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

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


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

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

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

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

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

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

Joshua Ioji Konov, 2015

Market Economics Using Quantum Approaches


The number of articles I have written on the subject could be very perplexing for specialists and regular readers alike, because of the complexity of issues evaluated and mostly because of the ideologies have been broadened out for centuries, the ideologies that justify the deep division between rich and poor, countries and regions. The Cold War with its profound partition between the ideas of free market entrepreneurship of the Western Block Countries and the government-run economies of the Soviet Block Countries. Thus, it will be well concluded that altogether cultures of philosophical schools and religious conceptions have been exploited to smooth these divisions inside countries and set up conditions for unity and normality in life. Nationalism, chauvinism, xenophobia and over all “I am better then you are” aptitude have helped countries prosper competing to others, Empires rose and fall alone; and at present Economic Powers came up into existence.
Most of these Historical developments could be greatly explained by the processes of economic progress, because the Economy is a mirror of the History indeed. Over all the farther we go in the past when the means of production were less developed and the individual intellectual involvement was far less productive the bigger division between the having and the having not. And, in the same time the closer to the most recent times, the more middle class participation, the more individual intellectual involvement, and the more enhanced standard of life for the majority.
The rise of the technologies, the Internet, the ongoing Global political depolarization and the subsequent Economic Globalization, the ability for investing to another place not just into the developed part of the Western world for a substantial ROI “Return On Invested” capital, had brought general economic explosion of the 1990’s, but also these brought the economic upheaval of the 1989 stock exchange crash, and the most recent Great Recession of 2006.

The existing economic and social structures of (I call it) Social Order that was well perfected by the Most Developed Western Economies which is pro supply by nature of more or less trickle-down economics with relatively high lending rates (the set by the Most Developed Economies’ Governments low almost to 0 internal interest rates do not affect that much the inter-countries lending rates nor this do to the majority of the Worlds’ Small and Medium Businesses where these rates are even higher then before the Last Recession: see the interest rates of the securities sold by Greece, Ireland, Portugal, Spain, or see the rates Small and Medium Businesses are borrowing in the US). The Capitalistic trickle-down

economics is based on a relatively shady Business Practices maintained to prompt “easy business” which under the most recent conditions allows better and faster concentration of capital which effect does not result a possible on the US marketplace business expansion  but instead this effect consequences of high  profitable ROI from some Developing Countries then from the US; the “shady” business practices in which laws and regulations are far from the perfected common laws generally allow easy businesses start-up but than the “security” of these start-ups is quite limited to let lower interest lending, nor the Small and Medium Businesses have easy chances to collect on contracts from their Big Brothers’ Intercontinental Corporations by lengthy court cases, and finally when they (SMB) outsource or move any production to elsewhere trying to stay competitive globally these Small and Medium Businesses easily become a prey of weak international laws for intellectual property and anti damping protection, therefore it could be easily concluded that in the most recent times and under the most recent economic conditions the system of Social Order works better for the Large Transnational Corporations then it does for the Small and Medium Businesses, also the same formula could be well applied to how Global investment affects Large Investors and Small to Medium Investors; the lack of proper Personal Liability Laws and Regulations on National and International levels of Stock, Money and Commodity Exchanges benefit mostly the Large Investors by lowering substantially the security of investment for the Small and Medium Investors.
It may be noticed with great certainty that the Social Order of the so-called Capitalism is more in favor of Big Transnational Corporations and Large Investors then of their smaller brothers Small and Medium Businesses and Investors. Well, if such Social Order had worked well under a pro-supply conditions of a less connected and less developed world of the past, when under the most recent ongoing Globalization and ever rising Productivity such approaches are becoming quite contra productive by their fundamentals for a consistent economic growth and development; First, when Small and Medium Businesses and Investors use more than 75% in the US and the industrial production by the Transnational Corporation has been gradually moved and outsourced to China and elsewhere, Second, when Large Investors have gradually moved their investing to these Far Eastern Markets where the ROI and the economic prospective are mach advance then these in the US, Third, when in Global prospective there could be considered impossible for all regions in US and all countries in the World to enhance their Industrial Production to support in order and properly enhance their Fiscal Reserves for handling their ever getting older population required by the economics of Capitalism approach it is obvious that high interest inter-countries lending, the high rate securities controlled by the World Bank and IMF is beyond contra-productive for these underdeveloped economies , and Forth, may be the most important. The diminishing Earth resources and the disastrous Global Worming may not and cannot be addressed if the division between rich and poor people, regions, and countries is not overtaken by some new approaches in Economics differing from the Capitalistic one, in less developed and developing markets the usage of old cars, means of primitive heating, uncontrolled wood cutting, uncontrolled usage of pesticides and etc. may well destroy this Earth much faster then it is expected, to address these issues better system of Economics should be used that may accommodate and use flexible approaches to solve these.


So, even when the Capitalism or the Socio-Capitalism or the Communism systems of Economics which all represent the Social Order of the past claim to comprehensively deal with Market Economics it must be easy to prove that under the new Global market conditions non of these or any combinations of them could properly be called Market Economics: First, any economics of so-called Social Order is based on the philosophy of cyclical dialectic development that rely on the market economy to fix by itself when market fluctuations of recessions and upheavals occur which could have worked out in a pro-supply marketplace but experience real difficulties in a Global ever rising Productivity marketplace; the last Recession, the stalled industrial employees income diminishing Middle Class  for the last 10 years in the US, the setback in the European Union where maybe only Germany is doing relatively well and it is because of the German export to China of high-tech machinery, most of other countries are experiencing tremendous economic stress and are literally reducing their once succeeded higher standard of life: their social security, pension funds, Medicare instead of being enhanced and improved is being losing quality because of Fiscal shortages; then it comes China which succeeded in maintaining high growth and withstand the Recession of 2006 by expanding their own marketplace and export even under not very favorable economic conditions: China have done it and is doing it just because the flexibility with which the Chinese authorities use the economic instrument to maintain growth is very proper, the balance between social and infrastructural policies for employment and private sector, the prompt action when the real estate market was overheating last year by regulating second house lending matrix a developers specula regulations (2009), the constantly adapted policies of subsidizing exporters and certain economic areas (the photovoltaic equipment as an example), the policies of equity enhancement and values, and the etc. showed that the Chinese approaches are the best in the World now days, and such accomplishments showed to everyone that politics and economics under the most recent economic developments are two separate things to deal with, and showed that Karl Marx, Adam Smith, John Stuart Mill. And etc. are dead wrong in how the economy works under these most recent economic conditions of the Globalizing and high Productivity marketplace. And, second, no one ever really philosophically explained how the lock of resources and the Global worming could be dealt with under the Social Order conditions in an open marketplace, because never in History the people were given the opportunity or more exact had the abilities to produce more industrial goods then they consume (because by China, India, Brazil joining the Most Industrialized Economies of the US, Japan, Germany such capability for industrial goods is just very high) and at the same time the exhausting Earth resources are pushing toward Alternative Energies and Very High Technologies, and at the same time any countries but very few in the World rely on Industrial Production for their GNP, Fiscal Reserves and so on.


Even the Social Order systems of Economics in one way or the other proclaim the Market Economics as their best; none of them really deals with the most recent market fluctuations by using their established system of economics; so when under the pressures of the last Recession many governments took monetary and fiscal actions to stimulate their economies, which they still continue doing it, these actions include taking off debt from Banks and Large Financial Institution, partially acquiring businesses as it happen with GM, and printing money and quantitative easing as they are doing now; actually what the governments were doing is interfering with the market forces to prevent their economies from collapsing, and at least for moment they are succeeding, but what they are mostly doing is braking with the philosophy of cyclical dialectic economics of the trickle-down capitalism to not relying on the cyclical dialectic forces of the market to fix the mess of the consequences from the  last real estate overcapitalization that brought the Recession of 2006. The Keynesian approach of financial market interference that also was used in the Great Depression was well extended by the actions taken in this Recession to points well beyond Keynes imaginations and limits. When from Microeconomic prospective: “The cost-push theory basically emphasized the role of excessive increases in wages relative to productivity increases as a cause of inflation, whereas the demand-pull theory tended to attribute inflation more to excess demand in the goods market caused by expansion of the money supply.[1]” non of the conceptions can explain the total disruption consequence of extensive moving and outsourcing of industrial production and outflow of capital to other parts of the world. Neither Thomas Robert Malthus [2] nor John Maynard Keynes [3] neither most modern economists could or even like to explain an employment shortage not founded on economic development in a particular market, economy being replaced by a quickly globalizing marketplace where industrial production went so far out of hand so the question of balancing wages to employment to inflation is cut short of industrial employment which as it seems becomes in shortage not just because of the ever improving high technologies but even farther it becomes such because the majority of industrial employment is moved and outsourced indeed. Thus the questions from Micro and Macro Economic prospective are beyond existing logic in current economics. The question about inflation started relating more the value of the US Dollar to the Yuan, and the real costumer consumption when the costumer may not have a job in industrial production, and when in the same time GDP is founded predominantly on industrial production. Such, in an economic environment of exploding demand enforced by the new industrial powers in a marketplace of shortening industrial employment for the rest of the world, and reducing industrial employment for even some most developed industrial economies the questions about employment, Fiscal policies, distribution and redistribution of wealth are taking more power than ever if ever in History, so the questions become with depleting industrial production in the US marketplace and almost everywhere:

·        How to manage inflation without industrial production growth?
·        How to keep up and enhance consumption related growth when unemployment is high and may get higher?
·        How to manage Fiscal policies and Monetary quantities without industrial production growth?
·        What is this new world that changed one time from Farming into Industrial Production, and now what change is coming?
·        Why and what China is doing better to keep up high economic growth when the rest of the world crawls?
·        Why such a good world as the US Economy which with a few exceptions had grown for the last 100 years with at least 20% every 10 years in case has stalled for the last 10 (2000 – 2010)?
·        Why the hard-working and with the highest in the world productivity US workers are running short of jobs and how far it would go?
·        Etc.?

Actually, let me suggest what is happening and to where things in economy in the US and almost everywhere else may go to:
·        The Economics of trickle-down Capitalism may have to change to a Market related Economics of variances (I call) Quantum Economics which promotes the ideas of prompt, practical, flexible economic actions to prevent violent economic fluctuations such as the Last Recession of 2006, Inflation and deflation;
·        With the  self-adjusting  Economics gone, economic instruments/tools may be used “as it comes as it goes” approach of pure statistical principles;
·        The ideological approaches of Republicans against Democrats of how to run the economy may still be in place but will be much less intrusive to how the economy is run, because it maybe much clearer the principle system of the Science of Economics as a system of adjusting market fluctuations by using old and some new Instruments of Economics;
·        Social and Medicare expenses,  Infrastructural expenses along with

Subsidies for Alternative Energies may have to be considered more on the equity side of the governmental books not on the expenses side as it has been practiced until now, which also may have to be considered Instruments of Economics.
·        The Industrial production US Economy is about to continue changing into a Service Sector Economy, but the already succeeded equity including over all standard of life, Social and Medical Structures, Infrastructures, Educational System, relatively high valued Real Estate and the accumulated Capital may have to play important role in a more regulated Stock and other Exchanges for investment into less developed areas in the US as well Global by the Small and Medium Investors who now are handy caped by the hostile to them market exchanges;
·        The business laws and regulations may have to be enhanced for corporate, limited liability and trust management that must improve their security for lower rates “lend-ability” of Small and Medium Businesses, that must prompt more employment in different spheres of business;
·        The Government may have to start using better tools to subsidize and prompt growth; tax breaks, tax initiatives, employment stimulus, and etc. are part of these;
·        Internationally, the government may have to promote equal laws and regulations to these on the US market.

The Social Order of the Past may be changing into the Market Order of the Present and the faster these new developments are adapted by an economy the better this economy will stand globally. There maybe countries and economies losing their superiority over others and really hope the USA is not one of them. As stated above Personal Freedoms, Democracy, Liberties are not necessary bring and support the best and most advance economics because the game has changed, however the values of these succeeded extremely important accomplishments of Humanity must be preserved in any cause.
http://sites.google.com/site/economicsofmarket/
© Joshua Konov, 2011


[1]“Macroeconomics,” Microsoft® Encarta® Encyclopedia 99. © 1993-1998 Microsoft Corporation. All rights reserved.

[2]“Macroeconomics,” Microsoft® Encarta® Encyclopedia 99. © 1993-1998 Microsoft Corporation. All rights reserved.

[3]“Macroeconomics,” Microsoft® Encarta® Encyclopedia 99. © 1993-1998 Microsoft Corporation. All rights reserved.

Market Economy Under Rapid Globalization and Rising Productivity


http://thescholedge.org/index.php/sijmd/issue/view/43/showToc

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VOL 2, NO 9 (2015)

TABLE OF CONTENTS

ARTICLES

 

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Joshua Ioji Konov
9-23

 

 

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


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

Someone has to lose money,” Guo Qigang, the plant’s general manager, said in a recent interview. “We’re a state-owned corporation, and it’s our social responsibility.”http://www.nytimes.com/2011/10/26/wor…

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


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

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


‘In this perspicacious and persuasive book, Tom Palley shows how Conventional Economic Thinking led ultimately to the disaster of the Great Recession and how it is now threatening to culminate in the Great Stagnation. His thoughts on how to avoid that and how to recover are compelling and important.’ Clyde Prestowitz, President, Economic Strategy Institutehttp://paper.li/joshuak2077/1329070660

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

Small Business Majority and the American Sustainable Business Council reports that’s not the case. On the contrary, 78 percent of small-business owners in the study think regulation is important to help level the playing field with big business, and 76 percent believe existing regulations should be enforced.http://paper.li/joshuak2077/1329070660#

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

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

Struggling euro-zone economies like Greece, Portugal, Spain and Italy cannot cut their way back to growth. Demanding rigid austerity from them as the price of European support has lengthened and deepened their recessions. It has made their debts harder, not easier, to pay off.http://www.nytimes.com/2012/02/18/opi…

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

a study released on Wednesday found that entry-level wages for students who graduated from college in 2010 was lower than a decade earlier, after adjusting for inflation.http://economix.blogs.nytimes.com/2011

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

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

Companies are focused on jittery consumer confidence, an unstable stock market, perceived obstacles to business expansion like government regulation and, above all, swings in demand for their products.http://www.nytimes.com/2011/09/10/

It is encouraging to see the Bank of England, the Bank of Japan, and the Federal Reserve all working to raise growth through stimulus primarily focused on the domestic economy. (While Japan’s central bankers would surely be happy to see the yen fall, they’re not, for the moment, following Professor Ben Bernanke’s advice to print yen and buy foreign exchange.http://paper.li/joshuak2077/1329070660

(VIDEO: Watch From Davos: Is Capitalism Failing? A TIME Discussion With the World’s Top Business Leaders) Third, and most importantly, the evidence is mounting that the austerity-led reform programs are not working to help countries exit the crisis. Take a look at Portugal Read more:http://business.time.com/2012/01/31/w…

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

 President Obama issued his sharpest warning yet about the German-led solution. He said the focus on long-term political and economic change was well and good, but emphasized that failure to react quickly and strongly enough to market forces threatened the euro’s survival in the coming months Unlike ·http://www.nytimes.com/2011/12/11/wor…

Lacking such evidence, the obvious conclusion seems to be that economic growth, and employment growth, would have been significantly stronger over the last two years without government cuts. But I’d invite readers to point us to any research that bears on the question, one way or the other.http://economix.blogs.nytimes.com/201…

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

Large corporations can often squelch their competition. They can minimize their costs by dumping waste products into the environment, contributing to pollution and global warming. They can use their profits to buy political influence. If they don’t like the regulatory policies of one nation-state, they can simply shift their operations to another.http://economix.blogs.nytimes.com/201…

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

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

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

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

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

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

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

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

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

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

Mr. Fillon “made clear it had not been his intention to call into question the U.K.’s rating but to highlight that ratings agencies appeared more focused on economic governance than deficit levels,” Mr. Clegg’s office said.http://www.nytimes.com/2011/12/17/bus..

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

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

by Joshua Konov, 2012 joshua.konov@gmail.com

SEE http://mpra.ub.uni-muenchen.de/34588/1/MPRA_paper_34588.pdf

Association For Heterodox Economics 17th Annual Conference 2-4 of July,2015 Presentation by Joshua Konov


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State and Private Debt of Market Economics


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

CAMBRIDGE – Argentina and its bankers have been barred from making payments to fulfill debt-restructuring agreements reached with the country’s creditors, unless the 7% of creditors who rejected the agreements are paid in full – a judgment that is likely to stick, now that the US Supreme Court has upheld it. Read more at http://www.project-syndicate.org/commentary/jeffrey-frankel-explains-why-a-recent-us-supreme-court-ruling-leaves-creditors-and-debtors-worse-off#LEKoUJp5KSDDLW2A.99

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

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

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

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

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

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

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

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

The world is crippled by too much debt. The borrowings of global households, governments, companies and financial firms have risen from 246% of GDP in 2000 to 286% today. Since the financial crisis began in 2007, debt-to-GDP has risen in 41 of 47 big economies. For every extra dollar of output, the world cranks out more than a dollar of debt. The Economist explains why the world is addicted to debt http://econ.st/1eaQEgc

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

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

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

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

The Marketism uses subsidies, low interest financing, and etc along with foreign direct investment to prompt environmentally friendly Market Development that will alleviate global poverty and thus save Earth from destruction using market principles and saving individual freedoms.   Joshua Konov 2015 [1] http://www.economist.com/blogs/graphicdetail/2015/05/daily-chart-4?fsrc=scn/fb/wl/dc/st/thetracksofarrears

Parameters – Market Agents and Tools – of Market Economics


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

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

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

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

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

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

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

Joshua Konov 2015

Joshua’s First Law of Market Economics


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

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

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

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

                             Demand                                  Supply
By-Sectors Monetary Policies in Lending

Consumer Protection Laws

Environmental Protection Laws

Insurance Laws

Education 

Infrastructure on Projects Investment

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

High Market SecurityHigh Education

Research and Development

Unlimited Liability Corporate Laws

Business Contracting Laws

Apprenticeships

Intellectual Property Laws

Bonding Laws

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

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

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

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

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

                               Demand                             Supply
·      Fiscal Expenses·      Low Interest Lending

·      Investment

·      Monetary Subsidies

·      Insurance Expenses

·      Social Expenses

·      Infrastructural Expenses

·      Educational Expenses  

·      Fiscal Breaks·      Stimulus Packages

·      Investment

·      Targeted Inflation/Deflation Prevention Interest Rates

·      Lending Rates

·      Borrowing Rates

·      Prevailing Wages

·      Bonding on Market Prices

·     Access to Public Financing

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

Joshua Ioji Konov, 2014

Joshua’s Second Law of Market Economics

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

There are a few ways to finance Demand:

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

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

Joshua Ioji Konov, 2014

Joshua’s Third Law of Market Economics

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

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

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

Joshua Ioji Konov,2014

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


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

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

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

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

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

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

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

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

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

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

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

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

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

eur-disinflation-charts-1-2

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

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

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

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

Joshua Konov, 2014

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

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

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

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

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