Transcript closed and transit structures

THE DUALITY OF ECONOMY
CLOSED AND TRANSIT STRUCTURES
Valerian Popkov, Andrey Baturin
International Alexander Bogdanov Instinute,
Yekateriburg, Russia
www.bogdinst.ru
Closed structures – is a “blind
spot” of economic theory
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input-output –paradigm: enterprises appear in these models in the form of
“black boxes”, converting inputs into outputs
These “black boxes” compete with each other for the access to limited
resources and the main argument in this struggle being the value of added
cost they may provide.
it results in chains of enterprises and production programs, providing the
highest possible result within the «input-output» system under specified
limits on initial resources.
The only thing they couldn’t do is to consume goods they produce
themselves, even if such consumption were mediated by closed supply
chains. The optimal program of input-output model eliminated such cycles
closed structures were left unconsidered, as irrational, non-economic
ones. And this is not surprising, because they broke the fundamental
philosophy of commodity production.
Along with the closed structures any unproductive consumption as such
was left out of consideration
For example, if rural population of an agrarian country eats a part of bread
it produces, this part is automatically omitted from the model.
The phenomenon of domestic
markets
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As far as they consume what they produce, it seems there is no
sense in searching any complex structures in domestic market
environment; isolation of domestic markets and their withdrawal
considered no more than an atavism
there appeared a myth, that if power obstacles are removed and
transaction expenses are reduced, no one economic structure
would be able to exist long enough “against the market”
Meanwhile, domestic markets do not “disperse”, more than that,
they multiply
Reforms of Eastern Europe became a vivid illustration of this back
side of the market
Half-closed production chains with their alternative surrogate
“money” kept on functioning in the depth of post-planned
domestic economies of the former socialist countries
Cyclic structures, “ring causality” underlie most synergy models,
since they naturally generate the so called “aggravation mode”
Cyclic and transit production structures
Let’s take an arbitrary enterprise network. This may be a global, national,
regional economy, a regional production complex
Any simple network analysis would reveal in this network some set of cycles
and open (or transit) flows
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Open enterprise network is
a “black box”, transforming
one set of products
(resources) into another
set, in accordance with
discharge coefficient – a
classical character of all
balance models
The only goal of such
“transit” production
structures is acquisition of
added cost, the difference
between input and output
(unit) prices.
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But cyclic processes are
absolutely different: the
closed flow means, that
there is no sense in
comparing expenses and
production results in its
every link – expenses and
results, inputs and outputs
are mutually cancelled in
final units, the cycle
contains no added cost, the
balance is zero (that is why
balance models have no
cycles)
And it will remain zero
independently of market
price conditions
The balance and balance-network
models
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The balance model does not examine the closed
(cyclic) structures and uses open (transit)
structures only
The balance-network model not only considers
cyclic structures, but allows to find conditions of
cycle existence and calculate their influence on
the transit processes
Divergent and convergent
processes in economy
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The global closing of economic processes can be carried on only
thought overcoming of powerful and universal processes of their
opening. A spring, working for the opening of closed life support
systems, is set into the very foundation of modern economy, and
this spring is nothing else than marketability of economy
We would call this group of processes “commodity divergence” in
economy, on the analogy of the concept of divergence in physics
Where in economy does convergence spring wings up? The
answer is obvious – in those structures, where marketability
eliminates, and a particular need comes to the foreground. We
believe such structures are either cyclic or closed ones
However, convergent processes in economy still have to get an
adequate institutional equipment, not to mention the theoretical
reasoning. Because cyclic processes and cyclic structures in
economy differ from transit ones in no smaller degree, that an
atmosphere cyclone differs from an anticyclone
Goods and services
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Classical political economy, from A.Smith to K.Marx, use to
consider services “noneconomic” welfare, “nonproductive”
labour
Modern analysts of service industries keep on consider the
service to be a variety of goods (“goods – services”), whose
distinctive feature is “direct connection, interactive relations
between the producer and the consumer”
The service is creation of object conditions, necessary for
successive activities of the client
the service participates in the following consumption
circuit: Activity – Product - Activity (A–P-A)
While the production follow the sequence: Product –
Activity – Product (P-A-P)
If in P-A-P sequence activity may represent a “black box”
and participate in balance models
In A-P-A sequence a product becomes a “black box”
As for the two interacting activities, they interact as “white”
boxes, initiating a shift of the partner’s internal parameters.
Excursus into topology of
comprehensive wholes
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A usual system is a bound aggregate of parts
while a wholeness is invariant to a certain degree, relatively
to partition
Such property is characteristic of network models
(generally, topological models), where enterprises do not
work singly, unlike well-known balance models, but join in
chains, and each individual business system represents an
aggregate of such chains
Allocation of independent chains in the network may be
done in different ways, but the number of closed chains
(cycles) in such partitions would keep permanent
It is cycles that represent the topological invariant of a
comprehensive whole, - a characteristic number of cycles
remains within the comprehensive whole, despite its any
deformation, aggregation, development
Chains and Cycles
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The comprehensive whole, as well as any other one, is made up of
processes, adjoining each other, of chains of such processes.
Process chains form chain complexes, which are systematically
analyzed by topology
A special attention topology pays to closed chains, or cycles. The
cycles, as opposed to opened chains, are able to feed themselves,
and therefore may exist relatively autonomously and stably. Thus,
if there were no circulation of raw materials, power and money
resources in gross production, no production would exist, - it
would become a single-shot phenomenon
The algebraic topology (a hundred years ago such construction
arose in the works by Henry Pointcare), distinguishes not only
structures, but most important parameters of processes, taking
place within those structures. Here is meant a systematic
distinguishing of contravariant and covariant substances or flows
and potentials.
Processes
The unity in duality
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Flows
are balanced in the
node
- (The law of
conservation mass)
i2
i1
(i1 – i2)
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Potentials
of adjacent nodes
are balanced on
the branches
e1
(e1 – e2)
e2
Flows and Potentials
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Generally, the flows
balance on structural
elements of lower
dimension, on their
lower boundaries
The flow is
characterized by some
variant of the principle
of conservation of
mass, substance,
volume, quantity – it
is an external motion
(visible parameter) in
general.
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Potentials, on the
contrary, spread to
their upper boundaries
and balance there
This is how stress,
force, pressure
distribute, how need
is produced, how
subjectivity (invisible
or hidden parameter)
is shown in general.
The world is a multi-dimensional
process
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It’s consisting of local processes, adjoining one
another
for example – a river has 3-dimensions
a pilot of a plane see it as 2-dimensional water
ribbon
a hydrograph examines one as 2-dimensional
bottom topography
The top and the bottom meet, making up a costal
line (1-demensional)
there are also fish resources, birds and animals
populations in the high-water bed
There are also the goods and financial flows,
associated with the river
The wholeness – the world from two points of
view
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Kinetic world
(a flow)
The streams are
structured and
coordinated towards
decrease of
structural level
dimensions:
from the general to
the particular, from
the concrete to the
abstract, from the
depth to the surface.
This is the direction
of differentiation of
the wholeness
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Stressed world
(a potential)
Potentials are
coordinated in the
opposite direction:
with increase of
dimension, through
structural elements
of higher
dimensions.
The world is
gathered,
integrated, joined
through stresses
This is the direction
of integrity of the
wholeness
Types of networks
open (transit)
mixed
closed
The generalized balance-network model
It has 5 nodes and 5 brunches. 2 nodes (oil and grain) have external export
potentials. 2 brunches (social and agriculture sectors) have internal potential
sources. 2 nodes (migrants and land) have outside restrictions.
External and internal prices
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The external price:
Concerns to grocery inputs
and outputs
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Stimulus of maximization
of profit
It exists in the opened
circuit
It is uniform for all
enterprises which are
letting out the given
product
Goods
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Opened (transit) structure
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The internal price:
Concerns to a branch, - to
the enterprise or the group
involved into a cycle
Stimulus not giving
enterprise to stop there
It exists in the closed
circuit
Each enterprise has own
internal price
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Needs
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Closed (cyclic) structure
Cycles (red) and open (transit) paths (yellow)
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3 cycles and 3 open paths
Мигранты
Экспорт
нефти
Нефть
Рабочая
сила
Е
e
Бензин
Земля
e
Экспорт
зерна
Зерно
Е
Results of calculations for three types
of economy
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Export – raw economy:
all economy was reduced to oil extracting by hands of
migrants and petro-export
economy all as export-focused, but now the basic is the
export of agricultural industry. Contours are not closed.
Agrarian: high efficiency of rural work and low norms of
consumption of grain have provided high stability of an
agrarian contour
Innovative: two contours Compete: 1. The innovative
contour focused on export of bio-oil to the detriment of
society,
2. The аgri-social contour focused on internal demand.
Solving in this dispute there is an intensity of solvent
demand of society. In the balanced condition these two
contours coexist, supporting each other.