суббота, 9 июня 2012 г.

The new economic theory and the new theory of cost


It is not surprising that the crisis phenomena continue to destroy world economics. The economic science, not possessing the logical and harmonious theory of cost, cannot offer effective measures for struggling against crisis. Moreover, the majority of applied measures only aggravates it. In this article  the new concept of the economic theory and the new theory of cost will be proposed.

The small size of this introduction article does not allow to consider in details the questions mentioned in it, but we will try to specify the main principles of the proposed information economic theory.

Entropy growth as the progress purpose

What can be the main indicator characterising progress and degree of development? We  suppose, that the main indicator of progress is freedom, but freedom in a broad sense which is characterised by  a number of possibilities. The number of possible conditions is characterised by entropy size. Therefore entropy growth  is the aim of evolution.

  The entropy growth is considered to lead to chaos . This erroneous opinion is generated by false analogies with thermodynamic system. But thermodynamic entropy-is very specific. It defines growth of possible conditions of atoms provided that entropy of the whole system does not increase. As a result, growth of thermodynamic entropy leads to that at a considerable quantity of possibilities for atoms, for the system, as a whole,  there is only one condition possible. And it means, that information entropy of the whole system is equal to zero. This condition is called as "thermal (heat) death», and its distinctive feature is not maximum, but zero information entropy of the whole system. Thus, reduction of information entropy which further we will call simply entropy, - is bad, and the entropy increase - is good.

When we analyze entropy, it is necessary to distinguish various levels. System elements can have high entropy, and system - low, just as vice versa. In inorganic nature there is a tendency of increase in entropy on a low level, and entropy reduction at higher level. In a range, this tendency also can lead to heat death of system. But if entropy growth - is the universal aim of progress then during material world evolution  a way to increase entropy  at higher levels should be found.

The origin of life is- the solution of a problem of transferring entropy from lower level  to higher. The behaviour of a living mouse, is much more various and is unpredictable, in comparison with a small group of molecules of which it consists. Change in one molecule which is in nervous system, can lead to change in behaviour of the mouse and as a consequence to changes at macro-level. And now all the surface of the earth, and not only that,  unpredictably changes. Entropy is transferred from micro-level to macro-level due to living beings.

One more "thermodynamic" delusion is that the so called new connections (ties) between elements and new structures obligatory reduce entropy of elements, but this is not so. A modern human being, , coming to his or her working place, functions within the limits and rigid ones, but in exchange he or she receives a lot  of new possibilities, receiving  the payment for work and  free time. Thus, new connections can increase labour productivity that gives additional possibilities and  free time. A savage living in a wood, is constantly occupied by search of food and  his entropy is, much  lower, than that of a  civilised man, despite lacking numerous communications and restrictions.

Besides, new communications and structures can create  new institutes increasing entropy in a society. Each new institute – is a new degree of freedom, for the society as a whole and for the members of that society. Unlike the savage, a modern man can be engaged in art,  science,  politics, sports etc. Thus, new communications in a society increase entropy of a modern person, in comparison with a savage, at the expense of increase in labour productivity and growth of number of social institutes.

Supporters of  full employment at any cost sometimes assert, that the increase in labour productivity leading to unemployment - harms economy. However now, when we have defined the main criterion of progress, the inaccuracy of this statement is obvious. And hence the necessity to increase the number of institutes in a society for the increase of entropy and  further progress – is the conclusion not so obvious, but true.

The higher entropy of a system, the higher its adaptation to external conditions, and higher its resistance to threats of the environment. During disasters or military threats the  society unites. It is possible to say, that members of a society transfer the entropy to the state,  losing entropy themselves and becoming only  obedient performers. Further entropy can be transferred to the opposite direction - from the society to its members. 

This process of transfer of entropy from one level to another, often, has cyclic character. First the entropy of the community increases, at the expense of reduction of possibilities of its members, and then vice versa,  the cycle again repeats. Thus, the community eliminates external problems and satisfies requirement of the members for increase in personal entropy. But if the given group of people copes with all external threats only personal entropy will increase , and entropy of community will steadily decrease.It will decrease to such extent, that it cannot resist to new, unexpected threat.  Many civilisations were ruined in such a way.

And the last, that would be desirable to say about entropy in this small article. Entropy – is the growth of possibilities, and, hence, a necessary condition for the development. Besides, entropy – is at the same time the goal and purpose of the development. Hence, the big entropy leads still to greater  entropy increase. This is the explanation of the exponential  character of the development of mankind.

The cost theory

Now let us consider the cost theory. Imagine a person in droughty place. The more he is thirsty the  less is probability  that he will be engaged in something except water search, and his entropy will decrease. Having received water, the person will increase the entropy to initial level or above it, and this increase in entropy will be more the more desire he had had before that. Thus, cost is – the quantity of increase in entropy. The greater  expected increase of  the entropy, caused by goods gain, the greater is its cost.

The more the person wishes something, the less his entropy is, and  it increases  much greater, when the person receives the desired.

Drawing 1

Now imagine an exchange of water for bread. One person has wanted water, and another - bread. As a result of an exchange both of them increase their entropy. Thus, the result of a fair exchange - growth of entropy of all participants of the transaction. Hence, an exchange - a way to increase entropy. And entropy as we remember, - an embodiment of the general blessing. There is much more sense in it, than in existing theories of cost according to which people exchange, with something equal, say,  value, work expenses, etc. What for to exchange anything equal?!

Standard display of process of an exchange is the supply and demand schedule. And though it is a question of sale and purchase,  as a matter of fact it is an exchange. It is considered, that an ideal point of the market is the point of the balance, being at the point of intersection of a supply and demand. But what does this point mean? It means, that the seller would not begin to sell  cheaper, and the buyer-buy more expensively. Practically, it is a point of the least satisfaction from the transaction which receives both the seller, and the buyer. It is a point of the least entropy which is received by participants of the transaction. As a matter of fact, a balance point - the worst point of the market.

Drawing 2

In the process of formation, the market moves to the point of balance below a line of demand and above an offer line, at this time both buyers and sellers are satisfied  to a greater extent, than in a balance point. But if it is not the monopoly the market will tend to a balance point all the time, that is  it will spoil in due course. Therefore the greatest entropy is generated by the young, dynamical markets. And the old markets which have already been in a point of balance, - generate the minimum volume of entropy and, as a matter of fact, are problematic. 

Business cycles

The most stunning feature of entropy is that it should be reduced before being increased. It is possible to consider an investment as analogue of this process. Before receiving any sum, it is necessary to spend the smaller sum. And the bigger sum we invest, the bigger profit we may expect. The Same concerns  entropy. Before reaching something, that will give us  greater freedom and  greater entropy, it is necessary to sacrifice  freedom for some time. For example, in order to have the possibility to travel on water, it is necessary to construct a boat. During its construction, your entropy will reduce. To get food and to become free from it,  it is necessary to work as well, having reduced freedom and entropy etc.

Drawing 3

This schedule is similar to drawing 1. Cyclic character is the basic feature of increase of entropy. As a matter of fact, it is a unique way of increase of entropy at macro-level.

Thus, if you wish to increase entropy, you should reduce it. If the society does not presume considerable decrease in entropy then the subsequent growth will be insignificant. Therefore more developed economics  have more  possibilities for  further development. Money goe - to money.

It is impossible to increase  entropy gradually, therefore the attempts  to completely smooth business cycles - are harmful. The state during recession does not need to try to keep gross national product in the former volume, stimulating demand. It is necessary to "permit" recession, but thus not to admit export of resources and destruction of institutes because both resources, and institutes are necessary for the subsequent growth.  


If at first one participant of the market has sold the goods to other participant, and then ,  bought something with the obtained money it is possible to consider the transaction equivalent to an exchange. But long time can pass between reception of money and acquisition  of any goods with it, and consumer ability of money can change. As a result the person will not receive  those goods  which he counted on. The possibility of such situation, is the basic problem of monetary circulation.

If to consider this situation in  terms of  the model of a simple exchange it will look so, as if having agreed on an exchange, one participant would satisfy the stipulated conditions, and another – would not. It will lead to redistribution of riches and to collapse of economic relations. Use of money, in modern conditions, without the due control will easily lead to similar situations. And namely this has led to modern crisis. And "deceit" is aggravated by that they try to solve a problem in the same way which  has  led to this problem.

In order not to be "deceived" in expectations  one should receive something in exchange. In  example it looks as: the person works, expecting to buy the car and the house, but inflation "eats" this money. If he cannot buy the car he should allow himself to buy something else that will allow him to receive  freedom and entropy not smaller than before. New values are necessary.

The conclusion

We suggest to study economic processes, studying change of entropy of economic systems at various levels. We consider, that the purpose of evolution of any system including entropy growth is economic. At microlevel such growth is provided by  laws of physics, at macrolevel  by- activity of living beings and activity of various groups of living beings, and in the sphere  of spiritual development - personal entropy increases  due to reduction of passions and desires.

P.S. Translated from Russian. I will consider a proposal from publishers and magazines.

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