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 http://www.bruegel.org/publications/publication-detail/publication/837-the-not-so-unconventional-monetary-policy-of-the-european-central-bank-since-2008/.

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

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About Joshua Ioji Konov
email joshua.konov@gmail.com twitter joshuak2077

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