Economics of Core ? and Economics of Convergence ?
Up-to-date debates on models of growth and development have adressed converging pathways, more or less within an international frame of specialization and labour distribution. Should this makes sense on sort of superstructuring economies ? - out basic social ones: how to finance and whom will define policies ? - "Economists are still debating upon the strengths and weaknesses of several concepts and measures of convergence. Nevertheless, there is agreement on the observation that productivity growth rates of the world’s countries do not converge to a common rate. The traditional neoclassical model (Solow-Sawn) predicted such ‘absolute’ or ‘global’ convergence, due to its assumption of a single worldwide production function, featuring decreasing marginal returns to capital. In such world, differences in labor productivity growth rates can merely be a temporary phenomenon, caused by initial differences in capital intensities. This view, however, could not stand attempts to verify it empirically".
"Baumol and a host of subsequent studies strongly rejected the implied hypothesis of global convergence (see, e.g., Sala-i-Martin, ...). Broadly speaking, 3 avenues of research have been pursued to proceed towards a more satisfactory growth theory, which could account for the emergence of convergence clubs.
- The assumption of diminishing marginal returns to capital was relaxed in endogenous growth theories, such as Lucas and Romer. Consequently, 2 countries with identical savings rates but different initial capital-labor ratios are likely to experience different productivity growth rates in these models.
- Mankiw et al. proposed to stick to the basics of the Solowian model, but to include human capital as a production factor, in addition to physical capital and (raw) labor. In this augmented Solow-model, steady state productivity growth rates can differ between countries, because they are dependent on the rates of investment in human capital. Thus, these models can generate divergence between groups of countries.
- Alternative is the ‘technology gap’ perspective. Proponents of this approach (e.g. Abramovitz, Verspagen, Fagerberg) argue that the Solowian assumption that all countries produce according to a common worldwide production function is wrong. They see technological differences as the prime cause for differences in GDP per capita across countries. Fundamental is the assumption that many countries are not able to benefit sufficiently from high productivity production processes operated elsewhere. In this approach the basic 2 variables of interest are the innovation rate of the leader(s) and the rates at which the relatively backward countries can catch-up through assimilating new knowledge. For a given rate of innovation, a ‘bifurcation rate’ can be calculated. Countries with a catch-up rate below this rate will face an ever-increasing gap, whereas countries with a higher rate will ultimately reach growth rates similar to the leader".
- "Basu & Weil proposed a model of international productivity growth dynamics, in which localized innovation is introduced as a force that can drive divergence. The model combines elements of the Solow model and the technology gap approach. Like the Solow model, this model (henceforth, we will use this abbreviation) assumes that new knowledge about production technologies is immediately public."
Now, with effects of "development" pathways over curves of productions,"textbooks often confuse intertemporal substitution with (more or less) instantaneous substitution. No one doubts that machines replace men, but this occurs in the course of time, and it is practically never the other way around. Would be the theoretical and practical issues on microinformations. If you understand that you develop any activity within a universe which is never neutral: because, in a physical material universe, you have necessary reactivity, crossed and mixing effects as well as many interactions. Also because we are and also interested by those interactions then, to consider pathways and the economics of your pathways. Economic development do well when many things are well organized and already work, to allow you to focus on the details of your activities or properly taken as regulating means and opportunities for good planning. You have to take care of fundamental issues. For example with rural development, financial banking services may manage sophisticated perspective; but fundamentals of good rural economics or real economic development must be there, often trained professionals ignore a lot of local economy. Use their services will not pay well, waste and bias precarious existing economy. The promotion of modern financial intermediation systems will probably disorganize more than prepare the future.
"True" Diversity of Pathways and Essence of Community
"Path-ways" (path-aways or ways-in-path) are often analytic views with pure concepts, commonly contained in policies but especially vene mode byside of their operations. We may dislike to include complications in your logical systems, because not caring real ones complicate the future of conditions. You have to cope with difficulties with a sense of positive critical thinking. Both, critical thinking and positiveness should be cared, by analysis and formal tools ressources: for clearing advserse effects and prevent times when; very low on average effects. This seems to help your logical system and you have means that make sense if, with linear proportionality of effects (or with statistics 'normal effects'). That is, and considering even regional scale infrastructure projects there could or should be time's generations. The reason why plenty of 3-5 years' time projects of social infrastructures, show so poor results or have oversizing budgetary needs. This turns into mispecifications: a very common reality of any cooperation and aid for developing countries. Not even preserving the training processes they should be: most have been managed by private builders contracted directly by 'generous' public donators. Meanwhile delocalized experts mastermind methods, policies issues and programs with sophistication and poor effectivty in results.
With activities and processes of transformations in material fields; you have to think about or take into account:
- Where you go (more in terms of responsibility and commitment or environment (since "caminante no hay camino, el camino se hace al andar"),
- The costs implied by having progresses in such environments if with exact goals and / or their impacts (have a proper social geographic and environmental overviews of where you are and can mitigate),
- Diffused and/or adverse effects soon to appear (intent previous consensus or preparedness in any event).
Potential or possibilities are also around. In ecconomics you often call them geographic local advantages (like of tradable goods). In ecology, and adverse effect you call them sensitive or critical environments. You can catch the ones, care the others when it helps your own projects or support tolerance. Think about what you can loose and supplementary costs. Care the environment may not have to pretend that you will have necessarilly to consider waste from corruption, obstacles to local entries of your business and so on: try to feedback locally on more central risks of corruption and at the reverse. These distorsions can even take more importance than substantial effects of your activities, but may be too they are not necesarilly socially non meaningfull.
Facing costs can distort structural calculus. For example, miss some traditional sort of contributions that is in fact effectively servicing the success of the changes you promote. With your sense of balance and management, your ability to make extra-fees virtuous payments instead of calling corruption anything out of planned by tended cash-flows. It may make the difference between involvement and failures. Also to observe that more anticipated or speculated ex-ante speculation sooner may come the disqualification. "Roads to Reality" needs to have plenty of questions on potential and essential formulations that could sustend, cover and open opportunities to catch. Not to consider yourself a good manager if you have only succeed to avoid any social distribution with budget as well as squeezed any proper program of explanations, be it formal and often more easy when informal (when based on understood cultures) activities.
With projects, especially socials ones (anyone pretends to have this ambition), you have to catch any little opportunity to make positive social returns. Do not uncare the small ones on the road, if you are not as safe as the large ones. People adapt or disappear often in in large ones. At the minimum ensure that the learning processes will happen. There are plenty of projects that have well fulfilled their reports, intermediate and final assessments, gave jobs and succeeded to avoid brutal social waves; but, at the end, most people will remember these only as something that did not let much more than promoting fraud. Also false amnesia will start with the renewal of professionals even from same institutions for pretending that things have not been done. If the Agency that promoted much mess stay it will neverteless be unopposed because more money about to come.
Conflicts or Synergies
"Patterns of accumulation of wealth depend critically on the allocation of bargaining power. For example with 2 extreme cases: one in which principals, and the other in which agents, have all the bargaining power (i.e., one party makes a take-it-or-leave-it contract offer to the other). Poverty traps arise when principals have all the bargaining power. Owing to their lack of collateral, poor agents are provided a “floor” contract awarding them rents (i.e., a payoff in excess of their outside opportunities), simply in order to provide adequate effort incentives. “Support system” is progressively withdrawn by principals as the agents become wealthier. This effectively creates a on hundred percents marginal tax on limited degrees of wealth accumulation by the poor. At sufficiently high levels of wealth, the contractual rents disappear, as agents can post sufficient collateral and have high outside options (which rise with wealth). Hence wealthy agents do recover some of the benefits of their saving".
"Consequently, a sharp nonconvexity in returns to savings emerges endogenously. For a range of suitable parameter values, this nonconvexity causes the poor to not save at all, precipitating a poverty trap. Wealthy agents, in contrast, have strong incentives to maintain wealth; consequently (conditional on not sliding into poverty) their wealth drifts upward. The wealth distribution is thus progressively polarized into 2 “classes” that grow further apart, with no interclass mobility. In this case long run productivity and distribution depend strongly on wealth distributions in the distant past. In the alternative setting where agents have all the bargaining power, strong incentives to save are generated at all wealth levels. All the benefits of incremental wealth, including those arising resulting from the relaxation of credit constraints, accrue entirely to agents — poor and rich alike".
The prospect’s problem of scale is with the (in)ability to switch from human scale management to large technological processes. Sometimes, concentration of resources can be justified. Also, social actors need to improve their skills and flexibility to manage higher scales. But other times you must not put much more forward than what the community can absorb, neither undervalue the potential for adaptation. Compared to many well-intentioned aid workers from kind societies, they are no less intelligent. They are often more consistent with reality. Separated and even opposed systems may do no more neither better than reformulate the same ideas under different terms. Sometimes they find some answers or explanations that could be useful to other systems, if pragmatism could prevail over rigidities and flexibility in 're-enunciation', it might succeed in establishing positive consensus with an eye on purity feeding, essential humanistic values. Crossing and dividing levels like micro, meso, and macro levels in a complementary way can reveal some symmetrical effects, similarities and potential consensus between opposed systems.
To develop such a network consists of putting limits on values, differentiate logical areas, write intermediate functional terms, weight according practical situations. To create values, you can imagine that the following are, with respect to the previous ones:
- Similar and progressive (mimicry is commoness and good: pretend to reinvent the wheel for the same use as in deep mud
- Complementary, especially considering the relative legitimacy of actors to be there and work with,
- Contrary to contrast positive process and opportunities,
- Suggest geometric structure: symmetry, extreme, equilibrium, etc.
In local democracies, we have to take better care of the weakness of practical democracy—the lack of specific democratic methods and of the deficiencies of good relays of participation. As you may think that, does not mean always that no regulations exist, meanwhile it is often in tune with the promotion of corruption. All this should make insist more on the kinds of horizontal (or democratic) social relations and, in methods of organization: not so derived from business ones, which are biased toward vertical or superior to inferior relationships. They are a great source but too narrow source of inspiration. Have a special concern to address local levels for the production of democracy. Complexities ideas make that, out of some tautological suggestions there are no much truth at the respect. Neither that achieved lessons are definitive, always take into account the assumption that complexity can be more practically covered with unwarranted and/or partially unprepared social densities.
How do we harmonize the social complex units or find effects of scale? - Harmonization is not necessarily standardization and unification. It is to help the development of endogenous exchanges and relations within most can maintain minimum but positive satisfaction. Satisfaction maintains and develops, especially if exchanges stay governed by fairness, understanding and balance, not primarily governed by asymmetries and maximization of profits. It is to take into account the complexity of people places exchanging products, goods, services and courtesy. All that is not simple. Good understanding and exchanges can develop, if there coexist at the same time enough similarities and sense of community preserved between the different parts.
So we have this complex dual: more complex people trying to understand themselves for the exchange of one complex object looking simple enough. The corresponding mathematics’ differential geometric figure is more the mathematical object called saddle-point rather than a simple and unstable optimal maximum point: the illusion of a optimum for an environment or support free perspective, which is not possible. Because, out of death, what you have ahead is never sure. Utopia and yourself may be only just at one point of inflexion of a down or upward slope, considering to have cared the best as you can: contingencies, factors and other issues related to the way you manage your own path. On one side, exchanges develop because of diversity of aspirations, needs, goods, and people. On the other side, exchanges enhance the whole abstract sense of productive community as well as consumptive needs. Dense efficiency is short ranged and “global village” is an utopic idea. The idea of commitment toward humanity is a partial subjective goal, not wiser than what we can, without missing our close human neighborhood. Just reasonable communities can practically resolve close natural complexities.
Exchange can have many different forms and formal market places, with their costs of transactions, asymmetries of information, diversity of situations and imperfections, must show variety of forms. All this makes impossible that monetary formalization could be the perfect expression of value. But money can better mean something like as the margin of value (and essential concept or rent of the social investing function for most virtual power purchase of core ingredient of investment function. Marginal values unanchored required by local convenient sustainability. Money flexibility alone should not the lone goal, but the tip-top of the iceberg of community's sustainability. Monetary formalization being an imperfect, complex mean, and as important is the community's involvement that help to reduce the money needed by the transformation impulsed by project of investment. Now formally also essential analogy is required between thermoeconomics of transformations with entropy/neguentropy and knowledge/money latter be social expressions of communication of information.
Supra-dominant markets are dangerous and illusory, but marginal and partial markets of values that also have enough anchors within their reality are important if properly understood they genuine relations to make with the thermoeconomical transformations. Would it be an ideal if expressing the value of residual surplus of democratic communities, available for exchange? Residual surplus can be used for exchange especially for preserving and developing humanitarian sustainability. Consdering thermoeconomics that imports by a sub-social-systems at end takes there both from Sun's inputs and opportunities of entropic releases in nearby-ecosystems (minimaly affecting, nearby-subsystem renewal if required. If this subsystems are anthropized, this is driven by trade (exchange of fruits) and but sustainably forsee by money. Feasibility of exchange between two maximally heterogeneous parts balance optimum use of the object exchange. Of course money than is the complicated support of both individual surplus support for exchange and communities surplus support for trade. Trade and exchange here may or may not be different (but can also substantially help to requalify local-global moneys).
Fairness and seriousness of a deal, meanwhile, negotiating should better be reached under common understanding of both parts, that is, if effectively made. At least as far as the deal is as possible between equal. Equality outside the place of exchange is a matter of efficacy and efficiency in the preparation of such situations of exchange and their intensity. Subjectively, this has the minimum sense of sharing perfectly all humanitarian minimal values and if potentially so, both parts hould be as far as possibly equal or peer, at least during the deal. We speak of margin of exchange of residual surplus of democratic communities. Community has to mind the: "coolest maximum smartest surplus", that it can exchange profitably; with the as strangest partner as close as possible. Meanwhile also assuming properly all other neighboring communities’ essential needs satisfaction as social sustainability. So, profitability cannot be conceived only as a value in cash but a timable kind of communicated information, not overinflated (formal issues of monerarism if substantially wrong respect humanes things can nevertheless be formally quite useful: communication of value should be fair-for-play well.
Money, as softly and as far as possible (like with an entropic risk of high potential of destabilization), has to express the value of good work, includes other social costs (correlated to good work). But money remains essentially a means to carry information (the one we call communication). Materially it is not the perfect value, neither the best mean for everything. Profits take sense also if referred to the community. Reference includes a reasonable skill to find profit in goods or services to exchange.
With concepts of diversity, complexity or heterogeneity, margins are where changes happen. Probably, the good function of markets in complex systems to find exchanges could be also socially good. At the minimum, with the secondary effects of the use affecting so the profit made with the exchange. Moreover, communities have to be able to absorb these exchanges. These hypotheses have many more implications that cannot all be detailed.
Competition between different people often turns out not to be fair. Good exchanges with maximum potential satisfaction are between necessarily different individuals or people (this is a biological minimum needed for diversity) but need to be, at the moment of exchange, under as similar as possible status, fair also with close others, the close others should also be fair: not prevent unfairly the exchange and last but not least but not least exchange should be as voluntary, as much as possible, that is, as free as possible. Our kind of freedom also depends on the environment. Ideally, meanwhile the exchange, the only difference in status should be with support of exchange: a good or service on one side, the free counterpart or a payment on the other, meanwhile all this is - relativelly good - for environment.
In fact we think also that the perfect utopic market contains implicitly a second best option a principle of equality of potential between two persons in the process of exchange. This has implications for market regulation, fairness, and probably the social feasibility of exchange. Extended to the society it simply mean that since biological differencies are enough to engine the economics of preference, this social or regulative effort to equalize capacities of negociation in trade relations for best asignment is just a kind of ... communism. Weird of course - that the perfect market of infinite number of buyers and infinite number of sellers unable to manipulate prices and able to negociate the best deals should be as close to parity as it can be managed locally; at least during the process of negociation and where wise regulation is as kind as possible. Meanwhile it is well known that genetically, psychologically social actors are and should better be as different in many things: preference, tastes and so on and so structurally essentially close . I hope not to be ritually sacrificed because pretenting the best market be either a realistic communist's utopy either a libertarianists' subjective socialism.