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 a case over 60% of its GDP) and to the Union to an 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, a 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 undercapitalization, 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.

Overall, 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 has 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 then 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 has 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 is 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 expand 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 breaking it constantly like Italy results seem just keeping the status quo of lower growth of underdeveloped Bulgaria and drifting toward similar but yet with a 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 nonfunctioning 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 recession 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 done 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 changes the trend from the time of the most 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 has 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 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 an ‘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 market like the US and the UK poured a 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 this development was the Earth Environment’s Pollution that has 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 a 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 been 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 is 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 another 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 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 undercapitalization excessiveness. The market’s expansion is considered a force promoting and maintaining high business activities by developed and developing countries alike. The division of labor wherein the developing markets high education, organization, and technologies will benefit straightforward from the developing markets expansion into environmentally friendly farming, tourism, construction, etc the use 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, therefore acting on time to prevent quick acceleration up or downwards 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 a 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! The 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 branches 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 extent; even though China has one of the world’s highest levels of income inequality, with the richest 1 percent of households owning a third of the country’s wealth, a report from Peking University has found. The poorest 25 percent of Chinese households own just 1 percent 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 an 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.



What really must be started 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 dysfunctionality, slow growth is considered either consequence 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 in 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 hundreds of millions out of poverty, building incredible infrastructure; China‘s approach more chaotic and partial having in mind the usage of 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 this 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;



Earth Environment, 



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, 



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 set up 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 a 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 an 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:

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

Painted and the Painter Employed”

“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”

“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: this isn’t about Budgets and a tight leash has been used by the status-quo current practice but it is about more motion steered 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 mean in practice?

To steer 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 with individual markets historical specifications. The Market Tools are used as Parameters for 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 robust 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 a very negative effect on the Economy is based on 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 is compatible with the entire market structure. The entirety of projected Market Development relies on boosted 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 market’s 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 Globalisation and Rising Productivity Paperback – January 12, 2017

by Joshua Ioji Konov (A1)

BLOG Philosophy of Market Economics

Joshua Ioji Konov 2017

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 nowadays Economics presaging practices such as

Equities Exchanges (Stocks, Securities, others)*

Quantitative Easing*

Accrual Accounting*

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 super-production 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 this 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


Market Economics usage of Inflation /Deflation Data Indicator tagged to Market Development does not differ from the appointed current presaging practices* but rather it extends 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 is 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 the 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 21

st 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 of Modern Economics goes that moderate 2% gives the best economic environment so business has the leverage to turn a 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

Uncertainty, Probability, Parameters, Market Economics Using Quantum Approaches

The complexity of modern day economics invokes the uncertainty principle because it becomes profoundly clear that using mathematics or the game theory may hardly take in consideration multiple variances, changing data, probabilities. The probabilities of multiple ever-changing economic realities could be only adjusted by using parameters, as it is done in quantum mechanics, to adjust or at least prevent extreme variances by applying pressures on certain relevant points.

Until to date, the tight budgetary leach has been used to prevent from excesses, redundancies or at least such approach was supposed to work. In the pro supply economy if the tight leach budgetary releases certain expansion to prevent inflation it might be considered the only comprehensive way possible for its time. Then with the new global economy complexities arriving with the development of high technologies, productivity, globalization the game theories have flourished becoming relevant in such progressively perplexing realities. In Market Economics such perplexity goes beyond the possibility for even game theories to apprehend thus changing realities, possibilities, pressures. In practice the aggregating inequality, personal and national debt, declining middle class, and with the exception of China: expanding poverty, insecurity – pressures of exogenous forces of super productivity achieved by the Transnational Corporations in farming, manufacturing, banking, services through better management, technologies, moving, outsourcing the China’s Industrialization, the Internet that have tipped off the ‘old’ supply driven economies into demand, balance driven such. The 2007-9 Recession put the final nail in the coffin of the supply economics by accelerating the processes globally toward recalibration of assets, redundancies, the inadequate consumption, demand in a highly vigorous supply possibilities marketplace.

21st Centuryinability of the orthodox economics to apprehend the globalized, high productivity possibilities could be put in the following grading from China that uses a best ‘as it comes; as it goes’ economics showing best results running for the last 2017 quarter 6.9 GDP growth down to the European Union’s under 1.5%. However, the results elsewhere are limited by the budgetary/debt driven orthodox supply driven economics that limits economic possibilities for vivid development. The low security of the trickle-down Capitalism, Socio Capitalism used at the moment comes from the main targets of easing business by overwriting labor, consumer, social protections to provide tempting for the investors, companies conditions to invest, do business, have better return on investment; the entire system, philosophy relies on such shady-business approaches that seeming had worked well for the developed economies like the US, Japan, Germany to succeed their high living standards, middle class, relative prosperity in the 20th Century. But this kind of prosperity is all but gone, the globalization, technologies, the non existing labor markets have taken over shrinking employment, small business and only allowing the really big business and investors to prosper – inequality, debt, unemployment, lost generations, reduction of social services, pensions, crumbling infrastructure that’s how the Orthodox Economics performs in the 21st Century, and therefore the new, Market Economics is needed to capitalize on the achievements from the 20th Century along with the new market developments in the 21st Century. Thus what was good for the 20th Century is quickly becoming an abomination in the 21st Century that needs enhancements, changes to apprehend the new market forces.

However, the question remains: how to avoid redundancies, inflation, economic upheaval if the leach of firm budgetary economics is not there?

If the Game Theories cannot solve the dilemma because of the high Uncertainty in modern day markets that only the Quantum Computing and the principles used in Quantum Mechanics to find the best adjustments in a particular situation will: both new sciences are brand new staff, never experienced; thus the principle used in modern science of adding up on past experience may not apply under these new circumstances! Lets say the Nash Equilibrium could be applied on individual Market Sectors development but not as a Game Theory, instead the multi Quantum Balance/Equilibrium may be reached by using the relations between 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) + Market Development + Inflation / Deflation + Market Competition (Equity, Assets, ROI) + Market Forces – a function between many relative Data to be mixed in a pad of relativity to the overall possibilities; the Market Tools are used as Parameters that either accelerate or slow down Market Development (entropy to equity or their ways around).

Uncertainty Principle and Sectoral Nash Equilibriums may apply for balancing factors to succeed equilibriums, the Market Tools are practically used as PARAMETERS to get accelerations, slowdowns, carry-ons in limits not boosting Inflation / Deflation and thus undercutting Market Development.

The Probability goes through the Invested / Subsidized Capital to the Market Tools that are flexibly applied in sinhron with the a market’s specifics, to J Constant that combines the statuary Market Agents and must be reached %% Macro-level Factors relating the succeeded adaptability under the circumstances to the subtracted Inflation / Deflation effect that must be kept in limits (-0.5 to +5) when both direction Inflation or Deflation are taken in number/fraction the – or + irrelevant;


ε,ε1xε,ε1p = Θ x [ζ(ζ x ΙΔ)]


μ1 = [μ + (ε,ε1xε,ε1p)] = Θ x [ζ[A(y1y7)|P (1) +B(x1, x2, x3, x4, x5, x6, x7, x8, xn)|P (1n) x ΙΔ |P(-050.5)]


(μ1) – it is seasoned Market Development after the gained Entropy, Equity;

ε,ε1Equity, Entropy (x p) added by the Θ amount invested through – Market Leap, Targeted Project, Carry-on Capital Infusion) multiplied by the ζ – J Constant then subtracted by the multiplied ΙΔ – Inflation or Deflation. (see: Example)

ζ J Constant is the sum of 2 probabilities; the Market Agents and the Market Tools.

A Market Agents implementation A(y1y7) considered probability to 1

B Market Tools probability p(1n] utilize the B

(x1, x2, x3, x4, x5, x6, x7, x8, xn) Market Tools’ probability effect on the Real Market that is most complicated probability that needs Quantum Approach possible by using Quantum Computers – Market Tools are used as probabilities in conditions of implemented Market Agents meaning in high Market Security business environment that allows lower interest lending and high transmissionability of the invested capital.

ΙΔInflation or Deflation acceptable variance p(-050.5)



14 = (Θ)10 X c[(ζ)2 [(μα)1(Ω)(μτ)(1] X (Ι/Δ)0,3/0.3 = 0.6] 2 – 0.6 = 1.4 x 10 = 14

14 = 10 x [2 x 0.3] = 0.6 (2 – 0.6) = 1.4 x 10 = 14

ε,ε1(Equity, Entropy) gain 14 thus M^ = 114-10 Liabilities;

if the invested capital comes from QE, SDR it must be subsidized to lift the EE will reach 121 whereas ‘seasoned’ EE may bring it down (seasoned E,E – Equity, Entropy = M^ – Market Development


The Quantum Probabilities are:

Market Agents [A(y1y7) ]complete implementation that will keep in (0….1) variance;

Market Tools [B(x1, x2, x3, x4, x5, x6, x7, x8, xn) ] that will add to the J Constant to accelerate, multiply the Market leaps, Targeted Projects, Carry-ons;

The J Constant ζ up to n%;

Targeted Low Inflation / Deflation Ι/Δ[(0.5….0….0.5)] that will not undercut Market Development – these factors are specific for individual markets, too;

Market Leaps / Targeted Projects / Carry-ons Θ that will be enough in value (at least 10% of the current M’s GDP) to ensure full employment and consistent Market Development;

These variances are targeted by the Market Tools indiscriminately; but also these are in relations to each other that must be taken in consideration and therefore only Quantum Computing can take so diverse variances into possibilities. Fundamental is the retaining of Inflation / Deflation where the Market Actions are tagged to it. The Partial / Sectoral Market Equilibriums are reached to make up the General Equilibrium; so, the Uncertainty and numbers of Possibilities are becoming even higher.

Μ– Market Development requires seasoned E,E – Equity, Entropy

Θ– Market Leap, Targeted Project, continuous Market Development

A(y1y7) Market Agents:

Strict Rule of Law in Business,

Unlimited Corporate Liability for the Management

Enhanced Protection Laws in;



Earth Environment,



B(x1, x2, x3, x4, x5, x6, x7, x8, xn) – Market Tools to accelerated Entropy/Equity

Quantitative Easing, SDRs;


Low Rate Lending;

Social Expenses (incl Educational, Pensions, Medicare, Social Security, Unemployment Benefits, etc.);

Infrastructural Expenses;

Markets, Regions Parts Equilibrium Monetary Policies;

Fiscal Policies;

Sectoral Regulatory interference by Central Banks, International Finance Institutions).

n. Others

ζ J Constant (0……n) where MS (Market Security) with implemented A (Market Agents) brings ζ to (1) in relation whereas the (1 – n) relate the adapted, adjusted Market Tools toward the Macro-level Market thus the efficiency fraction.

Ι/Δ – Inflation/Deflation

The Principle of self-adjusting Micro-level Markets and artificially adjusted using Market Tools as Parameters on Macro-level Markets on Parts / Sectors Equilibriums’ approach.

The most perplexing, hard to adjust, Probability in the above relativities is the B

(x1, x2, x3, x4, x5, x6, x7, x8, xn) Market Tools: Parameters’ mitigating effect on individual Parts/Sectors acceleration or slow down but also the relation among these parameters themselves; so, when a parameter is added or subtracted to certain value it affects the overall Market Development on a Sectoral and General Equilibrium as well other parameters in the occasion; when having in consideration the UNCERTAINTY PRINCIPLE and the MULTIPLE POSSIBILITIES and apprehensive overview requires QUANTUM COMPUTING capability to do such multi-functional, multi-operational, multi-informational estimation.

The ζJ Constant (0…1n) is consequential to the implementation in complete of the Market Agents that would give (0…1) ; the (1 to n) is a effect coming up from the proficiency of B(x1, x2, x3, x4, x5, x6, x7, x8, xn) in the execution of a Market Leap or Targeted Project that reflect the specificity of Individual Markets: (example: let’s take a market that is socialized so the more private business inclination will have a better effect on the ζ performance, or the way around: if the market is too privatized that reflects lack of employment: then the adding some social distribution would be more effective). The targets are high business activities to keep full employment using indiscriminately the Market Tools in an ‘as it comes; as it goes’ approach. Even there are countless variations in putting pressure on different Data Indicators: the positive, accelerating business are some that can be considered boosting business activities, employment to the required levels, thus the probabilities are limited and the % of impact vary but is yet limited in varieties: from these possible varieties are extracted the most vigorous for a particular market under its circumstances, development.

Joshua Ioji Konov 2017

Market Tools B(x1, x2, x3, x4, x5, x6, x7, x8, xn)|P (1n) Boosting Market Development While Keeping Inflation / Deflation in Limits ΙΔ|P(-050.5)

ε,ε1xε,ε1p = Θ x [ζ(ζ x ΙΔ)]

The Market Tools B(x1, x2, x3, x4, x5, x6, x7, x8, xn) as parameters set up by flexible usage through Market Leaps, Targeted Projects, Carry on Market Policies uses Environmentally friendly technologies, techniques in farming, manufacturing, energies, heating and cooling, garbage disposal, services, transportation to boost Market Development: business and employment, infrastructure and acceptable living standards I.e. alleviation of poverty, elimination of any Earth pollution under sustained Inflation / Deflation ΙΔ|P(-050.5)

Market DevelopmentB(x1, x2, x3, x4, x5, x6, x7, x8, xn) – Market Tools to accelerated Entropy/Equity

Quantitative Easing, SDRs;


Low Rate Lending;

Social Expenses (incl Educational, Pensions, Medicare, Social Security, Unemployment Benefits, etc.);

Infrastructural Expenses;

Markets, Regions Parts Equilibrium Monetary Policies;

Fiscal Policies;

Sectoral Regulatory interference by Central Banks, International Finance Institutions.

n. Others

The general unpredictability / uncertainty of very complex market forces inadequacy aggravated by the globalization, rising productivity, improving technologies, transnational corporations global expansion in farming, manufacturing, retail, wholesale, technologies, financing, the Chinese industrialization, and the Internet have brought exogenous for most market forces to improbable complexity that could not be offset by the status quo ideological economics of the Capitalism nor by the Game Theories, nor by the governments taking bigger role in the such orthodox economics’ practices. The self-adjusting Economics cannot prevent crushing recessions like the 2007-9 one, nor accelerate the post-recession rebuilding; under the heavy pressure of possible economic collapse the central banks and governments in the most developed economies have taken highly revolutionary policies such as Quantitative Easing, Subsidies, Banks and other bailouts, expanding foreclosures and unemployment benefits periods that supposedly would have brought Inflation but instead imploded stagnation; the even chaotic such actions helped the economies to regain some vitality, growth. However, the ideological economics that brought the 2007-9 Recession on the first place regain their strength not being able even to explain what really happened. The only marketplace that somehow and to a certain extent continued its growth was China that used the tools of economics very flexible on an ‘as it comes; as it goes’ policies principles. The Market Economics go beyond such economic policies into creating a system where the Market Tools are used as Parameters to from one side prompt Market Development of alleviation of Poverty through Environmentally friendly methods, and by having market forces on Micro-market level self-adjusting through market competition, whereas on

Macro-market level artificially using Market Tools to keep very low Inflation / Deflation.

The flexible usage of Market Tools have different effect on individual markets: let say hypothetically that an exaggerated I.e. incomputable amount o money is invested in a market such can bring high inflation and may even crush it; or let say that not enough of capital is invested in markets that such may bring huge deflation and impoverish even higher percentage of its population bringing further Earth pollution, with high unemployment, a not functional market. In this research is strictly stated that individual markets have their specifics, therefore, any Market Leap, Targeted Project, or Carry on Investment must be done in apprehension of such differences; however, with the required implementation of the Market Agents as stated by previous working papers of these research a existent minimum of a high security market environment would be in place. Despite if such existent minimum the differences, specifications must be taken in consideration in any artificial move on any market. Thus to relativity between individual Market Tools to Inflation / Deflation, and to full Employment, Business activity, Infrastructure (Equity) building is highly improbable to be achieved by the probabilities possible by the existing technologies but through Quantum Computing allowing unreachable in the past compatibility and variations. Thus this Market Economics was called Quantum too, because of its very high uncertainty and demanding complex relativity between a number of factors, possibilities.

The majority of Market Tools could be applied, enforced more to either supply or the demand sides of the occasion – thus to seek balance, first such must be sought on parts, sectoral market basis equilibrium instead of general such as some sectors overheat needing tightening up while others are in the opposite side of the occasion either needing additional boost or at least still in their ways up; second, the one way approach let say the demand side only can prompt quick inflation – instead careful configuration a particular market specifics is needed: let say a market is socialized like the Norwegian one than the pro-private business policies are to balance the market imbalance of a one way development, the opposite distinctions require the other way around thus too rigid privatization while the demand is relatively weak and stagnation sweeps through the Social expenses must be used to offset such extreme situation. It is all about balances under very low Inflation /Deflation – the second particularly distinguishing such economics from the Capitalistic one and the probabilities of high market security market development allow such difference to be possible where the lending rates to small businesses and investors could be very low without compromising with the risk factor requirements. The Market Tools also will have multidimensional effect being invoked by the need for Earth preservation that is not purely market factors but a dominant such that requires actions not necessary in synchrony with the debt controlled current budgetary economics, and therefore, as such artificial factor modulate the global marketplace the Market Tools must be used artificially on Macro-market Level to accelerate, promote, carry-on high business activities, full employment, market balance; thus the quantum uncertainty and multidimentuallity can provide such balances and allow the markets to develop without prompting harmful recessions. The relativity that accumulate by the Market Tools and affects the real economy has been well researched by the current economics though in combinations of multiplicity and intermarkets (globally) such could not be done first, because the mathematical approaches are limited in such uncertainty and second, because the further developed game theories could not accept multiple factors either even though the Nash Equilibrium and other probability theories were in use. The Quantum Economics i.e. Market Economics goes far beyond single or couple probabilities into ‘n+’ probabilities and the effects on multiple factors on the global marketplace.


Example 1: you have 10b QE subsidized into public transportation, infrastructure, Social Expenses, Fiscal Breaks for 10 years, prevailing wages, residence requirements, limited lending to small businesses up to middle size – however, the equipment, materials, energy is produced by large transnational corporations that make it global.

The Market Agents are implemented in the Market!

For the local market 10b is 10% of the market – the demand side are salaries, business income, social expenses, fiscal breaks, etc – the supply side are the expenses, small business production, services, etc; however, the effect from the global exchange of manufactured equipment, materials, goods, are to retain very low Inflation.

The Market Development is 1. EntropySales, expenses, business activity, employment and 2. Equity – infrastructure, market competition, poverty alleviation, clean environment;

To accelerate Entropy / Equity build up the higher Market Security with the implementation of the Market Agents will be established, however, the flexible ‘as it comes; as it goes’ usage of Market Tools under very low inflation even Deflation will be achieved only by appropriately weighing on the different Market Tools in accordance with the specifics of an individual market.

The in this example Investment is to change the old vehicles, improve public transportation, provide the needed employment by steering the needed business but also by apprenticeships and expanded public education. The funds are to be disposed by the commercial banks on setup matrix. To alleviate poverty also the social expenses are lifted targeting food, heating, transportation, job opportunities through prevailing wages and residency requirements. The 5 years Fiscal Breaks on taxation are to have the capital circulate in the Market. In case it is a Targeted Project in a process. There are two requirements for the implementation: 1. Proper preparation 2. Fast execution.

What complicates this Targeted Project is the necessity for multiple such Projects that must be executed simultaneously on the markets in proximity for 1. To sustain huge movement of people toward Targeted Project 2. To settle employment spread to all areas, 3. To avoid pollution coming with a concentration of people in less developed as infrastructure markets. The Market Economics does not prompt urbanization, industrialization, a concentration of people but the alleviation of poverty by using environmentally friendly methods in place: meaning in some market it could mean manufacturing and services in another farming and services, in third tourism and services to dominate market industries.

Again, all Marketed Leaps or Targeted Projects are tagged to Inflation / Deflation and therefore to the maximum a Demand-to-Supply internally must be paramount even though the globalized marketplace could sustain serious inflationary pressures by themselves.

The complexity of multiple projects, invested capital, other market tools and

the requirement to sustain low –0.5 to 0.5 Inflation / Deflation must be overcome by taking in consideration the pro-supply projected business, the existing supply local and global capabilities, the rise of demand under these projects that in a pot must avoid ‘big waves’ that can crash the market. In practice China is using a very similar project approach but on a smaller scale and therefore the results succeeded even impressive compared to the rest of the developed world are very limited in comparison to the probable Market Development under a very aggressive and widespread Market Economics: and what really presses the need for such is the necessities for poverty alleviation and Earth preservation not providing long term allowance. The Chinese experience even extremely valuable in practice, and serving as an example does not provide the needed on the large scale functionality.

In the Example 1: If 10% or 10b USD is invested through Market Tools to steer enough business activities, employment, consumption, building of equity just the implementation of the Market Agents (A) should provide Probability (1) effect on the invested capital so no losses are projected but the Inflation’s deduction, therefore, the Inflation / Deflation should be kept close to (0); the Market Tools effect should add additional acceleration, transmission-ability to the Investment thus adding to ROI, Entropy, Equity in which continuous after the operation business activity, employment, consumption must be achieved; thus, it isn’t about quick in-and-out profit driven operations but a long term Market Development where Equity / Entropy are seasoned: the Detroit’s effect where capital goes through brings profit and when the industrial production technically moved out or was robotized a devastated marketplace was left over; such, effect cannot be environmentally accepted – therefore, it is the service sector along with small business and investors, and the Social and Infrastructural Expenses that are suppose to keep the Market Development running on, the market competition, employment, consumption in check., and the Earth environment clean.

To use environmentally friendly technologies in transportation a very inexpensive public transportation, electric and hydro vehicles, and railroad, water channels, airfreight system must offset pollution; to use such in energy generation – the green energies must become the only source, same with farming, manufacturing, tourism, etc; to offset deforestation the heating and cooling must become elsewhere driven by green energies. The biggest difference between this new Market Economics and the Capitalism is the involvement of the developed economies to swiftly export Market Development all over the global marketplace, to extinguish any pollution, to establish stability by having people engaged in productive activities, having access to jobs and opportunities. Someone will call this research utopian, but actually, it is the only possible way to avoid Earth destruction by using peaceful means, and by saving personal liberties, freedoms and by not letting the government take over the business, life, personal freedom.

The implementation of the Market Agents expands personal management liability, strict environmental protection, consumer and labor such that must stop large transnationals, all businesses from hurting the environment or inflicting human rights violations. But all of this is possible with the expansion of possibilities for productive business activities, market development, prosperity on a global scale.

Joshua Ioji Konov 2017


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 ways 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 supposed to match these prices were left well behind. The Recession hit the entire market with an 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 branches of overheating markets; however, 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 yet 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 held 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 difference 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 Chinese economics seems to be the most adequate in comparison to the rest, and guess what if personal freedoms and democracy have been underperforming 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 gives 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 this 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