This conversation is closed. Start a new conversation
or join one »
Gravitational Economics
(Note: I do not posess a formal education, please refrain from pedagogical attacks as I am "unarmed.") It begins with a friend in college 20 years ago, he speculated on the idea of the "Black Hole Theory" of money. Simply put it deals with entrenched capital or "Mattress Money" and its effect on the economy. The reference was to the black hole that money seems to fall into in society when, for example, individuals with capital hoard it and prevent its circulation, hence "Mattress Money." His general idea was that an individual with hoarded money still effects the flow of capital around them. Money must flow in order to have value. My thought turned to physics. Black holes affect space around them but are invisable. Gravity makes this possible.
"The wealthy get wealthier, the poor get poorer" This expresses the general view of the flow of capital. I believe that some of the equations found in the field of physics could be adapted to analyze this and understand the dynamics. Money is governed by the principle of gravity. This is not just capital gains, investment or interest or any other mechanism for static capital growth. This would be an analysis of the movement of money through society and its effect. For example: the wealthy are constantly being courted. This may involve gifts or significant discounts (or free) products and services. This would constitute the "pull" of capital gravity on people, activities and money. This could be viewed as an extension of the "Canadian Disease" (an economic term). While I understand it, I have not the skills to realize it.
thomas torpey
We will either evolve or fail, period.
Gail . 50+
Our economic MODEL is not the only economic model that exists, and it is certainly the worst if not close to it.
I wouldn't look at it from a standpoint of gravity. I would look at a natural death analogy. All man-made systems that include a violation of the natural laws, are born with the seeds of their own destruction built into them. They grow - often achieving godhood - and then decline, as our form of pseudo capitalism has grown, become our god, and is in decline.
If too many people hoard $$$, then bankers simply release more into the economy because nations do not print their own money. Banks "invent" it into existence at an incredible rate.
Bankers work for profits. Wars = profits. Peace not so. Illness & injury = profits. Wellness not so. Inequality = profits. Equality not so. In our scarcity economy, you cannot get richer without taking away from those who have little.
The problem is not that economies are destined to die. It's that those cancerous economies like ours are destined to die.
You can learn a lot about economies on YouTube. Start with learning about the Fed. It's an eye-opener.
Krisztián Pintér 200+
thomas torpey
thomas torpey
In pursuit of the original idea and the discussion of it I would like to propose a few observations.
1) Money is energy. money is a unit of exchange, and so is a photon. Mass and Energy are inextricability linked in physics. logically there would be a similar relationship between money and property. The problem comes in (IMHO) when we consider that very little of the "money" in the world is backed by a direct property relationship. If we analyse the structure of value creation it starts with labor. This is the famous adage "Time is Money!" It is indeed. What, if anything would be the E=MC2 of economics? What is the real value of a unit of currency?
2)Gravity. The force of attraction (or repulsion) that exists between two blocks of captial. What would be the economic equivilant of the Gravitational constant?
3) Entropy. This must apply to economics but needs to be codified. This would also lead to the laws of thermodynamics
I use a term "capital velocity." I use it to relate to the number of times that a unit of currency (value not actual printed cash) changes hands in a given time frame. I believe that this is an important consideration. Much of my ruminations center around a connection between micro and macro economics and building a basis for a new understanding of a socio-economic system that can help define the future of our world, not justify its past. Again Thank you!
thomas torpey
Krisztián Pintér 200+
about the references, as you like. but please filter them throughly. i hate wasting time on unreliable and unclear articles. i've seen way too many of them.
thomas torpey
As I mentioned in my two part post, I am hopeful of "staying on point" with regard to the subject of potential new economic theories and mechanisms. Positive or Negative assertions regarding the ethical character of past events is illustrative but not actionable. We are, like it or not facing the formation of a global society. This requires letting go of the past and "he said, she said" and begin a dialog on a potentially better idea. Your knowledge on the subject is well developed and your input very probative as to the nature of what has and hasn't worked and how to view future industry, capital and society.
Krisztián Pintér 200+
price fixing is a meaningless term. my prices are always fix, until i change them. and i can do nothing to competitor prices.
in my book, corporate espionage is not a crime, as long as no property violations or coercion is involved.
before we attempt to change things, it is imperative to understand what do we have now. so maybe these sidetrackings are not so much waste of time. i didn't want to just pass by the fact that you called one of the biggest modern day heroes a culprit.
thomas torpey
As I understand it, in some cases actual coercion was involved but mostly the acts consisted of forcing other companies and individuals to merge with him, sell out to him, or face being run out of business. I regret that the details of the period have left memory but the information is available I'm sure. I do understand that to a degree this is somewhat controversial in nature. The laws did not exist then that do now, the reason for my comment that those methods would be illegal now, not then. However it was largely due to Standard Oil that the Anti-trust laws came into being.
Krisztián Pintér 200+
standard oil was successful because of continued innovation.
more on the issue:
http://wiki.mises.org/wiki/Standard_Oil
thomas torpey
Regarding scarcity and resource availablity. Physical resources like food and energy are certainly limited. But, with technology both can be extended vastly, and I believe they will. The challenge is to prevent the "Intellectual Property" and "Gene Trolls" from crippling distribution. This was how Rockefeller took control of the oil industry. Very erudite and insightful comments, thank you!
Krisztián Pintér 200+
rockefeller did not take over the oil industry, not for a single moment in time. this is so disappointing to see that we base our reasoning on statements that are simply factually not true.
thomas torpey
This is my understanding of that phase of Standard Oil's history, If you have correct information please share it with me. I hope that our dialog will continue, its our future, not mine.
Krisztián Pintér 200+
thomas torpey
I believe that there is a path open, but it requires new thinking. I believe that the fundamental value that underlies economics is the hours of a human life. One way or the other it comes down to that. For those of you that still think kindly of John Maynard Keynes, the fundamental generation of wealth occurs from the bottom up, not the top down. In the U.S over the last several decades an unusual phenomenon has occurred, productivity. This is how Keynes is subverted. In the 1960's there was much talk of the future in which workers would labor less, produce the same, earn the same and have greater free time. Many nations actually moved in this direction. But here, productivity was converted into wealth at the top, leaving Americans working much harder, earning no more and having no time whatsoever. It hasn't worked out so well.
Finally, the thrust of my original proposal dealt with a more organic and sustainable understanding of the economics of society. I then observed that capital seems to behave in a manner similar to gravity and thought that pursuit of this line of reasoning could be informative. There have been many such theories in recent years. Perhaps its time to look for a new kind of economics. War with mars is not an option, neither the exploitation of THEIR workers. Its just us and we are all on this planet
Lejan . 30+
I agree with what you describe here yet I am pessimistic that this 'new kind of economics' will be able to transform out of the given state without 'force majeur'.
The given ideology of 'continuous growth' can not sustain on a planet with limited resources, yet just a view are willing to step back to see this 'bigger picture'.
I am afraid, almost convinced, that he 'current system' got to hit the wall, badly, before it is able to transorm. Not because of 'understanding', because of a lack in option to continue.
thomas torpey
Your pessimism is not only well founded but highly advisable. The future is potential only until manifest. As far as hitting the wall, we have, and it has had an impact. This is why the forces of autocracy are fighting so hard in the U.S. and Europe, they feel they need to. Thank you very much for your thoughts on the matter.
Lejan . 30+
as the 'western' concept of value relies on scarcity, the concept of continues growth becomes obsolete in a virtual model. This actually is the source of the creation of 'intellectual property', to keep the good old habits and the world as it is. This mindset has always stopped societies to transform towards a rich public domain and common wealth and is doing anything to keep it that way. If it comes to 'intellectual property' the best advise I have for those who claims them is 'then don't go public!'. Stay at home with your ideas, stay at your own property and let the public 'die' in unawareness of your mind. Yet don't force them to bend around your intention to make a buck... This may sounds tough for economic liberals, yet in a digital, virtual world without scarcity the intention to also create it 'yirtually' reveals itself... This is a long topic to discuss about... :o)
Lejan . 30+
In case you have not seen it so far, here you can find an interesting video collage by Kirby Ferguson on this topic, called:
Everything is a Remix
Part 1: http://vimeo.com/14912890 *The Song Remains the Same*
Part 2: http://vimeo.com/19447662 *Remix inc.*
Part 3: http://vimeo.com/25380454 *The Elements of Creativity*
Part 4: http://vimeo.com/36881035 *Sytem Failure*
Part 4 summarizes the very meaning of what ideas are meant to be to which I highly agree.
thomas torpey
P.T. Barnum said "There's a sucker born every minute, and one to take him." On Wall Street the saying is "....eat what you kill." In the end there are two kinds of people, slaves and slavers, predator and prey. This is the essence of social Darwinism expressed in its naked glory. We live in a top down, command world. The few rule the many and thus it shall ever be. The brilliant mathematician John Nash in his pursuit of game theory in society created a game called "F__k You, Buddy" (my deepest apologies...) this is clearly a statement. I recognize the predatory, top down nature of our socioeconomic system. I am a realist and have, in the distant past, had some experience in international business on a small scale. I recognize the fundamental basis of the view point.
I differ with it. This emerges not from some moral or ethical motivation. I do feel those things as well. The simple fact is (IMHO) that this system is not sustainable. Sustainability is not a matter of solar panels and recycling, its an issue of the very structure of our society itself. Foreign exchange is going to be difficult when there is no “Foreign” anymore. Globalization is not a conspiracy it's an organic reality. Our population is growing and will continue. Perhaps future social forces or other developments will have the effect of controlling that but none the less, we will increase. Growth is the very nature of an economic system. Malthusianism is outdated. The world's food production (2005) of fruits, vegetables and grains was 3600 calories per person per day. The global production of energy (2010) was 38 Kwh per person, per hour. Certainly there is enough there for all to enjoy a decent standard of living. (con't in next post)
pat gilbert 50+
http://www.ted.com/talks/peter_diamandis_abundance_is_our_future.html
Didn't you say that you depend on public support? doesn't that speak against the predator mentality?
I do agree with your sentiments regarding Keynes.
thomas torpey
As the numbers show, we are already generating raw production sufficient to sustain the world with a reasonable standard of living, yet over 10 % of the world is suffering starvation, a number that has exploded while global production skyrocketed. We just need to organize things better and suffering could end in my lifetime. (Knock Wood) Besides, imagine the wealth that would be possible with a sustainable global model and a bottom up wealth generation dynamic with "singularity-class" technology to boot! Just from the title I see that Mr. Diamandis's presentation will be very enjoyable!
pat gilbert 50+
Rhona Pavis 50+
Rhona Pavis 50+
pat gilbert 50+
thomas torpey
pat gilbert 50+
Human beings want to survive, all of them, those that don't are ill.
Money helps you to survive, it help everyone to survive.
Opportunity is created by investment, investment capital goes where it is treated best.
Some people create more wealth because they are better at this subject than others. Almost always the rich guys become philanthropists. Fewer and fewer of these people inherit their money.
The thing that has raised our standard of living from hunter gather to today is the above that is SELF EVIDENT, the rest is conjecture.
thomas torpey
pat gilbert 50+
Products get produced where the demand is. Trust me the hardest buck you will ever make is creating products for the rich. It is much preferable to own a McDonalds than a fancy restaurant with unbelievably unreasonable patrons. Your premise is unreal.
In your second paragraph regarding philanthropy your assumption is that the pie is one size and the money was taken from the masses, no it was not, Rockefeller figured out a way to lower the cost of oil allowing everyone to have a better mode of transportation. Who did he take the wealth from the horse and buggy people? The point is simple Rockefeller did not take the wealth, he created it and it was a win win situation.
The money was reinvested; these guys like all human beings are real good about looking out for their own interests.
Krisztián Pintér 200+
in a nutshell. money is just another commodity, not more, not less. there are no mystic properties of it. the only difference between money and wheat for example is that wheat has a direct use, namely it can be eaten, while money can not be used directly, only to exchange for something. it leads to another notable difference, namely that we need a specific amount of wheat. half of that amount is not enough, we don't get the necessary nutrition. but the total amount of money in circulation does not matter at all. the value of money adjusts.
in your case, suppose i decide to put aside 1000 bucks. to do that, i need to create 1000 bucks worth of something (work), but don't buy anything. as a result, there will be 1000 bucks worth of stuff out there that nobody is willing to buy at the current price level. that will result in a drop in prices, which allows other people to get a little more stuff for the same amount of money. as my consumption went down, other people's consumption goes up by the same amount.
this of course can lead to a shift in the composition of production. since people might not want to get that much more wheat. rather, they buy some chocolate. wheat production might go down, chocolate production might go up. typically it results in some effort being redirected to production goods (capital goods), as opposed to consumption goods. it helps the economy to produce more goods with less effort. through this effect, hoarding money is good for the economy.
thomas torpey
Krisztián Pintér 200+
marx's theories are very relevant, but also very wrong. their relevance is the peculiar fact that many people believes them.
software production is just as limited as wheat production. it is not even that much different. all material comes from nature. we just reform, rearrange them. one rearrangement is wheat in human edible form. another rearrangement is a computer that has a certain magnetic pattern on its hard drive (i.e. software). both needs human effort to produce. and time is scarce.
money is NOT energy, as i explained, it is more like information if you want a metaphor. but it is a commodity like wheat or steel.
you had the theory that money attracts more money. it is not the case, although indeed looks like that. the correct statement is: success attracts capital. or efficiency attracts capital. any set of resources can be used to produce a whole array of different products (notice that resource can be time, product can be a software or a stage act). money tends to go to agents that produce the most valuable products out of the least valuable resources. the difference is called profit (or loss). profit comes from good ideas and good practices. capital in itself does not create profit. it is easy to make that mistake, because usually all the singers can sing, all the shoemakers can make shoes, otherwise they would not be singers or shoemakers. similarly investors usually know how to invest, or they have to look for another job really soon. we don't say that tools make the shoemaker. it is also false to assume that capital makes profit. investors make profit by using capital smartly.
thomas torpey
thomas torpey
edward long 100+
Ben seems to agree that, "money must flow in order to have value", as you say.
thomas torpey
F = G {m_1 * m_2}/{r^2} in this the masses (fixed, not relativistic, although I would think the latter would be more accurate) with the two blocks of capital as the masses and the distance serving as an expression of relative "closeness" (i.e; I am a green activist and would rather die than invest in "big firm" or I work for a company owned by "big firm" and am very likely to invest.
BTW; I view Behavioral Economics in the same vein and believe that the fundamental patterns are analogous to universal natural patterns in nature ("I would rather earn interest than work" -conservation of momentum perhaps?) Your reference to "Levity" and the comparison to John D and the Dalai Lama are very insightful and perhaps relate to a meaningful connection between behavior, perception and observed patterns in society.
Fritzie Reisner 100+
Slightly off the track of your specific question, you may be interest in a little old book by Albert Hirschman called The Moon and the Ghetto. The purpose, as I now recall it, was to explain in simple terms why technical problems are so much more tractable often than problems involving human behavior.
You probably know this, but models and equations have long been a very big part of understanding and predicting money flows, accumulation of wealth, and so forth. They just are not the same equations as in physics.
thomas torpey
Lejan . 30+
thank you for sharing this interesting idea and I really like the analogy you have sketched here.
Even though I like the concept of the 'gravitational effect' of money, the classical laws of physics usually don't like 'exceptions' much, as it would be difficult to explain why most apples fall to the ground, whereas some pears would rather choose to levitate instead and this even within the same garden.
In relation to money, those two fruity extremes could be, let's say, John D. Rockefeller and the Dalai Lama and you pick the one who remains levitating in this picture. :o)
The law of gravity as we know it would need a fundamental makeover to explain why money would not have the same effect on individuals as it has on matter, and therefore would not be physical anymore.
Therefore economic sciences got invented to understand the fundamental principles in different economies and to seek for 'cause and effect' relations within it. It depends how you look at it, but for me, economic sciences is a sub-discipline to behavioural science, as it explores the interaction and dynamics of behaviour in between interwoven and distinct groups of entities.
As you can see on the stock market, econemy does not react reational. It is driven by deep emotions, irrational decisions, fear, hope, greed..., you name it. Those principles are quite difficult to get by with the tools of physics.
Yet if analogies makes one understand things better or give another thought, another light on them - even if not all aspects match in comparison, they did their job.
If not laws of physics, what you can apply in this matter is the language of math and results of observations to try to create formulas and algorithms to describe the effect which money has on people. And if they proove valid you then have find a way to predict them.
The film 'A beautiful mind' shows a version of the life of the mathematician John Forbes Nash, whos work was partly related to this.
Debra Smith 200+
I am no expeert in economics at all and I would love to learn more about these assertions, please:
I believe that some of the equations found in the field of physics could be adapted to analyze this and understand the dynamics. Money is governed by the principle of gravity. This is not just capital gains, investment or interest or any other mechanism for static capital growth.
Fritzie Reisner 100+
thomas torpey
Fritzie Reisner 100+
The fact is that wisdoms come from across the spectrum of education. I have been part of communities (at least temporarily) in which there is prejudice not against those with little formal education but rather against people who might be labeled as academics. I find that bias equally discouraging.
Debra Smith 200+
thomas torpey