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

Poverty and Pollution How Inequality will destroy Earth!

Poverty and Pollution

How Inequality will destroy Earth!

The tight lenders leech on the poor undeveloped countries creates hazardous issues that harm the Earth environment and potentially will destroy it. The use of coal and wood for heating, the driving of old vehicles, the garbage disposal and water contamination, the relentless woods destruction relates a lock of market i.e.economic development;

Distribution of Wealth: Inequality in 21st Century
 The ability of Large Transnational Corporations and Investors to outsource and move industrial production, and invest globally has helped them gain profit in time of worst 2007-9 recession and post-recession accelerating and expending inequality;

“Many corporations have a greater turnover than the GDP of most countries. Of the 100 largest economies in the world, 52 are corporations and 48 are countries, and these corporations have sales figures between $51 billion and $247 billion.

Seventy percent of world trade is controlled by just 500 of the largest industrial corporations, and in 2002, the top 200 had combined sales equivalent to 28% of world GDP. However, these 200 corporations only employed 0.82% of the global work force.

In the US, ninety-eight percent of all companies account for only 25 percent of business activity; the remaining two percent account for nearly 75 percent of the remaining activity. The top 500 industrial corporations, which represent only one-tenth of one percent of all US companies, control over two-thirds of the business resources in the US and collect over 70 percent of all US profits.

According to the International Finance Corporation (IFC), inflows of foreign direct investment to the emerging markets have grown by an average of 23 percent per year between 1990 and 2000. The combined value of stock markets in emerging economies is set to exceed $5 trillion in 2006, and has more than doubled in the past decade.

In 2005 the number of millionaires globally swelled to 8.7 million, 5.7 million of whom are based in North America and Europe. Forbes reported a 15% rise in the number of billionaires since 2005, who now have a combined worth of $2.6 trillion.”[ Share the World Resources

While the middles class in developed countries has been deteriorating in numbers, and poverty has stricken many individuals and countries around the Globe.

In current research we therefore extend the work reported in “Leveraging Inequality” (F&D, December 2010), which dealt with only the United States, to include an open-economy dimension. We find (see Chart 1) that what unites the experiences of the main deficit countries is a steep increase in income inequality over recent decades, as measured by the share of income going to the richest 5 percent of the country’s income distribution.

This increase in inequality has contributed to a deterioration in the richest countries’ aggregate savings-investment balances, as the poor and middle class borrowed from the rich and from foreign lenders. This, along with the other factors mentioned above, can fuel current account deficits.

Indeed, we find that as income shares of the top 5 percent increased between the early 1980s and the end of the millennium, current account balances worsened. For example, in the United Kingdom, an 8.7 percentage point increase in the income share of the richest 5 percent was accompanied by a deterioration in the current account–to-GDP ratio of 2.7 percentage points.[ Unequal = Indebted

imbalancesFINANCE & DEVELOPMENT, September 2011, Vol. 48, No. 3

Michael Kumhof and Romain Rancière

Distribution of Wealth: Inequality in 21st Century

]The Earth environment has suffered farther deterioration by being polluted through burning coal and wood, by cutting woods and destroying rain forests, by driving old vehicle, by disposing of garbage and row sewer and etc.

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-fuelled 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.[]

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.[

 The most developed countries are taking prompt action to improve their environment through investing and tax initiatives to boost green energies and through enforcing strict environmental laws and regulations. However, it is not possible to take on some consistent environmental protection policies on just national level. To prevent from farther harmful environmental deterioration long-term Global policies should be implemented by the International Financial Institution of WTO, WB, and IMF widely supported and financed by the most developed economies of the US, EU, China, and Japan. But, most important, the ways the global marketplace “business as usual” should evolve into more engaging ways promotion of a Green Market Development for many if not all undeveloped markets i.e. economies. An end of the budgetary debt economics that relates economic growth to productivity and investment only, by keeping firm hand on borrowers: individuals or countries alike, is necessary. Even from purely historical stand point of view the system that had performed well in North America, Western Europe, and Japan until the beginning of the 21st Century has been tipping off: 

  •  the Globalization enveloped the entire globe with a very few exceptions,
  • the Internet and rising Productivity made outsourcing and moving of industrial production much easier,
  • and China has emerged as a great economic industrial power

 Developments that have distorted the market equilibrium in many developed and undeveloped markets alike (with the exception of China, Germany and Japan after the Abenomics) by bringing long-term high unemployment and underemployment, debt accumulation, falling standard of living, and rising inequality that were shaking the foundations of the Capitalism, which short term relatively high lending rates, low market security, weak business and intellectual property laws, weak consumer protection and environmental protection laws that were suppose to boost productivity, investment, and growth have established conditions for bubbles and recessions, instead: the 2001 $ 2007 Recessions followed by sluggish recoveries exemplify it.

The conception of using market i.e. economic agents and tools in an “as it comes; as it goes” attitude to prompt Market Development i.e. economic growth is called Market Economics. It has become possible for short-term in History: since the turn of the new century, which brought some new capability for industrial overproduction by the same development that distorted the existing Capitalism. Whereas the technologies that improve Productivity, the Globalization, and China that utilized at best these new opportunities could become the market i.e. economic agents to offset the possibilities for shortages and inflation to allow long-term market development.

 The Market Economics utilizes on such counterproductive for the Capitalism developments to prompt Market Development into targeted Environmentally friendly industries that could prevent from further pollution causal of an industrial production, productivity and investment approach, and in the same time create employment, replenish fiscal reserves, and allow a more balanced market approach in economics.

 The economic agents in Market Economics are flexible parameters that adjust most recent fluctuations on “as it comes; as it comes” probability principle. A high Market Security is paramount to improve the investment transmission-ability, whereas less developed and undeveloped markets, and small businesses and investors are given access to relatively fair market competition. Targeted into Environmentally friendly industries and technologies capital infusion should be adjusted to the Inflation (not to the budget). On local for the developed countries e.g. Detroit and international for the International Financial Institutions the “invisible hand” should prevent from pollution, wasting of resources, destruction of woods, wetlands, etc.

Joshua Ioji Konov 2014

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