jpb 1 NB. PRELIMINARIES ME & JOE & WEALTH CREATION ME & JOE & WEALTH CREATION CURIOUS & OPTIMISTIC BENEFICIARIES VICTIMS & STUDENTS COMPLEXITY CHANGE CONFLICT SCARCITY = APPARENT CHAOS ? but things are NOT RANDOM there are PATTERNS ! WHY is the JOINT STOCK COMPANY so successful at WEALTH CREATION ?? CURIOUS there are many ways of ORGANISING activities why are some COMPANIES more successful than others? why are some MANAGERS more successful than others? can we LEARN from & IMITATE successful organisations? OPTIMISTIC the JSC is SURPRISINGLY successful success is not random there is a PATTERN take a DIFFERENT look at an old institution unusual insights emerge & lead to a better UNDERSTANDING BENEFICIARY LEARNING, INNOVATION and ASPIRING trying to understand the JSC WEALTH is important more CHOICES seem to result in less infant mortality VICTIM wealth creation isn’t easy WHO is tying our shoe laces together? who is to blame for this CONSPIRACY? STUDENT what is going on?? THERE’S NO USER MANUAL ! JSC
Transcript
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PRELIMINARIES ME & JOE & WEALTH CREATIONME & JOE & WEALTH CREATION
CURIOUS & OPTIMISTIC
BENEFICIARIES VICTIMS & STUDENTS
COMPLEXITY CHANGE CONFLICT SCARCITY = APPARENT CHAOS ? but things are NOT RANDOM there are PATTERNS !
WHY is the JOINT STOCK COMPANY so successful at WEALTH CREATION ??
CURIOUSthere are many ways of ORGANISING activitieswhy are some COMPANIES more successful than others?why are some MANAGERS more successful than others?can we LEARN from & IMITATE successful organisations?
OPTIMISTICthe JSC is SURPRISINGLY successfulsuccess is not random there is a PATTERNtake a DIFFERENT look at an old institutionunusual insights emerge & lead to a better UNDERSTANDING
BENEFICIARYLEARNING, INNOVATION and ASPIRING trying to understand the JSCWEALTH is important more CHOICES seem to result in less infant mortality
VICTIMwealth creation isn’t easy WHO is tying our shoe laces together?who is to blame for this CONSPIRACY?
Limited liability Stakes can be cashed Anyone can join
Finance available
DRIVEN by PROFIT
and CONTRACTS for SUPPLIERSfor EMPLOYEES
PROFIT FROM PLEASING CUSTOMERS !
OWNED by SHAREHOLDERS
CAPITAL
IDEAS
PROFIT !
THE JOINT STOCK COMPANY CO-OPERATIVE VENTURESCO-OPERATIVE VENTURES
PARTICIPATION & CONTRIBUTION
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THE MAGIC ROUNDABOUT !
SOURCES of FINANCEOWNERSLOANS DEBTORS
CASH
FACTORY
STOCKS
PROFIT
COSTS
FIXED ASSETS
MATERIALS
CASHPOOL
CREDITORS
VARIABLEFIXEDDIRECTINDIRECT
DISTRIBUTION
SALE !
TAXDIVIDENDS RETAINED PROFITS
DEPRECIATION
FINANCIAL ITEMS
THE WEALTH MACHINE CIRCULATING RESOURCES picking up PROFIT each cycleCIRCULATING RESOURCES picking up PROFIT each cycle
DYNAMIC EBB & FLOW of OPPORTUNITIES
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CAVEAT EMPTOR !
RESOURCES IN
WEALTH OUT
CASH
SALESASSETS
SUPPLIERSEMPLOYEES
CUSTOMERS
Dynamic fluctuating ebb & flow of resources WHY MEASURE? EFFICIENCY & WEALTH PAST PERFORMANCE SOLVENCY & HEALTH CURRENT POSITION LIQUIDITY & RISK FUTURE PROSPECTS
THREE REPORTS PROFIT & LOSS ACCOUNT HOW MUCH PROFIT not CASH? BALANCE SHEET SPENT on CAPITAL or REVENUE? CASH FLOW STATEMENT WHERE IS IT GOING?
DIFFICULTIES Income fluctuates TIMING is not consistent Assets must be VALUED and there are no market prices Costs must be ALLOCATED and there are no invoices Uncertain future ESTIMATES are never ‘correct’
PRINCIPLES CONSISTENCY for comparison PRUDENCE for safety ACCRUAL for timing GOING CONCERN for clarity
but the ACCOUNTS tell only HALF THE STORY with focus on - COSTS but not QUALITY / SERVICE / SKILLS YESTERDAY but not TOMORROW COSTS of DOING but not COST of ALTERNATIVES RULES but not LEARNING / INNOVATION
THE BUSINESS ACCOUNTS IDENTIFYING FLOWSIDENTIFYING FLOWS
MEASURE or MIRAGE?
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SALE !
THE PROFIT & LOSS ACCOUNT PROFIT or CASH?PROFIT or CASH?
TIMING ISSUES
INCOME when EARNEDwhen the deal is strucknot when the cash flow in
EXPENDITURE when INCURREDwhen committednot when the cash flows out
the day to day transactions of the wealth machine involving a SURRENDER
and a GAIN of a benefit culminating in the PROFIT & LOSS ACCOUNT
BUY NOW PAY LATER !
INCOME
COMING IN
EXPENDITURE
GOING OUT
BALANCING across the SALE !
CASHSALES &DEBTORS
STOCKS
PROFIT
COSTS
MATERIALS
CREDITORS
VARIABLEFIXEDDIRECTINDIRECT
DISTRIBUTION
TAXDIVIDENDS RETAINED PROFITS
DEPRECIATION
FINANCIAL ITEMS
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THE BALANCE SHEET CAPITAL or REVENUE?CAPITAL or REVENUE?
VALUATION ISSUES
WHO PAYS HOW MUCH WHEN ?
ASSETS what we have of VALUEFIXED for generating incomeCURRENT for funding stocks, debtors and cash
LIABILITIES what we OWEto pay never = EQUITYto pay long term = DEBT RESERVESto pay next year = LOANSto pay this year = creditors dividends tax
a snapshot of the balance culminating in the BALANCE SHEET
no one can claim superior access to wisdom but the process of science and it’s application as technology is the best bet
‘KNOW HOW’ = ‘SURVIVAL VALUE’
MORE & MORE FROM LESS & LESS !
TECHNOLOGY APPLICATION of SCIENCEAPPLICATION of SCIENCE
TECHNOLOGICAL & ORGANISATIONAL ‘KNOW HOW’
JSC
GROWTH OPPORTUNITIES –
SCALE –
SPECIALISATION –
MASSIVE REVOLUTION IN MICRO ELECTRONICS SYNERGY of BRAINS & MICRO CHIPS SPEED & DYNAMICS BARRIERS DISAPPEAR
‘KNOW HOW’ - LEARNING and INNOVATING in the
PRODUCTS R & D PRODUCTION FACTORIES PEOPLE HUMAN CAPITAL
TECHNOLOGICAL
INNOVATION !
GLOBALISATION !
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TECHNOLOGY is ‘KNOW HOW’ and is exploited throughout the process from INVENTION to APPLICATION -
INVENTION MARKET RESEARCH DEVELOPMENT TEST MARKET ADVERTISING PRODUCTION DISTRIBUTION SALES
A BETTER MOUSE TRAP !
PRODUCTS R&D & INNOVATIONR&D & INNOVATION
‘KNOW HOW’ = LEARNING & INNOVATING
INNOVATION FUNNEL
SELECT FEW
REACH the MARKET
MANY
MANY
IDEAS
BUZZ
AROUND
PROJECTS COMPETE
for SCARCE RESOURCES
& MOST FAIL
from RESEARCH thru DEVELOPMENT to MARKET
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RESPONSIVENESS !
A COMPLEX INTERACTIVE LOGISTICAL SYSTEM
PROCUREMENT OPERATIONS DISTRIBUTION
SALE!
STORE STORE STORE
PRE-PROCESS MACHINES SUB ASSEMBLY ASSEMBLY/PACKING
CUSTOM
ERS
SU
PPLI
ER
S
INFORMATION
SERVICES
ENERGY
LABOUR
FIXED ASSETS
MATERIALS
INPUTS & COSTS
CONVERSION PROCESSES
ADDING VALUE for CUSTOMERS
MAXIMISING SALES REVENUE
ORGANISING COMPLEXITY SIMPLIFY SEPARATE DOWNSIZE
REDESIGN AUTOMATE
MANAGE CULTURE CHARISMA
CRISIS HYPE
SELF CONTROL GOALS INFORMATION
DECISIONS MOTIVATE
CONTINUOUS IMPROVEMENT !!
PRODUCTION FACTORIES & CONTINUOUS FLOW for SALEFACTORIES & CONTINUOUS FLOW for SALE
‘KNOW HOW’ = DESIGN & OPERATING METHOD
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TWIN LOOPS - in the BRAIN - in REALITY BEST OPTION from PAST EXPERIENCE LEARNING BETTER OPTION from FUTURE EXPERIMENT INNOVATION
INVESTING in PEOPLE SPECIALISED SKILLS ACCOMPLISHMENTS & APTITUDES EDUCATION EDUCATION EDUCATION EXPERIENCE been there seen it done it bought the T-shirt SELF CONFIDENCE for experiments & failures FLEXIBILITY
MOBILITYRISK THRESHOLD
HEALTHSTRENGTHENERGY
PERSONAL PORTFOLIOS OF SPECIALIZED SKILLS !
PEOPLE HUMAN CAPITAL & PATTERNS in the BRAINHUMAN CAPITAL & PATTERNS in the BRAIN
‘KNOW HOW’ = CREATIVE LEARNING
BETTER MODEL
BEST OPTION AVAILABLE AT
THE TIME
INNOVATIVE UNDERSTANDING
EVIDENCE OF
OUTCOMES
CREATIVE INNOVATIVE EXPERIMENT
LEARNING
PROBLEM
BRAINS make MODELS MODELS are tested in REALITY DOCKING of PROBLEMS & SOLUTIONS
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COMPLEXITY UNLIKELY TRUTH & WHO KNOWS?UNLIKELY TRUTH & WHO KNOWS?
the PROBLEM of SCIENCE - - -
HEURISTICS or ALGORITHMS?
SCIENCE is solving increasingly intricate puzzles, success is awesome & intoxicating but scientific KNOWLEDGE is no longer about CAUSE & EFFECT because :-
INFINITE REGRESSION to the ULTIMATE CAUSE of CAUSE
INNOVATION is about HITHERTO UNCONNECTED IDEAS
INACCURACY of MEASUREMENT LEADS to UNKNOWN EFFECTS
INTERACTION means CAUSES can’t be ISOLATED
DECISIONS themselves CHANGE the EFFECT
FEEDBACK results in EFFECTS becoming CAUSES
EMERGENT PROPERTIES of SYSTEMS don’t have CAUSES
COMPLEXITY EXPLODES the necessary computer would be
the size of the universe itself !
MORE MEASUREMENT & INSTRUCTIONS
= HIGHER COST & LOWER VALUE!
the REALITY of MANAGEMENT is HEURISTIC :-
BUILD on past success
CHOOSE the best option at the time
DO DEALS for mutual advantage
EXPERIMENT to discover improvements
TIT FOR TAT to protect investment
LEARN from experiencePATTERNS EMERGE
IT IS NOT RANDOM !!
EFFECTS ARE THE CAUSE !
THE
PRODUCTIVITY
PARADOX
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COMPLEX SYSTEMS NON LINEARITY & ITERATION NON LINEARITY & ITERATION
'KNOW HOW’ EMERGES
ORDER & FEEDBACK
SERENDIPITY !
EMERGENT PATTERNunexpected
FEEDBACK
FEEDBACK
UNINTENDED CONSEQUENCESUNEXPECTED RESPONSES
LOCAL
ACTIVITYsimple rules of
behaviour
CO-OPERATION EMERGES
from LOCAL ACTIVITY in the JSC !
from SIMPLICITY to COMPLEXITY SCIENCE has solved the MYSTERY but left the WONDER of UNLIKELY TRUTH ...… we look for GOD in the wrong place he is not the ‘DESIGNER’ but the EMERGENT ORDER in COMPLEX EVOLVING SYSTEMS on the edge of chaos
CREATIVE DIVERSITY not STANDARDISATION UNOCCUPIED NICHES not STRUGGLE ACQUIRED IMMUNITY not TREACHERY CO-OPERATION not EXPLOITATION CHOICE not COMPETITION
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ENTANGLED IN RED TAPE !
QUALITY & PROFIT are NOT ALTERNATIVES.
PROFIT ONLY comes from SATISFIED CUSTOMERS.
BUREAUCRATIC REGULATION :-
inhibits INNOVATION as change & flexibility are reduced
drives CAPITAL & investment overseas or underground
diverts resources from CUSTOMERS to the ‘rules’
incurs COSTS of quangos, red tape & small print
provides CARTELS ‘legal’ protection from competition
replaces CAVEAT EMPTOR with a false sense of security
separates RESPONSIBILITY from control
confronts the innocent instead of THE GUILTY
presents opportunities for BRIBERY, CORRUPTION & COVER UP
encourages INTERVENTIONIST instincts & delusions of control & hinders CO-OPERATION & local KNOWLEDGE
REGULATIONREGULATION is no substitute for entrepreneurial action & risk as suppliers have much more to loose from antagonised customers than from malleable inspectors
ENTREPRENEURS DISCOVER a BETTER WAY !
SALE !!
CUSTOMERS
THE WHEEL FELL OFF
CHANGE FLEXIBILITY & WHO RESPONDS?FLEXIBILITY & WHO RESPONDS?
the PROBLEM of STRUCTURE - - -
ENTREPRENEURS or BUREAUCRATS?
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WASTE NOT WANT NOT !
SURVIVAL
EFFICIENCY
MUTATION RATE
CHAOSSTAGNATION
the EDGE of CHAOS
= CREATION = the EMERGENCE of ORDER !
EXTINCTION
EXTINCTION
1 - SELF REPLICATION = dna inexorable repetition2 - RANDOM MUTATIONS = opportunities to progress3 - DEVELOPMENT = influences in the environment4 - NATURAL SELECTION = effects on the gene frequency
IMMORAL majorities DICTATE their perspective to minorities interest groups are BRIBED in return for support bequests from tax leads to CORRUPTION VULNERABILITY from dependency on others ALIENATION from remote decisions DEMORALISATION from unfulfilled expectations HELPLESSNESS as one ‘dictator’ succeeds another IMPOTENT
CAPITAL MOBILITY DEFEATS IMPOSED CONTROL
the benefits of ECONOMIC CO-OPERATION exploit wealth creating realities within robust institutions where everyone participates & contributes without harm to others.
RESULTING in CONFLICT RESOLUTION as more PARTICIPATION & CONTRIBUTION
produce more WEALTH, INCOME & COMPASSION for more PEOPLE in MASS MARKETS
CONFLICT CUSTOMER WISHES & WHO CHOOSES?CUSTOMER WISHES & WHO CHOOSES?
the PROBLEM of POLITICS - - -
CO-OPERATION or COERCION?
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Why did it the jsc evolve when it did where it and why not elsewhere? Why Western Europe? Why 1500 AD?
ADVANTAGES of HISTORICAL EVIDENCE - REALITY from the PAST AWAY from the EMOTIONAL PREJUDICE of the moment
But LESSONS - IDEAS have invariably been proved WRONG IDEAS have invariably been IMPOSED upon poor joe DETECTIVE WORK is necessary to reveal a golden thread of BOTTOM UP DISCOVERY & ACCUMULATION of SURVIVAL SYNERGIES as Joe & his mates respond to TOP DOWN IMPOSITION by BISHOPS PRINCES GENERAL & MAJORITIES
MORALITY & LAW = obligation & trust = harms & hards in the warp & weft of society common law evolved
CULTURE & RELIGION = learning across generations = centuries of experience breaking the grip of established AUTHORITY
opening up DIVERSITY and choice
encouraging CO-OPERATIVE INSTITUTIONS
establishing SCIENTIFIC METHOD
REWARDING successful innovation directly
ENABLING economic growth by a generally accepted system of tort law, free trade and innovative technology
DEFENDING created wealth from predators and parasites
for all goodies someone somewhere has to pay & pay again to maintain!
The difficulty is finding willing payers? Ask the tax man!
Everyone is his own willing expert!
SPENDING is easy but FINANCING is difficult
spending OTHER PEOPLE’S MONEY is even easier
income is what SOMEONE IS WILLING TO PAY. if your costs are not covered - no deal.
CUSTOMERS WON’T PAY for inefficiency ineffectiveness immorality or impotence
‘KNOW HOW’ is more valuable than ‘resources’
PRICE increase = lower OUTPUT & INVESTMENT
throughout history a shortage of willing payers has resulted in BISHOPS, PRINCES, GENERALS & MAJORITIES succumbing to violence
SATISFIED CUSTOMERS ARE THE ONLY WILLING PAYERS!
SCARCITY QUARTS & PINT POTS & WHO BENEFITS?QUARTS & PINT POTS & WHO BENEFITS?
the PROBLEM of ECONOMICS - - -
CUSTOMERS or EXPERTS?
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relentlessly seeking the BEST PERCEIVED SURVIVAL VALUE in excess of the UNAVOIDABLE COSTS available at the TIME
GAME THEORY TIT for TATTRANSPARENT ‘nice’ , clear & simple strategy GENEROUS never wins at the expense of othersPEACEFUL only retaliates if provokedFORGIVING reverts to co-operation after retaliation
‘THE KEY TO DOING WELL LIES NOT IN OVERCOMING OTHERS BUT IN ELICITING THEIR CO-OPERATION NO CENTRAL AUTHORITY IS
NEEDED, RECIPROCITY IS SELF POLICING’ - AXELROD.
COLONISE ideas & successful strategy spread in populations
LEARNING experience from successful cultures over generations
INNOVATION generating & testing new ideas
NO PRESCRIPTION because different people are at different positions at different times
NO EQUILIBRIUM just dynamic discovery & accumulation by evolutionary trial & error
ANALYSING CHOICE ANALYTICAL TOOLS for UNDERSTANDING ALL HUMAN BEHAVIOUR
SCIENTIFIC ORGANISATIONAL POLITICAL ECONOMIC
SUPPLY & DEMAND COMPARATIVE ADVANTAGE TOTAL FACTOR PRODUCTIVITY
ECONOMICS is a DISCOVERY and ACCUMULATION process in our ignorance we are forced to choose to survive –
Herbert Simon – ‘we encounter many branches in the maze of life’s path, we follow now the left fork, now the right. The metaphor of the garden of forking paths is irresistible to anyone who has devoted their scientific career to understanding human choice'?
CONSUMER & INVESTOR CHOICES involve individual decision making behaviour based on HERBERT SIMON'S 'satisficing' -
BUILDING on proven inherited success, imitate success, there is no better place to start, don't reinvent the wheel
freely CHOOSING between options available at the time and the place, unhindered by 'rent seeking' Bishops, Princes, Generals or majorities
EXPERIMENTING to generate diversity and increase the chances of discovering new tricks
CO-OPERATING with others to discover better tricks from synergies which are not available to individuals
RETALIATING against the inevitable parasites and predators to defend and accumulate benefits
LEARNING from the successful outcomes of differential survival and starting again
HERBERT SIMON again - 'We encounter many branches in the LABYRINTH of life’s path, we follow now the left fork, now the right. The metaphor of the garden of forking paths is irresistible to anyone who has devoted their scientific career to understanding human choice'
A GARDEN OF FORKING PATHS !
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DEMAND SUPPLY
MARGINAL UTILITY OPPORTUNITY COST
GLUTS
QUEUES
PRICE
QUANTITY
PRICE TOO HIGH - LOW DEMAND OVER SUPPLY
PRICE TOO LOW - EXCESS DEMAND INADEQUATE SUPPLY
PRICE in a free COMPETITIVE MARKET with CHOICE provides INFORMATION for decisions
AUTOMATIC SAFEGUARDS are built in as PRICES are necessary for proper CHOICES
everyone takes DECISIONS after negotiating their ‘BEST VALUE’ from MARGINAL PRODUCTIVITYMARGINAL PRODUCTIVITY
firms RESPOND by searching for the best OPPORTUNITY COSTOPPORTUNITY COST
CUSTOMERS must be willing to purchase SUPPLIERS must be happy to deliver EMPLOYEES WORK BANKS LEND
DECENTRALISED decisions & dispersed wealth result in effective & efficient ALLOCATION as more people PARTICIPATE as they choose & innovate for satisfaction & profit
COMPARATIVE ADVANTAGE SPECIALISATION AGAINSPECIALISATION AGAIN
No NOT ABSOLUTE
but COMPARATIVE ADVANTAGE
DAVID RICARDO explained comparative advantage and emphasised the mutual benefits for everyone from specialisation and free trade but the concept is troublingly counterintuitive –
Nobel laureate Paul Samuelson – 'thousands of important and intelligent men have never been able to grasp it or believe it even after it was explained to them' ...
The Open University - ‘The principles of comparative advantage and gains from trade are the most important results in the whole of economics. They apply at national, and also individual level. It maybe that a doctor is better than a farmer both at practising medicine and growing potatoes. It does not follow that the doctor should do both. If each specialises in the activity in which they have comparative advantage and engage in trade they are both better off than if each tries to be self sufficient’.
KEY POINTS –
EVERYONE has different OPPORTUNITY COSTS and a comparative advantage in something
EVERYONE benefits from SPECIALISATION and trade even when the gifted are better at all activities
the principle explains TRADE advantages at INDIVIDUAL and national level, with money or barter
specialisation and trade will EVOLVE because extra 'VALUE' is created, it does not require understanding or the intervention of the specialists
REAL WAGES are determined by the value of output
PRICES are determined by supply & demand
PRICES & EXCHANGE RATES don’t determine trade, they result from trade, they are measurements of opportunity costs
GUNS or BUTTER !
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TOTAL FACTOR PRODUCTIVITY MEASURING IGNORANCEMEASURING IGNORANCE
PRODUCTION FUNCTION
In 1957 Robert Solow used 'growth accounting' mathematics to analyse historical GDP data and identified the overwhelming importance of a residual, ‘total factor productivity’, in securing growth and NOT the Neo-classical endogenous input variables capital (resources) and labour (effort).
Solow defined ‘total factor productivity’ as technological innovation, 'know how‘, understanding and practice.
change due to technology
change due to capital
OUTPUT
k1 k2 CAPITAL per LABOUR unit
2000
1950
O2
Ok
O1
MONEY IS NOT A PROBLEM !
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ENDOGENOUS GROWTH
PAUL ROMER and endogenous growth theory lifted some of the gloom of the ‘dismal science’ by focusing economic analysis on INCREASING RETURNS and Adam Smith's 'Pin Factory'.
Romer integrated into mainstream economics the growth effects of TECHNOLOGICAL ‘KNOW HOW’ from specialisation and scale through education, training, R&D, incentives and coordinating institutions ... and also the debilitating effects of political collective decisions, protectionism, regulation and taxation -
Enable the growth of HUMAN CAPITAL -
Tort Law, Trade, Technology
education, education, education
diversity, health, intensive interactions
Enable MARKET CO-ORDINATION -
free trade, capital, competition, wages and prices
establish property rights
low intervention, tax, inflation
establish trust for investment and saving
Endogenous growth theory, emerged in the 1980's as mathematical tools offered opportunities to model the complex non-linear processes of human behaviour. The failure of Eastern Europe to achieve economic growth was beginning to be explained as EVOLUTIONARY THEORY was integrated into economic orthodoxy.
PRODUCTIVE OUTPUT from ‘KNOW HOW’ PRODUCTIVE OUTPUT from ‘KNOW HOW’
MONOPOLISTIC COMPETITION in COMMERCIAL R&D DEPARTMENTS
‘KNOW HOW’ a NON-RIVAL PARTIALLY EXCLUDABLE GOOD
A LEG UP NOT A HAND OUT ! !
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IT IS EASY TO SATISFY MAJORITIES IN STABLE SITUATIONS -but the market continually responds to individuals with different
preferences, expectations & knowledge, & at the same time automatically adjusts to change & complexity.
PRINCIPLE FEATURES OF MARKETS - decentralised decisions where customers vote using price information about competing alternatives by a voluntary exchange of private property
ESSENTIAL PREREQUISITES rules for the definition exchange & protection of private property uninhibited access to customers obligation & trust
UNAVOIDABLE CONSEQUENCES rising prices to pass on information bankruptcies when losers fail to respond efficiently & effectively unemployment following adjustment to change
there’s no such thing as society … only different people at different time in different places choosing different things
EDUCATION EDUCATION EDUCATION AVERAGE is an ABSTRACTION …. VARIATION is REALITY … from GENES to ORGANISMS to CULTURES … PROPERTIES of the whole EMERGE … POPULATION FREQUENCIES CHANGE
Blind generate &test - not design - aspiration endeavour & ingenuity to discover the best option available at the time - not bishops princes generals nor majorities - tyranny and oppression is not an ess – crowd trouble emeges !!
OWNERSHIPRESPONSES- PERSONAL RISK / REWARD PROFILES
SPECIALISATION SCALE SYNERGY SCIENCE IMITATION
INVESTMENT INNOVATION
CUSTOMERVALUEJUDGEMENTS- CHOICES BEST PERCEIVED OPTION AVAILABLE AT THE TIME
CONFLICT
HANDS OFF !
different people, different experiences, different places, different times …
THE CONTROL MODEL ADAPTIVE SELF REGULATIONADAPTIVE SELF REGULATION
AUTOMATIC RESPONSES
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MULTIPLE ROLE -
MEASURES how much wealth is created maximum value at minimum cost
SIGNALS where to concentrate activities where scarce resources produce most satisfaction REWARDS innovation investment & risk spur to change & experiment
FACILITATES the ebbs & flows of uncertainty copes with inevitable losers
INDISPENSABLE in all COMPETITIVE DYNAMIC MARKET SYSTEMS
If information & motivation are to be effective profit must be maximised it cannot be ‘just’ or ‘fair’
PROFIT is a SURPLUS resulting from WEALTH CREATION it cannot be an EXPROPRIATION from buyer to seller.
PROFIT is not a part of zero sum games where STEALING is the only option.
PROFIT in positive sum games becomes a MORAL imperative and explains why the Bishops after outlawing USURY in 1571 revised their decision and inlawed it only 50 years later in 1624
UNFAIR & UNJUST !
THE NATURE of PROFIT INFORMATIONINFORMATION
DISPERSED & TACIT KNOWLEDGE
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Not REGULATION but AUTOMATIC CHECKS & BALANCES
CONTROLS EXPLOITATION & CORRUPTION
SUPPLIERS must be happy to deliverCUSTOMERS must be happy to purchaseEMPLOYEES must be happy to workFINANCIERS must be happy to lend
otherwise they choose the alternative
FEEDS PROGRESS
MORE DIVERSITY & CHOICEMORE CONSIDERED DECISIONSMORE PROGRESSIVE LEARNING
THE BETTER EMERGES
OTHERWISE the ALTERNATIVE WINS
COMPETITION between
gives CHOICE
and PROGRESSES
INTEREST GROUPS will always try to RIG COMPETITION forTheir own advantage but the best antidote is ANOTHERCOMPETING INTEREST GROUP
PRODUCERS
CUSTOMERS
EVERYONE
LIKE IT OR LUMP IT – VOTE WITH YOUR FEET !
THE SAFEGUARD of COMPETITION ALTERNATIVE OPTIONSALTERNATIVE OPTIONS
ACCESS to CHOICE
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FOOD SEX SHELTER
FRIENDSHIP
ESTEEM
FULL POTENTIAL
INDIVIDUALITY
EVERYONE has a DIFFERENT POSITION at DIFFERENT TIMES for DIFFERENT REASONS
the cause of all CONFLICTthe source of all CREATIVITY
MONEY gives some OPTIONS & INDEPENDENCEbut doesn’t help with DECISION MAKING
CULTURE gives some GUIDANCEbut doesn’t help with PERSONAL DECISIONS
INDIVIDUALITY & INDEPENDENCE are about PERSONAL CHOICES
SECURITY
MASLO
W’S
HIERARCHY
PURPOSE
RESPECT
INITIATIVE
CULTURE
INDEPENDENCE
MONEY
INDIVIDUALITY !!
MY HUMBLE CONTENTION !
THE INDIVIDUALITY of REALITY CONTINUOUS CHOICECONTINUOUS CHOICE
CONTINUOUS EVALUATION
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RESOURCES CONTROLLED by their OWNERS for BENEFIT or SALE tend to be
&
EFFICIENT use of SCARE RESOURCES
REDUCING WASTE & DEPLETION and
CREATING VALUE In excess of COSTS
The NATURAL EVOLUTION of the extended phenotype
BIOLOGY BEHAVIOUR TOOLS PROPERTY
each is an extension of genetic inheritance
each addition is painfully acquired through
&
PRIVATE PROPERTY Is not forced on people if greater benefits are perceived collective ownership will thrive
OWNERSHIP BEHAVIOUR CREATES WEALTH
OWNERSHIP IDENTITY IS IRRELEVANT
… unfortunately all property becomes a target for parasites and predators and must be defended if it is to exist …
INVESTMENTEFFORT
ENHANCEDPRESERVED
THE TRAGEDY OF THE COMMONS !
THE MAGIC of PROPERTY ASPIRATIONS & INCENTIVESASPIRATIONS & INCENTIVES
IMMUNITY from TREACHERY
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SPECIALISATION - focus education & training to acquire better skills which can be offered for sale
SCALE - more volume lower cost - drive down the learning curve
SCIENCE - scientific problem solving ‘know how’ is massively & increasingly available to all
SYNERGY - experiment to find the emergent 2 + 2 = 5 synergies they can’t be predicted they must be discovered
IMITATION - copy successful practice there’s no better place to start
INNOVATION - make a better mouse trap & the world will beat a track to your door
INVESTMENT - sacrifice some of today’s pleasurable consumption & tomorrow will be better
There is no secret economic activities are well understood but organisation is necessary as the co-operation of strangers is essential - here’s the rub - how do we organise the activities of countless SPECIALISING agents on an ever increasing SCALE with ever more disparate knowledge ??
![[Credentials];[Notch JSC]](https://static.documents.pub/doc/80x56/5442a5f9b1af9f350a8b46f3/credentialsnotch-jsc.jpg)
