Saturday, April 03, 2010

The Chaos Theory of Economics

History is replete with Stories of Jobs which fled, then never returned. I was reading this Post by Robert Reich, when I captured this Thought. Now, I might be quite in error about the final numbers, but I will try to get as close as possible. Labor has to be a kind of Renaissance Man who must be capable of all Skills, until somewhere around where his Product must supply 8 or more people with a specific desired item. Technology develops in Production, not as an equation of Supply, but of the speed of Production; innovation of Product coming from the insistence of Demand for immediate service. It is basically a function of eliminating Production Steps, especially time-consuming Steps; the Point here being neither levels of Production, or Quality, has much effect on the development of Technology.

Technology, while utterly necessary for the contentment of Demand, is a Curse as well as a Blessing. Examination of the entire process of Production will reveal that technology is basically a elimination of as many labor Steps as possible while maintaining the viability of the Product item. This may seem like a continuous benefit, because it manages to maintain a profitability throughout the entire spectrum of Production models. The problem at heart is that technology manages to maintain it’s viability of introduction because of profitability, until somewhere after 1 laborer can supply around 250 people, whereafter the expense of technology reduces its value; it is all a question of profitability, Competition becoming too extreme for enterprise survival when technology becomes too cheap. Monopoly and concentration of Production becomes the only viable model after this variable point, depending on the nature and craft of Production; nothing else can create profits.

There will be a great deal of contention about the above Argument, as it has several large holes within it, which would allow for Trains to pass through it. What I am trying to do is simply to explain the general run of technology within the Production cycle, and not doing a very good Job of it. Now comes the Problem: Production stands at risk where labor is too critical, and labor stands at risk when technology is too critical. It varies across the Production spectrum, but forms of Starvation stands at both ends of Production. If labor cannot achieve a high level of Supply, there will be shortages of Product; if there is too high a level of Supply, then there will not be sufficient labor demand. Technology helps Us avoid initial Starvation, but rapidly generates a labor oversupply. Cottage industry matches the labor supply, but presents a threat to Supply under adverse conditions; technology supplants this threat, though it presents a scene where there is created a leisure class of too great a magnitude to be viable, given the Profitability of Production. This element may be the real Generator of recessions. lgl

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