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Are economies mathematical?

Updated on December 7, 2013

Or are they humane?

Adams, Malthus, Ford, Friedmann were among others, figureheads at the prow of Economics allowing it to win its spurs as a science. Economical growth, production, capital... for the pundit on the subject the science hid no more secrets. Statistics, equilibrium, differential calculus... gave the science its rationality. Since capitalism derived from maths, since maths are logical why is every economy that adopted the model dropping? Why the application of its theorisation is failing their logic? Maybe Economics are not mathematical or the economy as any computer doesn't recognized the data to function well? Then, what does Economics lack of to be implemented at a human scale? Or is it antinomic? Can we deduce that the economy in spite of their loud voices is not mathematical but only humane? Does it mean that for an economy to be sustainable the human factor has to be put forward? That social reforms contrary to our politicians' discourse are the vector to successful economies?

Throughout Europe, the United-States with the exception of the BRIC, the ALBA, the ASEAN, the CELAC formations, our economies are collapsing and the only endogenous solution preconized by our "competent" governments is the sempiternal austerity. Once again, by default of any viable and appliable economical policy, we the people a gun on our temple are facing the increase of the debt, the devaluation of the currency (the hypothetical intervention of the ECB for the Euro, the elimination of the Fed for the dollar!), the internationalization of the production and the radicalization of the economy concretely, ask the people who committed suicide because of the crashing of their economies! Concretely, we are at their mercy!

Greece, Italy, Spain and Ireland (that barely harvested the fruits of its development) are the victims of the mathematical equations the neocons recognized as truisms. They consciously apply a failing policy implying restriction on governmental budgets cutting on people's rights for the scavengers to finish off the work. It is a pattern to be acknowledged by the international community to understand the worldwide economical down spiral. Isn't it the IMF interest for economies to fail? At the mercy of their amicable interest rate, those economies will have to be transfused and their debt to be eased! When the US will realize of the shortness of breath of the Federal Reserve policy, what will happen then? Its falldown?

What is the difference between their economical data and ours? Is it what we westerners understood from the economical predicament that we are experiencing? That the ship is sinking and the only way to stay afloat is to wage war? It reminds me of the Romans, they gave games to entertain the population when the internal situation was adrift. What about fixing the economy with new policies?

Productivity, margin of production are efficient production factors on an exploitable platform where labor is abundant and inexpensive and I will add where the economy is launching, new on the international market. For years Europe and the United-States got the lion's share. Today, China, Brazil, India gather those prerequisite conditions and are consequently scoring growth, southern America applying human economic policies is facing the crisis with a better preparedness or a better comprehension of what capitalism is and what mistakes to avoid. Venezuela, Argentina are giving us the exemple to follow. Economies that were moribund, are rising. Who would have bet on them? Definitely not the arrogant West!

What are they doing that we are not? Maybe considering the problem under a new angle? If you start your equation with the right or a new postulate, you may trigger another solution, and therefore a more suitable one than the one I would call the "master key", that pretends that for the x factor n time, austerity only preached by neocons will cryptanalyze and will remedy to the world predicament. What we tend to forget, too easily I must concede, is that the crisis is capitalistic.

Few factions of rebelious countries understood the concept and decided to deroute from commonality and, consequently are building another model of society, some like China copycats the western paradigm conserving nevertheless their former communist roots, others are freeing their souls from the American tools of pressure like the IMF. They all converge to wage their development on their competitive assets. When China put forward its cheap labor, Venezuela chose its natural resources. When China exploits miserably its manpower, Venezuela, Iran, Ecuador grant them a more equitable redistribution of the oil revenues. What is our excuse?

To avoid the dollar that chokes their economy, as their trading currency, they create others, the SUCRE for the ALBA, the Renminbi within the ASEAN. Thanks to its diplomatic ability China uses its gift of ubiquity not to be the atomic nucleus in the parity, but at least one of the protons or neutrons. It creates trading and binding ties instead of financial slavery (the reason of being of the IMF). Under Gaddafi, Libya offered to African countries loan interest rates superiorly attractive than the ones practiced by the IMF. China is taking the lead over the IMF, is it the reason why we are "refocusing" our priorities on the African soil?

The Bandung gathering in Tehran that went purposedly unnoticed by our mainstream media may have triggered the rise of a middle eastern economical platform that we will have to count among our competitors. A new map or economical order, different from the neocons', is being drawn, will the West jump in the bangwagon or will it watch passively the train of opportunity pass by without reacting? Is the political, financial, military destabilization of the Asian platform the only solution to save our economy? It looks like it.

Contrary to the rest of the world, the south American platform aimed at the comfort of its people through humane economical policies what seems to be a winning ticket. It explains the western "devilization" of their pioneer presidents. The promises made during their electoral campaign were kept and ensured them a garanteed reelection (confer to Chavez, Correa, Ahmadinejad). In four months the Iranian president will be elected and the leading party of Ahmadinejad has big chances to score the next presidential tenure. What is their secret? The human factor? By accentuating the human factor versus the capital one Lula's, Chavez's, Correa's, Ahmadinejad's presidencies set a precedence in the art of governing. A country is its people. By developing policies propping up the demand versus the offer, they are scoring economical growth, a depauperisation and a successful paradigm to apply to the eyes of other struggling or subjugated economies. Their success only announces that another solution is at the doorstep of the world beside the one claimed by the IMF (the US in disguise).

A society to thrive needs freedom and civil rights. To ignore it and the people will redesign the constitution. If the constitution and the Maslow's pyramid portrayed us as so, it means that for a society to be, conditions of living and working of its beings shall favor their humane factor.

It is clear that the rationale behind capitalism doesn't support its symbiosis with the human entity. Capitalism invests in capital.

Since policies are determined through theories. Since theories remain abstract with the support of mathematics. Since mathematics are rational therefore rigorous. Which parameter our economists missed to rationalize the inadequacy between the policies carried out (austerity) and their anticipated results (economic growth - that is rarely at the rendez-vous -, the expectations of growth are always overestimated) that should correspond to the mathematical thought and result? Logically in mathematics there is one result. There is no room for doubt. One plus one will always equal two, and it is the certainty upon which mathematics reposes. Since a mathematical result is flawless, the flaw belongs to the theory.

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    • maxoxam41 profile imageAUTHOR

      Deforest 

      4 years ago from USA

      Thanks for the interesting intervention. I will also add that most of the world expenditures in R&D represent ONLY 1% of their GDP. Northern countries Finland (3.78%), Sweden (3.37%), Denmark (3.09%) are more R&D oriented than the rest : Germany to my bad surprise only (2.84%), Austria the agreeable surprise with (2.75%), France (2.25%), Netherlands and Belgium (2.04%). Small countries without economical status like Estonia (2.38%), Slovenia (2.51%) are betting on R&D for their future whereas colossi such as the US (2.77%), China (1.84%) and Russia (1.12%) prefer to accentuate their military power. Israel is the only country that is superior to 4% of its GDP. Now it will be relevant to know which part is dedicated to the military.

    • CHRIS57 profile image

      CHRIS57 

      4 years ago from Northern Germany

      Impressive critical thinking. You are quite right that there is always maths behind economic theories. And yes, the human factor, the social factor is often neglected. Economic theories tend to cover social impact in some minor parameters in their balancing sheet.

      May i contribute another factor for the mathematics of economic theories? Besides social impact it is the technological progress. And associated with that is organizational progress.

      The flaw in long term mainstream economics is that economic growth is treated to be created out of itself. Well, it is not. Behind every real economic growth pattern is always some kind of industrial or organizational revolution. First comes the new technology, then comes the organizational means to optimize use of the technology. Always has impact on social well being.

      Today technology brought economies to the status that only 15% of respective GDP must be used to produce, to manufacture, to create goods. Some 85% are then used for servicing, for distributing whatever was produced.

      However it is not easy for economies to adjust to that level, that technological watermark. All economies with less than 15% productivity do borrow on the world market of what is needed to maintain status quo. The US is one of them, and by the way, Greece, Portugal, UK are also in that team. All economies above that 15% can´t really do much with what they produce. Same (mathematial) law applies, so the have to export their stuff (China, Germany...).

      The long term social effect is: In economies below watermark people live beyond their means, in economies above the watermark people live below their means.

      The method for adjustment to live within ones means is called Austerity. And Austerity can only be felt by economies who live beyond their means. They will have to cut back.

      If adjustment is necessary, this will always be on the back of the weakest participants of the economy. So better have a social balancing system available.

      BRIC economies: My job gives me the privilege to visit frequently at least 3 of them. While China (factory of the world) and Russia (natural resources of world) are above watermark and are doing fairly well, Brazil is struggling to maintain status quo. Brazil tends to run trade deficits.

      An example of where things are working: Northern Europe. Has good economic status, good social situation, and is also above the watermark when it comes to productivity. Germany is somehow inbetween, a little behind Scandinavia for the social situation but with the economic firepower of a large population. One country in Europe illustrates that economic and social wellbeing can be accomplished with living within their means: Austria.

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