore in a closed marketplace as it was before. The ongoing Globalization, the rising Productivity, and the Chinese Industrialization have accelerated the up mentioned processes that have given the opportunity to many markets to develop into not industrial production related market sectors without prompting necessarily Inflations, whereas the Deflations instead have become bigger issue.
 The foundations of current Economics has been less or more a Socialized Capitalism, which lays on the Industrial production. The most developed markets are called Industrialized Economies. However, the most recently expanding Global capabilities of industrial overproduction has invoked the needs for reevaluating Economics and finding ways for Fiscal balance by not accenting on industrial production and industrialization: the most common method is by imposing high taxation. Social and Infrastructural Expenses have become a main tools for re-balancing market demand to supply: however, high National debt run by the most developed countries, but China, has undercut the abilities of governments to continue such policies; Neo Liberals, Big Business and Investors have put political pressure on these governments to reduce Social and Infrastructural expenses. The situation with less developed and undeveloped markets is even worst because of their dependence from their debt holders: the World Bank, European Union, IMF, WTO, which serve their lenders and apply constant pressure to prevent these countries from adding more debt to the already accumulated such.
The unorthodox approaches in Economics by China to use their public sector and stimulus packages for improving consumption have proved productive, as well the Abenomics and the US Quantitative Easing have had. The indifferent European Union orthodox approach has proved a disaster. All of these are good proofs for the changing Global markets’ realities and the need for action by the “Invisible Hand” to re-balance markets under these new arousing realities.
 However, the market interventions by governments or international financial institution may finally backfire and prompt new recessions if the ongoing processes are not properly apprehended and long term policies are not implemented. Policies that can boost market development i.e. Economic growth must prevent from bubbles and major market imbalances. Whereas the Social and Infrastructural are market tools to be used for maintaining markets’ balance they also could be used to prompt market development by targeted capital injecting into Market Leaps without prompting Inflation. If properly executed such Market Leaps could accelerate business and investment activities in these particular market sectors. What is necessary before using these market tools is a detailed evaluation of this market overall abilities to absorb such expansion of consumption and business. Market Economics is an “as it comes, as it goes”’ approach in Economics that tolerate the usage of all market tools to expand and manage market development, therefore, if Social and Infrastructural expansion could prompt employment, consumption and business activities without excessive Inflation, than such approach is considered appropriate. The Uncertainty Principle and the Probability Principle are used for simulations of Market Leaps and prevention of Bubbles. Market Tools are used as parameters for maintaining relative fluency. Parts Market Equilibria are used to maintain General Market Equilibrium. (SEE the related Papers and Articles).
 The Market Economics considers Social and Infrastructural Expenses to certain percentage as equity: such change is made possible by the Globalization and rising Productivity, which allow some extra consumption and business activities balanced by the globalized markets overproduction. Even partial equity such expenses are supplementary approach toward Market Development that that supports the main production and services based approach. Social and Infrastructural Expenses could have a good use for fighting deflation (example for such is Japan).
 The percentage of equity Social and Infrastructural Expenses reflects ta market’s success in adapting the principles of Market Economics, not that much the level of Market Development i.e. Economic Development. An open market with adapted Rule of Laws: Contract Laws, Consumer Protection Laws, Environmental Laws, Intellectual Property Laws, Insurance & Bonding Laws may well be suitable for using such expenses to start a Market Leap, even though this market i.e. economy is not developed in compare to the most developed markets.
 Joshua Ioji Konov 2014

Can the Global Investment and Productivity Steer Growth

Can the Global Investment and Productivity Steer Growth

In the ways the Global economy works, the expectations for the investment and productivity as fundamental economic agents for growth vary in different countries:

Whereas the European Union relies generally on such to prompt and maintain economic growth, in the United States the market interference was much bigger through Quantitative Easing and Stimulus Packages, it when farther in Japan, and even farther in China whereas the market interference is basically running the whole economy through targeted stimulus packages, establishing tax free regions, using the state owned businesses to raise salaries, income and internal consumption. Unless in the US whereas the politics interfere with the government policies: in Japan and China such policies are roaming free: the “as it comes: as it goes”’s Economics of 21st Century has arrived and whoever understood it right and start using it indiscriminately from political views and ideas will benefit. The winners clearly are these the last one. To rely mostly on the Investment and Productivity to steer and stir up the markets into growth and possible employment has become a dream for a few economists in the West that excuses them from the failure to oversee and overcome the 2007-9 Recession that almost crushed the Global economy.

According to the Organization for Economic Cooperation and Development (OECD), the United States had the fourth highest GDP per hour worked ($59.50 USD) in Oct. 2011, behind the Netherlands ($59.60), Norway ($75.40) and Luxembourg ($78.50). Research at the U.S. Bureau of Labor Statistics shows that between 2000 and 2010, real GDP per hour worked in the United States grew from $48.47 to $59.28, or 22.7%. Productivity was clearly on the rise, and at a fairly quick clip.

The OECD also indicates that between 2000 and 2010, average annual wages for full-time employment grew from $49,981 to $52,607, or 5%. They were basically stagnant, but how did this happen? (For a look at GDP and what investors look for, read Can Global Investors Profit From GDP Watching?)

What the Chinese took off on the Recession was the practical ideas that relying only on the National and International Investment and the rising Productivity, which relies on the simple ideas of lower taxation and weak regulations to prompt economic growth causa finita est, therefor, they started targeted market interference by watching the Inflation and possible Bubbles, so the system has worked much better than everywhere else. The Social and Infrastructural Policies have been positive economic tools, too. What the Chinese discovered, followed by Japan, was that by using the “invisible hand” was much more effective than waiting for some investors to decide to boost their economies.

What the EU and now the US are doing is digging themselves into a perpetual circle of unemployment and underemployment that consequently will push them to start using so called unorthodox economic agents and tools to prompt long term economic growth. The Investment and Productivity always follow the winners, and guess who will be the winners if a long term economic policies are not undertaken.

Joshua Ioji Konov 2014

Probabilities in Market Economics

Market* equals economy, economic, 


For the last 20-25 years. the accelerated Globalization, the rising Productivity, and the Chinese Industrialization have accelerated the moving and outsourcing of industrial production by the large transnational corporations from the Most Developed Markets have brought more complex Global economic situation of industrial overproduction capacity, higher unemployment, rising national debt, increasing income inequality, and etc negative developments that exceed the abilities of currently used economics to deal with it appropriately. The Uncertainty Principle, which changed Physics, in some degree applies to Economics bringing the Principles of Probabilities to manage the complexity and the uncertainty of these new developments. However, unlike in Q uantum Physics in the Quantum i.e. Market Economics the Plank Constant does not apply but a new J Constant should be applied, which vary between (-2…….0………+2) from the lowest to the highest possible Market Security: Market Development is a seasonal Entropy/Equity Market Place. Through a Market Leap prompted by targeted injection of capital into a particular market sector or Natural Market Investment an accelerated Entropy/Equity process could establish artificial accelerated market activities, however if the Market Security is higher than a (0) a Market Development higher than (0) is possible. The Globalization, which supports markets against Inflation in some market sectors, allows Market Leaps (accelerated market activities).

The general market equilibrium evolves into part’s market equilibrium a complicated structure of interdependence between market sectors in a Globalized marketplace in which some sectors are more globalized than others, and therefore market sectors vary in their inflationary susceptibly. The overall lock of inflation in the US Economy, for this period of time, presents a prove for the power of these new forces.

Market Security is a fundamental Market Agent that could prompt Market Development[ See Table 1]. To succeed Market Security over (0) a fair Market Competition is required, whereas Market Agents such as Large Businesses and Investors, and Small Businesses and Investors should be setup into a equal access to financing. There are two possibility for such: either the Government interfere into Markets by providing additional security to the small business’ loans, which is not market related approach if under a lower Market Security, and in many cases are politically motivated reversible actions , or when targeted Market Sectoral investments are injected into a higher Market Security that would consequence into seasoned Market Development (market equilibrium when expanded business activities). Current market conditions are with very low Market Security: the large businesses and investors are given advantage in a a lock of Rule of Laws’ Business Environment, therefor, any capital injections under such condition could not boost Market Development, these may stir temporally business activities bit cannot succeed seasoned Market Development (example for this is the City of Detroit, where for years many capital injections could not succeed Market Development); currently used Economics tolerates low Market Security, because such is considered helpful to trickle-up capital into the very few, who were suppose to trickle-it-down into business activities and economic growth, however, the Globalization and rising Productivity have provided Global opportunities for such reinvestment, and the expanding wealth inequality results of these new developments: the large transnational corporations and the direct international investment are the economic agents for these global opportunities. Enhancing the Rule of Law in Business: Liability Laws, Contract Laws, Consumer Protection Laws, Environmental Laws, Insurance & Bonding Laws, Intellectual Property Laws will improve the Market Security by marginalize the inequality in the market competition.

The J Constant will go above (0) and therefor if capital injections are properly done Market Development could be succeeded.

The Probabilities’ Principle is to be used:

*to give the right levels for possible Capital Injections without prompting Inflation/Deflation.

*To show the amount of possible such Capital Injections.

*To oversee the possible results,

*and if some emergencies arouse the possible actions to be taken that would disperse the negative bubbles.

Simulations, historical and prospective by using Possibilities’ Principle are in a working process.

Joshua Ioji Konov 2014

1 For centuries, scientists have gotten used to the idea that something like strong objectivity is the foundation of knowledge. So much so that we have come to believe that it is an essential part of the scientific method and that without this most solid kind of objectivity science would be pointless and arbitrary. However, the Copenhagen interpretation of quantum physics (see below) denies that there is any such thing as a true and unambiguous reality at the bottom of everything. Reality is what you measure it to be, and no more. No matter how uncomfortable science is with this viewpoint, quantum physics is extremely accurate and is the foundation of modern physics (perhaps then an objective view of reality is not essential to the conduct of physics). And concepts, such as cause and effect, survive only as a consequence of the collective behavior of large quantum systems.2


Probability is a measure of how likely it is (or how probable it is) that a given event will occur. The more likely an event is, the higher its probability. The sample space is the set of possible outcomes within a given context. The sample space is equivalent to the universal set. An event is a subset of the sample space. The elements in the event are referred to as favorable outcomes. The word “favorable” is not used to mean “good” or “desirable” in the normal sense. A favorable outcome means only that the event has occurred. The probability of an event is the number of elements in the event divided by the number of elements in the sample space.

3 The Planck constant (denoted h, also called Planck’s constant) is a physical constant that is the quantum of action in quantum mechanics. The Planck constant was first described as the proportionality constant between the energy (E) of a charged atomic oscillator in the wall of a black body, and the frequency (ν) of its associated electromagnetic wave. This relation between the energy and frequency is called the Planck relation:

4 Table 1


Md = Market Development

LIR = Lending Interest Rate

En = Market Entropy

Eq = Market Equity

E = Market Equilibrium

EE1= Market Leap

“As It Comes; As It Goes” Economics of the 21st Century; the End of the Budgetary Economics

“As It Comes; As It Goes” Economics of the 21st Century; the End of the Budgetary Economics

Joshua Ioji Konov, 2013


The Globalization, the rising Productivity, the Internet and the Chinese Industrialization have established some very new conditions to a global marketplace of vest industrial capacity mobile and highly effective that changed Economics forever from a pre-supply Libertarian and Keynesian budgetary approaches into the unorthodox innovative Market related pro-equilibrium approach. The Quantitative Easing, the Abenomics, the Chinese targeting certain areas for economic empowerment, the Federal mortgage security targeting lower lending rates in the US, etc are the first steps to an Economics of “as it comes; as it goes approach” which does not count just on a market liberalization through deregulation, low business taxation, and rising productivity to prompt Economic growth, thus the “invisible hand” has become more active. However, the economists and the Economics still retain their highly ideological stand up by either not evaluating these new developments or coming back to the status quo by just ignoring these developments as never happened.

CHANGE (Market I.E Economic, Economy)

As the Physics has changed from its orthodox ‘assertive’ knowledge into the uncertainty of Quantum, whereas probability theory so the Economics should change its ‘assertive’ ideologically motivated approaches of trickle-down into a ‘as it comes; as it goes’ Market Economics, whereas market agents and tools are used adequately to maintain market equilibrium and market development.

In real Marketplace such approach means by using Monetary, Fiscal, and others the Central Banks and Governments to target particular market sectors and areas to boost their development, sectors such as Alternative Energies, Tourism, Farming, etc should be prioritized. The ‘invisible hand’ that boosts certain market activities could be only implemented if markets transmissionability is appropriate to absorb and transform the liquidity into market equity e.g. to establish market equilibrium by maintaining low inflation or deflation. High market transmissionability could be achieved by enhancing the ‘rule of law in business’ through changing the limited liability corporate laws into unlimited such, by enhancing business insurance and bonding, by enhancing contracting laws, by enhancing environmental and consumer protection laws, etc then the ‘invisible hand’ of targeted liquidity and fiscal stimulus would work its best through the marketplace to buildup market development.

Currently used by the Central Banks monetary policies through lowering or raising Primary Rates a general market equilibrium approach should change into using lending rates, fiscal policies and targeted investment parts market equilibriums approach e.g. is the China’s handling their Real Estate bubble.

The Uncertainty Principle applies to Economics whereas the Probability Theory shows the ways market agents and tools are used as parameters to adjust market fluctuations; however, in comparison to the Quantum Mechanics the Market Economics i.e. Quantum Economics’ equations, oscillators, theorems, and etc differ in principles and values.


Market Economics does not put all markets i.e. economies under the same constant, whereas different markets posses specifics that should be taken in considerations in applying the best for these markets oscillators. Even when the free market entrepreneurship of the Small and Medium Enterprises is considered the best and most productive approach toward market development the ways some countries have their Markets/Economies entailed to specific social, medical and educational policies by more aggressive governmental involvement should be taken in considerations when simulations are put together.


However, for best performance, the principles of an open market competition whereas Small and Medium Enterprises and Investors are set on equal opportunity competition are paramount for a long term success. The marginalization of advantages Large Transnational Corporations & Investors is one of the principles for Markets to function properly, so to speak market transmissionability and overall market development could not be achieved if the market competition does not reach relative fairness.


THE Globalization of the Marketplace should be used to prompt business activities, build equity, and maintain market development, but for such to be fluent the principles of Market Economics must be implemented globally, which is highly achievable in the present day open politically and entailed economically world.

Joshua Ioji Konov, 2013

SEE Market Economy under Rapid Globalization and Rising Productivity

Partial Equilibrium by Sectors Intervention Instead of General Equilibrium’ Central Banks Interest Rate Adjustment


The FED’s Federal Funds Rate and other Central Banks Rate adjustments are targeting the entire market (i.e. Economy) effect could be deleveraging by raising it or boosting by lowering it that materializes the theory of General Equilibrium. However, because these sectors are becoming more globally than nationally connected such general approach did not reflect the possibilities of using the Partial Equilibrium approach by Monetary (lending rates), Fiscal, and Regulatory means to adjust some sector redundancies, whereas allow the rest of the economy continue market development (i.e. Economic growth).


The economic data[1] by sector from the last two recessions the 2000-01 and 2007-9 ones shows the unevenness with which these sectors fluctuate, thus the overcapitalization in the Internet Bubble 2001 or the Real Estate 2007 compared to decrease in capital of e.g. Manufacturing. Hence differences are mostly exogenous because of the ongoing globalization and rising productivity, Chinese industrialization, the Internet, and the overall improvement of manufacturing technologies that have allowed outsourcing and moving of industrial production and capital much easier than ever in history; factors that support long terms of lower inflations toward deflations developed markets (i.e. Economies).  Developments that make a different market (i.e. Economic) sectors more globally interconnected. As we see in the Table 1- NASIC sectors differ vary substantially in growth therefore before the 2007-9 recession, possible redundancies targeted Federal Funds Rate adjustments[2] are pro-cyclical in the case of Manufacturing, Wholesale, etc., and   counter-cyclical in the case of Real Estate, Construction, and related Industries. Currently used economics does not take sufficiently enough the new developments (see above) and rely on statical a combination of Libertarianism and Keynism trickle down approaches that performed poorly in the recession as well post recession times. Seemingly, the most unorthodox approaches of Quantitative Easing, Abenomics, General Governmental intervention in business e.g. US Auto Industry, Financial Sector, etc., and e.g. Extended Unemployment, Foreclosures, etc., have had the best results over the markets (i.e. Economies). Moreover, the Chinese approach in cooling Real Estate bubbles and overcapitalization of the sector could be considered the most effective up to date: through Monetary, Fiscal and Regulatory means the Chinese government targeted some individual sectors such as Real Estate, Construction, and related industries; a method that proved quietly effective, and method considered by the Market Economics as one of the Future. However, even though individual markets (i.e. Economies) posses their nuances and specifics the fundamental principle of Market Economics that economic tools are to be used “as it comes; as it goes” approach, which will reflect the specific market (i.e. Economic) developments that basically reflect all different markets (i.e. Economies) in a way of justifying the unorthodox means when needed. The change from using Central Banks’ Interest Rate on a general equilibrium approach to one using different market tools on a partial equilibrium of the individual sectors in need for intervention, whereas not touching sectors not in such need. This paper will scientifically justify such innovative approach.  (To be continued)

Joshua Ioji Konov 2013

[1] Table1 [2] Table 2ImageImage

Market (i.e. Economy’s) Equity of Market Economics (i.e. Marketism)

Market Equity[1] is the value built in assets[2] by the level of market development. Market Equity (i.e. Eq) decreases with rising Lending Interest Rate (i.e. LIR), whereas Market Entropy increases with rising Lending Interest Rate (i.e. LIR).



Market (i.e. economy’s) entropy of Market Economics (i.e. Marketism)

Market (i.e. economy’s) entropy of Market Economics (i.e. Marketism)


The technological improvements in manufacturing, international trade and communications i.e. rapid Globalization and rising Productivity have established global market (i.e. economic) allowances for expanding business activities into not-necessary-industrial related market sectors without prompting Inflation (called by the Marketism – “market entropy”). The entropy is unpredictable business activities succeeded in a market (i.e. economy), which could be invoked by “natural” to the market competition agents i.e. businesses and investors, or “artificial” to the market competition i.e. governmental interventions, or a combination of both. However, if mostly artificial to a market (i.e. economic) competition market tools are used the possibilities for market redundancies or shortages and therefore market volatility and instability if high entropy is achieved is probable, e.g. the governments’ ineptness in handling market (i.e. economy) is well observed. The probabilities for governmentally run economies to bring market distortion are high. However, the trickle-down economics of the a priory Capitalism has exhausted its strength to spur enough business activity for supporting adequate market development (i.e. economic growth) for employment and fiscal reserves. The transnational corporations and big investors are favored by the “shady” business laws and practices, fiscal brakes, lack of international transparency, weak intellectual property laws, e.g. whereas they cannot prompt and maintain enough business to respond to the global demand for such. The appointed globalization and productivity growth in combination with the China’s industrialization has tipped off the market possibilities for the expansion of manufacturing internationally to the point needed to prompt and maintain global development: the productivity and investment considered as the only market (i.e. economic) carriers for global development under this current condition underperforms greatly. Moreover, the Earth pollution and exhaustion of resources are two factors that additionally load the system because of the necessities for quite expensive environmental protection and the rising natural resources prices. Thus becomes natural for the governments to get involved in markets (i.e. economies) by using stimulus packages, keeping low interest rates, pouring liquidity, e.g. and unorthodox tools such as quantitative easing all in prevention from total economic breakup  or to prompt business activity, low rate lending and subsidies to promote environmental protection. However, the pinned to a tight-budget politicized economics of oligopolies and monopolistic competition has weak transmissionability to the bottom market that the real business activity is needed to balance the market demand in natural for the market competition. The Small and Medium Enterprises & Investors (SME&I) are those that could enhance and diversify such business activity into unpredictable and uncontrollable directions, i.e. entropy, but the unfair market competition does not allow SME&I natural for the market expansion: the shady business environment is weakening the market security.

Named after Boltzmann’s H-theorem, Shannon denoted the entropy H of a discrete random variable X with possible values {x1, …, xn} and probability mass function P(X) as,


Here E is the expected value operator, and I is the information content of X.[8][9] I(X) is itself a random variable.

Joshua Ioji Konov, 2013

How Globalization affects Equity

How Globalization affects Equity   

Joshua Konov 2010

In times of Globalization some economies and markets build equity, however some not only cannot use their equity to improve their standard of living but lose their equity to lack of business that provokes deterioration of equity or at least discount of equity.

Equity is in the foundation of the economy and the market: in the past most of the equity consisted to physical property but gradually more intellectual property and subjective market securities have become equity. Thus when individual or corporate equity is evaluated plus the physical equity if any the intellectual property, the hold securities and the projected economic growth are considered equity. The trend toward intellectual property and market valued securities instead of physical equity is more than obvious for private and corporate equity equally. However, private equity for the majority in the world consists of physical property equity when intellectual and market securities equity is more possessed by very wealthy individuals and individuals living in the most developed economies.

There is direct correlation between market individual income and equity value, because equity value reflects general market value of a property which relates income financial statement. A property value supported by higher income statement is higher than a property value supported by lower income financial statement. In some cases -as it happened before the last Great Recession- market property value became uncontrollable prompted by pure speculations and compromised lending practices. Consequently the exasperation of property value burst bringing financial losses and lost of properties to many. Seemingly equity of property values should well reflect the real market property values which reflect general income level in this market. Talking about equity not related to physical property but could be intellectual property, market security, or projected economic growth with very high subjectivity in the real economy the market value of such equity is more related to security of intellectual property, market securities and certainty of projected economic growth. Factors that directly affect these equity are scrutinized historical development of the market, most recent economic indicators showing the direction of this market and consistent indicators of the direction of proximal development, factors that indirectly affect these equity are the level of real acting rule of law and contracting laws of such market, the clarity and accountability of the marketplace and trading exchanges, the clarity and accountability of intellectual property laws, and the level of personal liability of the risk management of corporate structures, the fiscal stability and the respective infrastructural maintenance and improvement, and social and medical security in this market.

Globalization has invoked the need for individual markets of using Social and Infrastructural expanses for balancing “demand-to-supply” when in the past these expenses were functioning as stoppers toward economic growth because the overall productivity was lower and there were many closed for globalization markets, now the conditions are changing the productivity is rising constantly and the almost all markets are eager to globalize. Other major changes at the moment are the China’s entering WTO and the global competition and the consistent economic growth for the last 20 years China has succeeded. By attracting the majority of global investment and by becoming economy to which outsourcing and new startup manufacturing China become the industrial power that might well tip-off “supply-to-demand” into “demand-to-supply” market configuration; such processes shorten already shortening employment in manufacturing to the rest of the world. Manufacturing, industrial production could well be considered in the foundation of the modern Capitalism that adds the most to fiscal reserves of most of global economies by highly paid employment; the most advantageous return of investment and the most secure buildup of equity: the higher growth of industrial production the higher level of equity value.

The Most Developed Economies are considered the Most Industrialized Economies.

In such market environment of Globalization (outsourcing and moving industrial production to less expensive economies) and rising Productivity (improvements in high technologies and shrinking employment marketplace cause this rising productivity) industrial employment is shrinking fast at US. Very few are the economies of Most Developed ones that have succeeded under current forces of industrial competition to sustain industrial production and keep up their industrial leadership: Germany and Japan are the few. The value of equity as stated closely relates industrial production of the modern day economics therefore overall such value will deteriorate in markets with deteriorating industrial production.

Modern economics does not take in consideration the value of already succeeded equity if economic industrial economic growth is not maintained and only short term self-adjustments are project-able. Such positions of equity directly relate the financial system of individual markets and the global financial system which lends on relatively high interest rates and short term, and in which corporate structures are run on short term profitability. Indeed equity related intellectual property and equity related market security are long term corporate equity however the fluctuations of overall market equity value often fluctuate and reflects corporate equity values violently.

In the past when supply was leading and most developed countries were firmly holding onto the global industrial production such fluctuations of individual and corporate equity values were productive because of prompting concentration of capital than prompting consecutive economic growth, then also less developed economies were more like satellites to the most developed ones being able to support fiscal reserves for social and infrastructural expenses. Even some parts of such industrial production was developed here and there in different countries the majority was still kept by the most industrialized economies. The equity values in most industrialized markets were therefore higher than these of in less developed markets and these still are, except that under the new arousing conditions of globalization and rising productivity industrial production has been gradually moved and outsourced to China, and now India, Brazil and Vietnam which are vastly populated countries with inexpensive labor force and some good industrial structures, therefore in terms of value of equity related industrial production the most definitive becomes the issue of lack of such industrial production to many economies and if such is reduced or lost what consequently would be their value of equity. Intellectual property and market security values are much more flexible and adaptive than the real estate equity value because intellectual property and market security equity reflects an economy, country, marketplace achievements in education, social and infrastructural development that requires long term development thus countries as US that very well represents such succeeded development will be hard to be shut away as holders of such equities. However such superiority is a short term prospective even to the mighty US because of the Internet and the constant exchange of information and technologies, because of the outsourcing and moving industrial production the new emerging economies would pop-up if these themselves develop required infrastructure, social structures, and education to respond to the changing realities. In case of China when in the past its communist social policies were counter productive to its industrial growth and development under the most recent globalization and rising productivity China’s Social and Infrastructural expenses proved to be very productive in balancing its “demand-to-supply” and thus succeeding consistent economic growth even when the rest of the world went through the Great Recession, thus China’s equity has risen much because of its economic growth.

Equity values are very sensitive economic indicators more like currencies; the difference between them is that currencies’ values are more related to short term global adjustments and fluctuations when equity works in longer terms. Equity values are harder to built: real estate, infrastructure, intellectual property, market security equity values are to be used in the future as economic indicators for a country, economy, market evaluation and underwriting. To use equity values, economics must change the ways these values are preserved and enhanced even when industrial production is not going to be the main economic indicator as it has been for some time. Economic “tools” are to be used to sustain equity values in a “as it comes: as it goes” basis and approach, that approach differs from country, economy, market to country, economy, market because of their level of development, mentality and tradition. In some Social and Infrastructural expanses should be reduced in short term to prompt economic development in some the Social and Infrastructural expenses should be well enhanced to prompt such economic development. There are some economic “tools” that are for all and these are the expanses for preventing pollution and implementing renewable energies, these are economic “tools” for balancing “demand-to-supply” on a global scale and are to be financed by the global financial structures of the World Bank, IMF and WTO through Commercial Banks on a marginal interest rate or subsidies. For such lending paramount should be the enhancement of businesses security: of business and contracting laws, of personal liability to corporate structures, of corporate bonding. The global financial structures should be given the controlling functions over global balance of “demand-to-supply” to prevent from inflation, the issuing of monetary quantities power to keep interest rates low, the targeting countries, economies, markets weak points for building equity, the controlling over countries, economies, markets compliance with the guidelines and underwriting, the controlling over commercial banks’ execution of these guidelines and underwriting matrix.

The existing equity of countries, economies, markets should be the foundations for low interest lending therefore overall security should be enhanced thus countries, economies, markets could become eligible for financing.

In the new century of market economics industrial production should not be the only way for fiscal reserves but ones equity that could be built by properly balancing its “possible demand-to-supply” and properly and pragmatically using all economic “tools” to raise its “security”.

  • China’s Barbie Doll EconomicsOft-quoted, Dong Tao, a heavyweight economist at UBS in Hong Kong, once said: “A Barbie doll costs $20, but China only gets about 35 cents of that.” He was talking about global trade statistics at the time, but that proclamation might help explain why Chinese companies are increasingly shopping for and successfully acquiring storied brands, most recently, Ford’s Volvo.The lesson: the big money is in owning the brand, not just making it for foreign companies, writes the AP’s William Foreman.
  • Great exportations “China overtakes Germany to become the biggest exporter of all” “CHINA’S rise has long appeared inexorable. Despite a decline in total world trade, China has seen its exports fall less than those of other big powers. A new report by the World Trade Organisation calculates that the total value of merchandise exports fell by a staggering 23% in 2009. Among the top ten exporters, Japan’s shipments were worst affected (falling by 26%). Although China’s exports also fell (by 16%), the contraction was less painful than in Germany (down by 22%). As a result China is now the single largest exporter. The global downturn has helped to reduce global imbalances; the leading three exporters accounted for 26.7% of total world exports in 2009 down from a third of the total in 2008. The WTO expects trade to rebound by nearly 10% this year.”
  • The Real Reason China Resists on the RMB“As I see it, China is asking a question to which there is no easy answer; what right does the US have to lecture anyone on economic matters now, having played so large a part in causing the current global recession through loose monetary policy, poor risk management by some of our most prestigious companies and monumental regulatory failures? They are responding to the continued US belief in American exceptionalism, that we can do whatever we do, right or wrong, and ignore the criticisms and demands of other countries who often bear the consequences of our actions, while we continue to insist on our right to criticize and make demands on them. As Brad Delong and Stephen Cohen have pointed out, the US simply no longer has the economic clout to get away with this any longer, and who better than China to stand up to it?
Capacity (Equity) building as a China’s National Policies is a balance between Free Enterprises rising Productivity and Social and Fiscal Policies and Infrastructure
Equity, capacity and sustainability “The concept of equity in the context of capacity building is not sheer ethical. It”s mixed with certain practical social and economic meaning, therefore inseparable from sustainability.Equity here contains three folds of meanings: 1) equity between existing generation and future generations; 2) Equity between different social members under the same generation; and 3) Equity in responsibility and obligation that different social members or groups have to achieve sustainable development. Equity between generations, to much extent, is subject to ethical area. The current generation, in moral sense, should avoid “eat rice from ancestors while break future generations”pot”. They have no right to overconsume and damage natural environment and resources that the future generations will live in. This point was made very clear in the World Committee on Environment and Development Report. In its definition of sustainable development, that not to harm the future generations to meet the need of their own was established as a condition. Although capacity building of the current generation is helpful to equity between generations, this equity however is not the most important problem to solve in the area of capacity building. The equity between different social members under the same generation is closer related to sustainability. On the one hand, from the perspective of social justice, it”s necessary that the society takes into consideration the poor’s interests so as to reduce the gap between the rich and the poor. This was emphasized in the Brundland Report. That is, The basic needs of the poor in the world should be put at the top priority. On the other hand, equity between different social members under the same generation is also a condition to sustainable development. It seems that there is not much connection between equity and sustainability, or not so direct. However by some analysis, can you find that different social members”unequally possession of the resources is an important reason for difficult sustainable development.This is because that even though the society in general is rich in resources averagely speaking, yet the gap in term of resources possession will force the social members short of resources to overuse or abuse their limited resources to make a living. Since the environmental problems are interrelated and intereffected, some part of unsustainability in the society will likely lead to an overall sustainability. Therefore, equity is also a condition to the sustainable development process. Sustainable environment and equity of social responsibility and obligation have been an issue that developed countries and developing countries keep debating on. Who has polluted the environment? Who is making the environment worse and worse? This is an issue of responsibility and obligation. Even though it”s an issue of equity between different social members or groups under the same generation, in essence, it”s a practical issue in international politics and economics. However, even if every social member or group is willing to assume the obligation, does he have the capacity to realize the commitment? There you find that equity, capacity and sustainability are closely related with one and another.”
State Employment is used as a balance for higher wages in Non State Employment instead of used by the Economics of Capitalism (mostly and only) Employment Market Forces.
Ⅲ. The Institutional Transition Under the Dual Labor Market From our analysis of the features of employment absorption and wage determination in the two parallel urban labor markets we can make the judgment that the labor market in the newly established sector determined by market forces represent the future direction of development. In other words,the process of transformation from the SOE”s employment system to NES”s is the process of the formation of the labor and wage system of the market economy. How will this system transition take place? Since the two systems of labor and wage in the two kinds of sectors dominate their respective labor market, the competition for laborers between these two kinds of enterprises and therefore the expansion of one labor market and the reducement of another will realize the transition from one system to another. This is the first form that the transition of employment system will take. In the process of expansion and reducements of the two labor markets, caused by the competition between the two kinds of enterprises, the traditional system of the state sector will respond accordingly, namely by introducing reform in order to survive in the competition and shift to a market economy. In this way the second form of system transition takes place. First, we will look into how the first system transition that is characterized by employment transfers between the two kinds of enterprises occurs and the features of its transformation. If we suppose the urban labor market is closed off for outsiders, laborers are distributed merely between the SOEs and NESs. Chart 1 indicates the competitive relations between these two sectors as well as the process of expansion and reducement of the two labor markets.The horizontal axis stands for the labor volume. From O1 to the right, the labor volume of the SOEs can be measured; from O2 to the left that of the NESs can be measured. The domain between O1 and O2stands for total supply of labor. The vertical axis stands for the marginal productivity of labors or the wage level. The curve tilting downwards from the right to the left is the curve of marginal productivity of labors in the NESs. It tilts because their marginal productivity of labors decreases with the increase of the employed labor”s size. At the same time, the marginal productivity of labors in the SOEs increases with the number of workers leaving their enterprises.Thus, the curve tilting downwards from the left to the right is the curve of marginal productivity of labors in the SOEs. The curve that is steeper, is the curve of marginal productivity of labors in the SOEs under the assumption that their wage level is determined by the market (see name in quotation marks). In this situation, this curve intersects at the point A with the curve of the marginal productivity of labors of NESs during their employed labor volume expansion. This means the wage level of the two kinds of enterprises are equal to the point Wa, and the expansion of labors”volume in NESs no longer continues. Then the labor”s volume in the SOEs is O1A while that of NESs is AO2. Since the SOEs are overstaffed and wage is not determined by the marginal productivity of labors, however, their curve of marginal productivity should be more flat (might be a horizontal beeline without elasticity), i. e. the curve whose name is without quotation marks that intersects at the point B with the curve of the marginal productivity of labors in the NESs. It is at this point that NESs stop expanding their labor volume, here the wage rate is Wb. As the wage is determined institutionally NESs need to pay higher wage to attract laborers; and the transformation of the laborers from the SOEs to NESs becomes smaller. In the real laborer”s distribution, the laborer”s volume employed by the SOEs is O1B instead of O1A, that for newly established enterprises is BO2 instead of AO2. So the NESs are limited by their ability to pay higher wage, the difference between labor volume they really employ and that they should employ is indicated by the distance between A and B in the chart. Chart 1 Labor Transfers between Two Sectors Our theoretical analysis reflect the reality of transformation of laborers between the two sectors. One characteristic of NESs is very labor intense. It is not feasible for NESs to pay very high wage to attract employees from SOEs if NESs are to keep their advantage in laborer”s resource. So competition of employment is limited by the scope of their ability to pay high wages. Within this scope, however, NESs can certainly attract relatively high qualified workers to form the backbone of their enterprises without taking cost into account. As it is not possible for the NESs to obtain all the laborers they need from the state sector it is necessary to have other channels to find labor. If NESs had not have other such channels, this sector would not have been able to develop to the present stage. Our analysis above was made under the assumption that the urban labor market was closed off for outsiders, in our further analysis we will give up this assumption. NESs obtain highly qualified workers from the SOEs by paying higher wage in order to satisfy their needs for technology. The other source is laborers with common skills from the rural areas.
China has discovered that globalization and international competition work in its favour.
The problem of the Rest of the World is the ideological almost blind following of Marx’s’ “Das Kapital” financial system controlled by the rules of “trickle-down” Capitalism that happen to be quite impractical even when this system built North Americas, Great Britain, France and Germany: Great Powers envied by anyone in the World, however looking in History things sometime have to change; it happened to Rome, Persia, Victorian Empires, and etc., thus change could be considered as ongoing now affecting different countries and markets in different ways, but the trend is quite similar ( In the World short term history: once mostly agriculturally driven GDP changed into mostly industrial production driven GDP, now it is about to change into mostly “artificially” balanced “Demand-to-Supply” Market Economics GDP not the ideological one followed as a mantra by the west, however if global economy does not adapt to the new upcoming with the globalization challenges very hurtful consequences may occur).
Joshua Konov 2010


Philosophy of a Governing Economy

THURSDAY, MAY 27, 2010

Philosophy of a Governing Economy

In contrast to the US economic policies China uses much more decisively economictools when a situation arises. In many cases when either Global economic crises was on its ways as it happen in 2008-2009 or now when Chinese economy shows overheating the Chinese government does not hesitate to act and to act promptly and decisively. When Real Estate bust in the US provoked rambling effect over the entire Global Marketplace in China a curbing on speculation and targeted low housing prevented similar to what happen to US and EU effect in there.

When in 2009 stimulus packages were needed to add monetary supplies and keep the economy from falling as a result of decreasing export elsewhere and particularly in the US as a main trade Chinese partner, a “flexible” usage of raising Chinese internal demand and expanding trade relations elsewhere and particularly with South Asian markets kept Chinese economy in relatively strong growth of over 9%. In the First Quarter China the world’s fastest-growing major economy expanded 11.9 percent in compare to the last year and now Chinese government takes prompt action again:

China’s Rules to Curb Property ‘Madness’ Will Take Effect Now

“The market is having its “last madness” and speculation may dissipate in a year or 18 months on extra action by local authorities and an increased supply of low-price, so-called policy homes, Li said.

Cheung Kong (Holdings) Ltd., the Hong Kong developer controlled by billionaire Li Ka-shing, said yesterday that efforts to cool the Chinese property market are “timely.”

“You want to take action before the market gets too hot,” Justin Chiu, executive director of Cheung Kong, said in a Bloomberg Television interview. “Prices have gone up really quite a lot; people buying for their own use should do it within their means. If they invest, they need to be cautious about interest rates.”

Chinese government is not persuaded by lobbyists of falling stocks prices “The Shanghai Composite Index fell 1.1 percent yesterday” to moderate or change their policies, they are acting indiscriminately using the available “tools” of economics for prevention or stimulus when needed.

In comparison to China, here in US a partially pro political and ideologically motivated system of the ways of economics is used by the government for prevention of economiccrisis or stimulating the economy when needed.

President Obama spent years to promote the Health Reform in fierce fight over details sometime quite irrelevant when the Health Reform is a purely economic “tool” for expanding economic activities and overall for so much needed wealth distribution and redistribution in US. This constant talk of US deficit and constantly rising National Debt also handicaps the Government to take decisive prompt action when situation arise.

The economic “tools” are more considered ideological prerogatives for political gains andEconomics is more considered as a believe in something could be the Right “trickle-down” Capitalism could be the Left more business involved Government, whenEconomics is a Science by which any “tools” of economics should be used indiscriminately under different arousing economic conditions, any economic tool should be on the table: curbing speculations, financial regulation, enhancing personal liability of risk management of corporate structures, social policies, infrastructural expenses, healthcare expanses, SME tax breaks and low interest financing, subsidies and etc.

In time in ever globalizing marketplace and rising productivity, industrial production of the production based economics is not going to maintain conditions for many countries all over the world to keep up with their Fiscal expanses. When countries like China are building industrial production to new heights in combination with Japan, Germany and US, these may well build capacities filling the Global supply for such industrial production. Here in context the exhausting Earth resources, the Global pollution and deteriorating Environment should be taken in account, too: showing limitations to a constant Global Industrial Growth for all countries so these countries could keep their Fiscal expenses under control.

Industrial production adds the most to any country’s GDP at the moment, therefore under the current production based economics for a country to not be industrialized means either this country is very much underdeveloped like Bulgaria or it runs high deficit like Greece and Portugal. For US the effect of decreasing industrial production has a very similar effect to the Bulgaria and Greece: when in some areas like Detroit poverty roars just like it does in Bulgaria in some other areas like Chicago high deficit is becoming imminent. Thus the policies President Obama is implementing of “artificially” boosting Healthcare, SME and tax breaks to the low income are the only economicpolicies possible under the circumstances, though there should be some better ways for sustained economic growth in which private enterprenuarship is not curbed and freedom of business is not overtaken by governments, because what all learn from the last Great Recession was that Governments could take over businesses, financial institution in a very quickly, and as a conclusion when future recessions hit Governments will go even farther.

China’s handling of the last Recession is a good example of how such crisis should be handled but when a well balanced economics is combined with personal freedom of the US the results could be much higher, but to preserve this freedom we should adjust currently used economics to the arousing developments of the New Century.

©Joshua Konov, 2010

Market Development Verses Economic Growth

Market Development Verses Economic Growth

The global industrial overproduction capabilities have been gaining momentum accelerated by ongoing globalization, rising productivity, Chinas industrialization, the Internet and mostly by the vastly improving high technologies in manufacturing, communications, and international trade. The Transnationals have been given great advantages to find new cheaper markets that they could relocate or outsource industrial production, whereas the huge Chinese marketplace has provided them the needed demand to expand and aggregate their capitalization and economic health even in the time of 2007-9 Recession and post recession time. Simultaneously to the rising profit of the transnationals and big investors, declining industrial employment, middle class, and fiscal reserves have been observed in the United States, many European countries, and Japan, the manufacturing jobs that used to replenish fiscal reserves and maintain large middle class have largely disappeared being moved and outsourced, moreover the industrial jobs still left in there have been highly robotized bringing down salaries and numbers of employed. The low paid jobs that have been gaining in post recession time could not compensate to the lost high paid industrial jobs from the past. In general, capitalism relied on industrial jobs and high interest lending rates to raise profits, boost economic growth and replenishes fiscal reserves; however, none of these three points is working under the conditions of most recent market developments, whereas aggregated super-production, moving, outsourcing, the long-term and deep 2007-9 recession and post recession time, and e.g., made these three points, which are founding for the capitalism, obscure and underperforming. Hence, the governments are keeping their discount tier one interest rates close to zero, but the poor transmissibility of the economies is establishing the condition for new market bubbles instead of boosting higher percentage economic growth with high employment and salaries in manufacturing. The idea that manufacturing will come back to the US, or most European countries to employ the high single and double digits unemployed is unrealistic in its nature. The austerity measures in UK and Europe, the quantitative easing and stimulus packages in the US, UK and Japan, and the stimulus programs in China are temporarily economics tools capable of reviving business activities of mostly lower paid jobs in service sector, however the majority highly paid industrial jobs are gone forever being undercut by high technologies, and moved or outsourced elsewhere, therefore the capitalism could not work out these economies to sustain adequate economic growth to balance rising fiscal social and infrastructural expenses.

The main carriers of economic growth in the capitalism are big transnational corporations and big investors, which were suppose to stir economic growth by raising productivity supported by trickling down capital. Moving and outsourcing industrial production to wherever cheaper and qualified labor is found, these two economic agents are considered the noise in (1=f noise) formula for every country/market economic development that is suppose to close underdeveloped economies to the developed industrial ones. Hence, low taxes, low regulations, shady not particularly clear business laws, and corporate contracting are the keys to progress, industrial employment, and economic growth. However, for the last 20 years the system of capitalism greatly underperformed the 1=f noise formula has not worked, the middle class deteriorated, the manufacturing jobs are gone, and the business activities are shrinking lacking demand balanced marketplace.

Moreover, the economic growth, which was suppose to keep at the least as high as to compensate for the natural energy related price rising could not keep up marginalizing into the very low, or like in EU into the recessionary minuses. The deflationary forces have been gaining strength, whereas Japan is the good example of it. Thus, the market forces pressure has degenerated economic growth into market development, however neither the overall financial system, business laws, lending approaches or market security have been adapted to the natural processes of this ongoing change, thus instead of a sustained market development  be succeeded and maintained the economies continue accumulating fiscal debt, and underperforming with high unemployment and underemployment. The ideologies are ruling over the clear indicators of a system, which has exhausted its growth generating powers.

Economic growth differentiates from market development by its fundamental change of priority from big business and investors as main economic agent for economic growth to small and medium businesses and investors as main market agent for market development. Hence, the economic tools such as high lending rates, shady business laws, deregulated financial system, tax breaks for the rich, limited liability corporate structures, cutting down on social and infrastructural expenses, e.g. that worked to boost economic growth are to change into more sophisticated deleveraging diverse business environment using market tools such as enhanced business laws, unlimited liability corporate structures (to the decision making corporate structures – not to the investors), higher market security allowing lower lending rates, using social and infrastructural expenses as an extra equity demand, e.g. that overall will provide better balance to demand-to-supply markets. Market development is an enhanced version of the trickle down capitalism that rely basically on market forces to balance markets demand-to-supply but uses indiscriminately market tools to keep this balance in marginal proximity.

Working Papers


  1. 2001 & 2007 Recessions prompted remaking of the international organizations
    MPRA Paper, University Library of Munich, Germany View citations (1)
  2. Piercing the Veil’s Effect on Corporate Human Rights Violations & International Corporate Crime (Human Trafficking, Slavery, etc)
    MPRA Paper, University Library of Munich, Germany

Joshua Ioji Konov, 2012

Bonding as Tool for Sustained Economic Growth

In the modern financial system bonding is requested on large and governmentally subsidized construction projects. To be sure that a project will be executed with needed quality General Contractors and even the Subcontractors are required to be bonded as a precondition for even bidding on these projects. To acquire bonding a company is underwritten by the issuer or the bond holding company.

“Construction bonding is a risk management tool used to protect project owners and developers. A bond constitutes a legal guarantee that the project will be completed as expected. In instances where a bonded contractor fails to perform, the bonding company will provide some form of restitution to the owner. While bonds are not required on all projects, there are strict bonding standards on government work. Many private owners and developers might also require bonds to protect the interests on various projects.

Read more: What Is Bonding in Construction? |

Bonding is a financial tool that enhances the security to investors, developers and owners on projects.

Another tool used in construction business is Mechanics Lien that basically is a security for GC and Subs so they can get paid on construction projects: Mechanics Lien is used on any-kinds of projects large to small, and even it (Mechanics Lien)  may slightly differ from State to State the difference is not any great.

Mechanics lien is a financial tool used in construction business that provides additional security to General Contractors and Subcontractors to ensure proper payments on construction projects.

These economic tools are not perfect bringing lawsuits and long financial disagreements, however without them construction business would be in total chaos bringing these disagreements to longer terms.

Bonding and Mechanic Liens are tools that could be well adapted in other sections of the business law which could enhance Small and Medium Enterprises security and afterward make SME lending much easier and less risky.

Breaching contracts by not executing payments by Big Businesses to the SME is a very painful to the whole US economy with consequences taking many SME to bankrupts, and putting on the streets many SME employees: it is well known that more then 80% of all employment comes from SME.

Especially when economic crisis occurs Big Businesses tend to stop payments or negotiate Contracts price reduction in accelerating rate, thus, economic crisis deepens and effects US economy most painfully. Unless Big Businesses that are Global and could switch operations or even file multiple bankrupts and then rise as winners, for SME such bankruptcy filing are very often deadly and many are getting sold looking for equity or even close operations.

The trickle-down approaches of currently used Economics of Capitalism promotes and serves mostly Big Business, and the system worked well because the concentrated capital through such “trickle-down” brought industrial productions down to the US marketplace, but this process of Free Capitalism was totally interrupted by the Globalization and rising Productivity on a ever expanding Global marketplace in which the previously “trickling-down” to the US marketplace capital started “trickling-down” to China and elsewhere else. Large Corporations and Big Investors are moving, outsourcing, and investing to elsewhere in where ROI and projections for better ROI were much better, thus, US marketplace was left to SME to employ the majority of the US workforce when in the same time the “old” support for these Big Guys is still in place.

US Government intervention to the Great Economic Upheaval in the last few years was a result of the exodus of the Big Businesses and Investors from the US marketplace.

However what was done was a natural reaction to the Globalization and if rightly used it (the Globalization) could bring good to America, as long as these processes are rightly evaluated and actions for improving the situation are taken promptly.

One of the things needed for such Globalizing economy is the Bonding, ability to put Lien and correlated Business Contracting business law and regulations that can help SME to become more lend-able.

(For more see: Business Exchange: Market Economy)

©Joshua Konov, 2010

Employment, Capitalism, Environment and Resources by Joshua Konov

 Modern day’s economics encounters conflict between market (market synonyms of economic, economy) growth that could boost employment and the environmental regulations, which are obstacles, adding to high taxation and business regulations such conflict could have serious weakening effect on businesses’ competitive edge. It is so right, because in current relatively low security markets founded on cyclical runoffs and high lending rates, particularly to small businesses and investors, the business competitiveness is negatively affected, a step farther, by additionally imposed environmental rules and regulations. In addition to, the environmentally friendly products average high production prices and high technological machinery prices that makes such production quite expensive, indeed. Only subsidies and tax initiatives could help sustain market competitiveness, however, these subsidies and tax breaks are watered down into unproductive artificial market interference in an insecure market, which instead of enhancing the market competition are pushing it down making it totally dependent on such tax breaks and subsidies for their existence.

LONDON — For years, Europe has tried to set the global standard for climate-change regulation, creating tough rules on emissions, mandating more use of renewable energy sources and arguably sacrificing some economic growth in the name of saving the planet. But now even Europe seems to be hitting its environmentalist limits. (Europe, Facing Economic Pain, May Ease Climate Rules By STEPHEN CASTLEJAN. 22, 2014)

The global business conditions of many countries running high deficit and accumulating national debt establish highly unlikely conditions to meet the demand for environmentally friendly products and alternative energies anytime soon.

Declining Earth resources prompt energy related inflation, which aggravate the need to maintain consistent economic/market growth in a runoff to survival for developed and developing markets alike. However, the 2007-09 Recession has been followed by anemic rebound of employment and of personal income, contemporaneously causing market imbalance of demand-to-supply high national indebtedness. Easing Interest Rates, Quantitative Easing and Stimulus Packages have decelerated the processes of declining economic indicators, but could not boost market activities to the needed fundamental turn around. Outsourcing and moving of industrial production prompts high unemployment and marginal personal income growth. The inadequate consumption resulted from the declining industrial employment has long lasting negative consequences to the market development. The fundamentals of the trickle down Capitalism lay on relative high lending rates, shady business that benefits large transnational corporations and investors, however, under the new developing market conditions of globalization and rising productivity, of the Chinas that make outsourcing and moving industrial production targeting reduction of expenses much easier, the trickle down approach cannot function appropriately.

In this new global market, small to medium businesses and investors play progressively higher role to create employment, enhance consumption and business activities overall, the current economics empowers large corporations and investors in conflict with what is necessary for market development. The shady business practice and unfair competition might had performed well in a pro supply economies of the past, but cannot ensure needed market development of the presence, and such inadequacy is particularly transparent when it comes to the issues of environment and diminishing Earth resources, which are counter productive and cannot keep up market balance, therefore fiscal indebtedness is in progression.

The question remain: if the Earth environment is so much affected by pollution and the Earth resources are so quickly declining to require prompt action?

Even some scientists and politicians object global warming and fight restrictions on pollutions, there should be no question that our environment should be saved to the maximum in the future, and very rarely someone would object it. However, the economics of Capitalism is industrially based: in meaning, industrial production is considered the highest contributor to the GDP of any developed economy, therefore in times of slow growth and factors that regulate industrial production, limit it too, and while the competition is Global, coming from places with wider opened doors and more flexible regulations, the competitiveness and success of any economy is directly affected by any regulations the particularly environmental ones. Hence, if Environmental protection, environmentally friendly production and alternative energies are to be implemented: it could be done only on an equal base globally, or/and if the system of economics is amended to apprehend these new developments. Any other ways, such cause is “cauza perduta”, and especially in the conditions of slow economic growth.

Subsidies and tax breaks could help environmental protection to a certain point, sure, it could be done only nationally for the most developed economies, but even in there counter market measures of such regulations are politically resisted; these are just very difficult to be implemented when working against the markets.

What kind of economics could adopt Environmental protection, environmentally friendly production and alternative energies into a productive competition?

The Capitalistic economics takes productivity as the main economic tool for growth, thus anything that prompt it is good and anything that slows it is bad for the economy: social, educational and infrastructural expenses are bad, business laws and regulations are bad too, while deregulated and shady business practices, lower taxes for the rich, no social or medical protection and expenses are good.

Well, are all of these the bad, bad or the good, good? – Yes, these are…, but such statement reflects the reality of the modern days Capitalism of industrial production and trickle down capital.

The world history (recent Greece is a perfect example) shows that governments could not manage markets, being inept and inflexible the governments create redundancies and economic upheaval. Only free entrepreneurship and a free market business environment can create market balance, however the 2007-09 Recession was not created by the government’s spending or redundancies, but it was a product of real estate overcapitalization in an economy depressed in any other sectors, which was not growing proportionately. I may bravely concur, that if the US economy in 2007 was growing proportionately in other than the real estate overcapitalization the crash effect of the overcapitalization would have been different.

It becomes obvious that the governments running economies/markets or overcapitalization product of deregulated business could bring very similar consequences.

The productivity as main tool for economic growth runs on a high gear runoffs of industrial production, for which, I believe, is insufficient to steer “noise” in the 1=f noise formula, and in the real life for bringing accelerated business activity and prompt market development (development equals growth). The small and medium businesses and investors have become the main economic agents, in times of high technologies; globalization and rising productivity do spear employment and business activity. However, shady business practices, the lock of international intellectual property protection, the over all high interest rate lending works better for large transnationals and investors, establishing unfair market competition. But, if artificial tools such as tax breaks and subsidies or low interest rate loans only are used to promote fair market competition, the long term results would not be any positive, therefore, some market related and natural for the markets economic agents should be adapted to do it.

Which are these natural for the markets agents and tools that could marginalize the unfairness in market competition and steer the “noise” as an addition to “productivity” to prompt market development and maintain market fluency, and thus raise the market security that will lower lending interest rate?

  • To change limited corporate liability into unlimited

  • To enforce business contract lows

  • To enhance project insurance and bonding requirements

  • To enhance intellectual property protection, globally

  • To enforce equal business laws, globally

These and some other points, I believe, would raise market security, and thus establish relative fair market competition by lowering lending interest rate and accelerating business activities.

After these points are implemented and only then, the role of social, educational and infrastructural expenses (which are considered as artificial for the market agents) should be better comprehended, as partial equity market agents for balancing market’s demand to supply.

But the natural for the market agents should have paramount standing in prompting and maintaining market growth.

The Environmental protection, environmentally friendly production and alternative energies are to be implemented under these new more secure market condition as a main agent for market development, because in a more diverse business climate of accelerated business activities the small and medium businesses and investors  would explore any possibilities for marker exploration; thus, lower taxes and subsidies would have more vivid effect on the market development, indeed.

Joshua Konov, 2012


The Rule of Law in Business

From generations the rule of common law does not apply to business in its force and clarity because it is considered contra productive for providing most adequate conditions for business to grow up. Business environment should be foggy and deregulated for economy to prosper was considered. Unless in the Common Law where clarity was main priority in Business Law the opportunism was its main priority.


The ideas about the role of “the rule of law” differs:

“Not surprising, people disagree a great deal about how many laws (and what sort of laws) are just right. For example, liberals tend to think we need lots of laws to control corporations, to protect minorities, to protect the environment and to provide social goods. As another example, while American conservatives claim they are for “small government”, they tend to want more laws limiting things such as sex, drugs and various personal liberties they disagree with. This nicely matches the fact that the guiding “principle” of most people is “people should do what I want and not do what I do not want them to do.” So, people tend to favor many laws against what they dislike and many laws for what they like. They tend to be against laws that are for what they are against and against what they are for.”

For businesses an environment of “do not see do not say” with   limited business laws is considered the best. Policies of “easy business” are widespread:

“Jun 1, 2010

Cameron announces his initiative for change. Picture: Andrew Yates/Getty

In his first speech as Prime Minister, David Cameron promised to aid companies by cutting red tape, improving the speed of business start-ups and kick starting bank lending.”

Cameron’s speech reflected the plans for businesses laid out in a new document, which was released last week in partnership with the Liberal Democrats.

In the document, the coalition government promised to introduce a one-in-one-out rule, whereby no piece of new regulation would be introduced without the exit of another. It also stated it would find a practical method of making small business rate relief automatic and would aim to level the playing field between small and large retailers, by enabling local councils to take into account competition laws whilst drawing up plans to shape new retail development.

The government added it would make the UK one of the fastest countries in the world to set up a new business and would end the ‘gold-plating’ of EU rules, so that British companies would no longer be at a disadvantage against their EU competitors.”


Any experienced business attorney can tell you countless stories of corporate management getting away with fraud and not paying on contracts; whole schemas of how to trick the system and avoid legal actions are developed in details: the limited liability of corporate, trust and other organizations are craftily exploited and are examples of this philosophy; countless fake offers on the Internet, through Junk mail or even on TV are coming from happy “honest” executives and advertisers with offers for easy money and immanent success if we buy their product, follow their advice or give them some money in advance. There are some laws that try to curb on such activities of fake advertising and canning promotions but these laws are so difficult to win in court unless multiple fraud is not resulted in serious financial harm thus preventive actions against possible fraud are very rarely taken. However the biggest harm for the economy does not come from pyramids and financial fraud but from general “insecurity” coming out of such lawlessness. When in the past “easy business” could have been positive to boost pro-supply economies but these have already changed into pro-demand economies of a global marketplace, so have changed financing: the narrowing profit margins of the US businesses have Large Capital well gone oversees particularly to China and now India even in case SMB have rarely been financed by large investors anyway, the ones left were the Small and Medium Investors who were the heaviest hit by the last recession.

What Does Venture Capital Mean?
Money provided by investors to startup firms and small businesses with perceived long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above-average returns.


Investopedia explains Venture Capital
Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies or ventures with limited operating history, which cannot raise funds by issuing debt. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.”

In a pro-supply economy experiencing growth and in a limited marketplace (before the globalization took over) the system of deregulation and clueless business laws might have worked well, however the situation in the world has changed greatly and the relative insecurity of Small and Medium Businesses as a result of lacking clarity of business laws started having a negative effect: insecure contracting, bonding and limited personal liability of corporate structures consequences of underwriting financing difficulties.


Usual for SMB are

· limited access to public financing;

· limited access to foreign markets experiencing economic growth;

· limited ability to outsource production or move some production to somewhere more adventigous


Therefore the necessity of stable borrow-ability in volatile economic environment or in direct competition to foreign companies subsidized by their governments is paramount. For SMB to be competitive would be only if better access to financing is available.

The overall condition of Small and Medium Businesses and their profitability directly reflects the overall conditions of ones economy because SMB provide the highest percentage employment of all, thus if SMB struggle to survive as it happened through the 2007 Great Recession so the Middle Class and the Poor in the US economy overall.  In an environment of globalization with open borders for business and ever rising productivity the Large Global Corporations are not anymore interested in maintaining industrial production on US territory, neither are these interested in investing into long term projects on US territory because of the less expensive labor and well ongoing economic growth of China, India, Vietnam and etc., same is with the Large Investors who really are not coming back on the US market either because of the lower Return on Investment ROI, therefore it is up to the Small and Medium Businesses to create employment and simultaneously to go global too, because the diversification needed for surviving market volatility may come only by going global. SMB are the one that still will continuing to maintain their basis on US soil and they are the ones that could be easily persuaded to stay in there by right economics means such as low interest loans, subsidies and tax breaks from purely practical reasons of being close to the US market, same is with the Small and Medium Investors that are the most important to still retaining their investment on US soil. The clarity of business laws bringing out higher security to SMB and SMI is from great importance to revival US economy and to funnel so needed wealth distribution and redistribution for balancing demand-to-supply ratios.

Small and Medium Businesses are much more flexible then Large Global Corporations, SMB could develop in very diverse areas of business and reflect Governmental environmental policies much faster.


If the Market Economics is used by its best Small and Medium Business borrow-ability should be based on enhanced market “security” of SMB on the market not on artificially general subsidizing by governments in a lack of business laws marketplace as it is practiced until now, because by using genuine market forces lower market volatility and redundancy, and consequently prevent from economic turmoil.

Posted by Joshua Konov at 3:21 AM

Labels: developmenteconomicseconomyglobalizationmarket economicsphilosophyquantum economics

© Joshua Konov, 2009

The Relativity and Uncertainty of Market Economics

Economics is a philosophical system of taking statistical data on individual technical indicators consequential to subjective conclusions: example of such: Gross Domestic Product  variations call %…

Source: The Relativity and Uncertainty of Market Economics