воскресенье, 14 октября 2012 г.

Market life cycle (new hypothesis)



This article  is the first article in the world, which is written in the meta-language. *

3 Market life cycle

We will use the standard schedule of supply and demand for the market analysis. Supply and demand lines are crossed in a point of balance of the market.





Let's assume that the market is in A.  Point A is to the left of a balance point, below a line of demand and above an offer line. The market point is below a demand line, the buyers are more happy. The market point is above a demand line, the manufacturers are more happy. Distance А1-А2  is proportional to satisfaction which is received by the buyer and the manufacturer from sale of one product. Therefore distance А1-А2 is proportional to volume of entropy which is received by the buyer and the manufacturer from sale of one product or service. Product of distance А1-А2 on volume of output  proportionally volume of entropy which receives a society.

We will study volume of entropy which the market gives to a society. We will not find out volumes of entropy which receives manufacturers separately. And we will not find out volumes of entropy which are received by buyers separately. Each person in a society is the buyer and the seller simultaneously. It is important to us to know volume of entropy which receives a society as a whole.

Market will move to a point of balance in the conditions of a competition. The market stops in a balance point. A balance point – the worst point of the market. Buyers and manufacturers have the minimum satisfaction in this point. The price will a little increase - buyers will refuse purchase. The price will a little decrease – manufacturers will refuse purchase. In this point the market makes the minimum volume of entropy.

Let's consider market life cycle in other co-ordinates. X- axis - time, Y-axis - entropy volume.

At first it is necessary to spend certain volume of entropy (I). Then the entropy volume starts to grow (II). The entropy volume reaches a maximum through any time (M). Then the volume of entropy which makes the market, decreases (III). The market reaches balance points through any time (B). After that the entropy volume does not change, if demand (IV) does not change.



The more absolutely the competition, the faster the market reaches balance points. We will assume that the market instantly appears in a balance point. In this case the market makes an entropy minimum. An example of such market – small online services. The markets with a perfect competition influence economy and society development a little. Therefore restriction of volume of release can increase entropy which makes the market.



To limit growth of volume of release it is possible in several ways. The first way - monopoly. If the enterprise is a monopolist in the market the enterprise can reduce output volume. However the monopolist will rise the price, most likely. The new price will be above "the fair" price. The fair price - the price at which the buyer and the manufacturer receive identical volume of entropy.

Еxchange law – all participants of an exchange receive identical quantity of entropy, on long-term intervals. The law can be broken on short-term intervals. The processes and the information in economy and a society are more free, the is less deviations from this law.

Let's assume, the monopolist establishes the prices, which above the fair prices. If the price is unfair, the enterprise should spend additional efforts for maintenance of a monopoly position and decrease of public discontent. Costs increase. The offer line rises, entropy of a monopolist will decrease. The exchange law will be executed. Such market makes entropy a little. For the same reason arrangement of manufacturers on price increase is inefficient too.



If the monopolist kept the fair prices and limited release volume the entropy volume could be maximum. But in the conditions of monopoly it is almost impossible to define size of the fair price. And the monopolist will want to rise the price above the fair price, most likely.

Second way of restriction of volume of release is the establishment of quotas. Quotas should establish either the state, or the companies. But it is difficult to distribute quotas for a considerable quantity of the companies.

Third way of restriction of volume of release - informing of a society on profit which is received by the various markets. When the market will reach an entropy maximum, the market profit will start to fall. Now the market will move to a point of balance and the entropy volume will decrease. If all companies are informed on it they will not enter this market. This information will limit release volume. Reduction of profit of the market signals about reduction of volume of entropy. Between money and volume of entropy we will consider interrelation in other sections.

I consider that the third way of restriction of volume of release - more effective.

If to slow down movement of the markets to a balance point they will create more volume of entropy. The markets create more entropy, there are new markets. Because entropy – criterion of freedom and development. If market movement to a balance point stops, manufacturers can receive superprofit, and buyers keep unsatisfied desire. Therefore manufacturers have an opportunity to create the new markets, and buyers keep desire for creation of new demand.

to be continued ….

* Meta-language is - a special structure of the text, which is translated by an automatic translator without loss of meaning.

P.S. This article is a very small part of my new economic  theory.

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воскресенье, 7 октября 2012 г.

The criterion of development and progress. The new theory of cost and condition of a fair exchange




This article  is the first article in the world, which is written in the meta-language. *
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1 Universal and absolute criterion of development and progress

Imagine that the money does not exist. Economy without money. How can we assess the economic processes? We are living better or worse? The economy is progressing, or vice versa? We need to find a new criterion of development and progress. If we find a new criterion, we create a new economic theory.

So, the money is not there. We produce some products, then to exchange them for other products. We are not hungry now.

Assume that a year has passed. We produce new products, then to exchange them for other new products. We are not hungry. But we are living better or worse? We need a criterion.

Suppose that we have more options. Now we can get to any place in the world, we can engage in politics or sports, read any book and listen to any music. We are living better than ever before. Society progresses, if citizens have new opportunities.

Suppose that we have a lot of opportunities, but we did not use them. Suppose that we are hungry all the time. We are searching food and do not use  other opportunities that we have. For example, if we are looking for food all the time, then do not read a book or listen to music. Therefore, the society progresses, if the citizens can make full use of  their capabilities.

If we are hungry, we are searching for food. Search of food - one of our states, which has a certain probability. The probability of this state is enhanced when we are hungry. And the likelihood of other states is reduced when we are hungry. We read less and less listening to music. We use all possible, only if the probability of all states are the same.

Society progresses, if there are new opportunities. And society progresses if the probabilities of different states are more equal. The person becomes more free in this society. There are many opportunities for people.

The entropy of a system depends on the number of possible states and the probabilities of these states. The more possible states and more than equal to the probability of these states are, the greater the entropy. Therefore, the entropy - a measure of freedom. Entropy - the criterion of development and progress.

Entropy always increases in the inorganic world, increases the freedom of individual atoms. But there comes a chaos if every atom of maximum freedom. Chaos means that the system has only one state. But if the system has only one possible state, the entropy is zero. Thus, each atom is the most free, and the system does not have freedom. System is "dead", if the entropy of the system is zero. This condition is called "heat death."

Nature has a way to increase the entropy of the atom, but not only. Nature has a way to increase the entropy of the system. This way - life. In living matter, more features, more freedom and more entropy than inanimate matter. The entropy of a living mouse is higher than the entropy of a bunch of chemicals. Life enhances freedom systems and increase their entropy.

Bonds between atoms decrease the entropy of the atoms in the inorganic world. Bonds between the atoms increase the entropy of the system in nature. Communication between people in society can increase or decrease the entropy of the people. Communication between people in society increase the entropy of the people, if the society is progressing. The modern man have more opportunities than savage. The entropy of the modern man is greater than the entropy of the savage.

Increase of entropy - the criterion of development and progress.

A strong desire to increase the likelihood of one state and reduces the likelihood of other states. Therefore, a strong desire to reduce the entropy of the person. Many religions call to overcome desire. If a person get rid of the strong desires, will increase its entropy.

Increase of entropy - the universal and absolute standard of development and progress. More entropy - more freedom.


2 The new  theory of cost and condition of a fair exchange

We will now create a new theory of value. Suppose a person number one is thirsty. Increases the likelihood that it will search for water. Decreases the probability of other states. Therefore, the entropy decreases. If a person is number one will find water, the entropy of human № 1 increase.

Suppose a person №1 has  food, and the person №2 has a water. If they perform the exchange, the person №1 will receive water, and the person №2 will receive food. Both persons will increase their entropy. Increase of entropy - the purpose of the exchange. All participants of the exchange increases its entropy. If people do not increase their entropy in the exchange, it does not agree to the exchange.

Suppose a person №1 got the water and increases its entropy by an amount ΔE(1). Person №1 in the time T will experience hunger again. Entropy was increased by ΔE (1) during the time T.

Volume of entropy (VE) is equal to the amount of entropy multiplied by time:
VE=E*Т

Person №1 got water and received an additional volume of entropy:
∆VE(1)=∆E(1)*Т

Person №2 got food and received an additional volume of entropy:
∆VE(2)=∆E(2)*Т

The exchange will be valid if ΔVE (1) = ΔVE (2)

But the person is difficult to estimate the amount of entropy objectively. Person considers fair exchange if ΔVE(1) = ΔVE (2) on its subjective view.

Entropy change over time, so the volume of entropy must be determined by the formula:
VE= ∫Edt

Then the condition of fair exchange:
∫∆ E(1)dt=∫∆ E(2)dt

 to be continued ….

* Meta-language is - a special structure of the text, which is translated by an automatic translator without loss of meaning.

P.S. This article is a very small part of my new economic  theory.

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