Thursday, October 7, 2010

New Economic system (part 1)

A system is the set of rules, procedures, functions, structures, inputs and outputs in which the rules and functions establish a rational relationship among structures, inputs and outputs to reach a steady equilibrium in the period of the time.
According to above definition of the system, an economic system is the set of rules, functions such as capitalism, communism or mix economy and is structured by societies where inputs are the same scare resources such as land, labor, capital and entrepreneurship and outputs are produced goods, valuable commodities and services so that the rules govern interconnectivity among societies and scare resources to find the choice and the appropriate behavior for distribution and consumption of produced goods and services to reach a sustainability in the period of the time.
As we can see, there are two important factors as the target of an economic system:

1) Sustainability 2) Time

An economic system should deal with the balance of the sustainability in the period of the time. In fact, the time of all economic systems is limited that it depends on the scarce
resources and consumption.

Financial crisis, which was apparently started in Sep 2008, showed us the expiring time of capitalism. In fact, it was the end of capitalism because some governments of developed countries such as USA prepared the stimulus plan for helping private sector. According to this economic encouragement, the companies had to assign the partial of their property rights to government as a guarantee of their loan. On the other hand, the governments obliged the private companies to follow the new dominant regulations on financial markets such as Wall Street in USA. It means that capitalism have to cut the portion of property rights and economic freedom. Therefore, it is not the past capitalism but it will be a new economic system. Of course, there is too much concern about this new economic system. For instance,

What is the percentage of government ownership or government involved in? And what is the percentage of private sector ownership?

For answering to above question, we have to solve the problems as follows:

1) What will be the new rules and regulations?

2) What will be the new definitions of scarce resources (inputs)?

3) What will be the new definitions of produced goods and services as the new choices (outputs)?

4) How will be the new societies arranged in the future due to the phenomena which is named “multiculturalism”?

I think that above problems are the new challenges for decision makers in the world.

-About problem (1):

We need to new ideas and theories because a transformation of capitalism to new economic system will raise the huge complexity. In fact, we have to change the old regulations and replace them by new functions and rules in new economic system. One of the ways is to use from the nature’s laws as the substituting. For instance, Adam Smith and David Ricardo stated that a difference in cost is the reason of international trade flow. It could be adopted from potential difference in physics theory. Now, there is an important question: Are the discovered nature’s laws enough for new economic system or we have to find out the new ones?
As we can see, there are so many variables such as, which laws for what percentage?

Anyways, I think that we should firstly perceive the huge risk of the change but believe that it must be done then the nature’s laws will help us.
As an example, the below link is the end of “Papillon (1973 film)” directed by: Franklin J. Schaffner

He exactly knew very high risk of the change but believed that it must be done.

If you watch the previous clip of above link, you will gain that:

1) He tested his idea
2) He was disappointed because of the test result
3) He actually knew that there is always the way for solving of the problem if it is really a problem.
4) He continued and finally he subtilized about the nature’s laws, discovered seven waves and found out the influence of the seventh wave.

Pending ......