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

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

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

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


That are not Budgetary/Debt related*

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

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

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

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

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

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

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

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

Joshua Ioji Konov 2017



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


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


The Market Agents required (considered unifying) implements:

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

Enhanced Protection Laws in;

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

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

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

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

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

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

       The Joshua’s Three Laws in Market Economics:

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

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

What does the Market Economics means in practice?

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


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

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


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

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

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

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

by Joshua Ioji Konov (A1)

BLOG Philosophy of Market Economics

Joshua Ioji Konov 2017

Governing in Market Economics

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

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

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

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

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

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

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

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

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

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

Joshua Ioji Konov 2017

Why It Is That Difficult to Change Economics?


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

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

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

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

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

Joshua Ioji Konov 2017

The Most Recent Developments in The Global Economy

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

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

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

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

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

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

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

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

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

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

Joshua Ioji Konov 2017

EU’s Economics of Ideas

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

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

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

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

Joshua Ioji Konov 2016

The Relativity and Uncertainty of Market Economics

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

Source: The Relativity and Uncertainty of Market Economics

The Relativity and Uncertainty of Market Economics

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Joshua Ioji Konov 2016

The EU 3% Deficit Limit

2015 Conference – Association for Heterodox Economics : AHE .

Joshua Konov
Market Economy under Rapid Globalization and Rising Productivity

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

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

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

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

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

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

Part II

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

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

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

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

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

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

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

debt poverty

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

– the Real-time Air Quality Index

– Pollution Index

– the Human Development Index

– Human Poverty Index

– the real employment and underemployment figures

– the Inflation/Deflation

– the inequality ( Gini Coefficient)

– the GDP Growth Rate

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Perception and Psychology of Economics

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

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

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

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

Joshua Ioji Konov, 09-2016