Economics as a Complex System

The economic scenario of a country drives the development of its social scenario. The Unicist Conceptual Economics was developed to deal with the nature of economic behavior allowing the development of transgenerational plans (20-50 years) to promote the development of countries

Managing economics as a complex adaptive system is a breakthrough that allows dealing with the world of possibilities before entering the world of probabilities.

An internationally recognized expert, Alan Greenspan, recognized the need of a conceptual approach to economy in order to maximize the predictability of economic scenarios.

It has to be considered that conceptual economy is only applicable in institutionalized environments. The aspects of currency and speculative manipulation were not included in this introduction.

Introduction to Conceptual Economics

A Macro-Micro Approach

This is a synthesis of the works on conceptual economy developed by Peter Belohlavek to provide a guiding idea of how to deal with real economy considered as a complex adaptive system. It is part of the conceptual model for country scenario building and forecasting.

The development of the conceptual approach to country scenarios, which included conceptual economy, started in the ’70s and its core aspects were finished in the ’90s.

It was triggered by the need to find a structural solution to the multiple failures in applying economic solutions to different countries.

The objective was to find the concepts that allow adapting the systemic economy to the true drivers of economics considered as a complex system managing its unified field.

What are concepts?

Concepts are the drivers of human actions. They are entities that underlie the operational aspects of reality, which define the essential logic that makes that reality evolve. They are integrated by a purpose, an active function, which generates added value that drives its evolution while it produces unavoidable entropy, and an energy conservation function that sustains the purpose and limits the entropy of the active function.

Concepts define what needs to be done to produce a predefined result and the basic “know how” and “what for” of these actions.

Adult individuals cannot accept that they do not know the concept of what they are doing. Thus, the concepts individuals have in mind can be functional or dysfunctional to produce predefined results.

When concepts are dysfunctional, they can be either pre-concepts or anti-concepts. Pre-concepts are concepts that avoid personal risks for the one who is considering them but do not drive to any added value to the environment. Anti-concepts, on the other hand, are those that destroy the concept of something that is intended to be done.

What is Conceptual Economics?

Conceptual economics defines the fundamentals that drive the real economy of an environment. Conceptual economy deals with the nature of the actions that allow managing the production, distribution and consumption of goods and services.

Macro conceptual economy is homologous to micro economy. This allows making pilot tests at a micro level that are replicable at a macro level.

Conceptual economy is defined by concepts and their fundamentals, which guide the actions in the field of real economy. Fundamentals are sub-concepts of a superior conceptual entity that drive the nature of specific actions.

These specific actions can follow either an evolution cycle, when the active function is the first step to be followed, or an involution cycle, when the first step that is followed is the energy conservation function.

Conceptual economy integrates the essential aspects of a culture, beginning with the nature that underlies the collective unconsciousness in order to define the structural boundaries that cannot be overpassed.

The archetype of a culture defines the limits of what is possible to be achieved. When these boundaries are exceeded, the culture corrupts and a different culture establishes new utopias that will be attacked by the old culture.

This situation takes place until the preceding culture implodes or an external catalyst and/or gravitational force allows achieving a mutation of the old culture.

This “change” will never be a synthesis of both cultures, but a mutation of the old environment, which includes aspects of the invading culture.  The dominant archetype of a culture is defined by the dominant archetype of the mass that evolves through the actions of the elites.

The middle class provides a transition that makes the archetype of the mass bearable. The archetypes establish the wide context of conceptual economy and establish the possibilities of the restricted context that is defined by the value of work.

Synthetically, it can be said that the unicist conceptual economy deals with the archetypes of cultures as the wide context, the essential structure of work as the restricted context and the fundamentals of materialistic behavior as drivers.

On the one hand, conceptual economy establishes the concepts of the actions to be developed, respecting the boundaries of the specific cultural archetype that defines what is legitimate in an environment and what is not. But, on the other hand, it considers introducing catalysts as necessary to expand the power of work. This drives towards increasing the level of technology of an environment, which makes economic growth possible.

After this process of empowering work has been done, or the type of work has been structurally stabilized, conceptual economy deals with the economic fundamentals ensuring their consistency with the social and political fundamentals.

The unicist conceptual economic approach allowed defining the unified field of economics, which behaves as a complex system. In order to transform this conceptual approach into operational actions, multiple compromises need to be done avoiding considering the consequent systemic solution as being the “real economy”.

Experiences demonstrated that similar economic solutions produced totally different results, depending on the wide context defined by the archetype of a culture and the restricted context defined by the value that “work” has in this environment.

This is the consequence of working at a level of universal cause-effect relationships instead of having previously defined the wide and restricted context that establish the basics of the possibilities that can be achieved in economics.

What does Unicist Conceptual Economics Propose?

It proposes defining what is possible to be achieved given the present circumstances, defining the actions that need to be done to improve the future circumstances and then finally use this definition of possibilities as an input for the systemic approaches to define the operational actions within the limits that have been established.

In the following pages, you will find the conceptual approach that allows integrating the archetype of a culture, its concept of work and the fundamentals of economy and the corresponding social and political scenarios.

Unicist mathematics allows defining the possibilities of actions and the probabilities of their success to achieve pre-established goals.

The Structure of Unicist Economic Scenarios

Unicist Economic Scenarios deal with the concepts that drive production, distribution and consumption of goods and services. They deal with the materialistic aspects of a society to ensure its survival and growth while providing a basis for the evolution of the coming generations.

The unicist conceptual economy considers that the core objective of economy is the organization of work processes in a culture or institution. Economic Scenarios can only occur within the level of the archetype of a culture and based on the values of work .

The purpose of an economic scenario is to generate wealth, its active function that puts this purpose into action is the generation of social added value, which makes wealth become useful, and the energy conservation function is the generation of wealth with growth.

This synthetic definition requires entering the definition of the three elements that integrate economics in order to define the sub-concepts/fundamentals that integrate it. It has to be considered that each of the concepts that define conceptual economy need to reach a threshold according to the expectations that are implicit in the social scenario that are finally based on the values implicit in the archetype of a culture.

The Ontogenetic Map of Economic Scenarios

The final purpose of conceptual economy is the generation of wealth, which can only be achieved if the culture is driven by the value of work as a value generating action and not only as a way to survive.

Conceptual economy organizes what is possible to be achieved. Crises occur when any concept becomes dysfunctional and does not work within its credibility zone and cannot be compensated by its energy conservation function.

But work as a value can only generate wealth if it is sustained by the necessary technology that allows dealing in a competitive context. Technology implies necessarily innovation.

Work and technology can only establish a meaningful integration when people are driven by the need to learn. This implies that the environment needs to foster the generation of value and improvement in order to evolve and thus a learning context is given.

Maximal Strategy

The goal of economy is to add social value, which implies that wealth becomes part of a society.

This implies giving access to work, as employment, to the active members of a country in order to allow them to profit from the wealth that is being produced.

The satisfaction of common well-being implies giving access to the possibility of consuming to satisfy materialistic needs and of social ascension in order to provide hope, within a stable economic environment that allows personal and institutional planning.

The consistency of the benefits includes establishing a fair distribution that is consistent with the value added in the work processes and the final goal of the generation of expectancies of evolution. This consistency of the benefits of a society is the catalyst of the economic activity. The economic activity becomes the driver of evolution when a culture considers that a better future can be expected and that the benefits obtained are adequate.

The generation of jobs is the final purpose of the maximal strategy in economics. It allows transforming theoretical economy into real economy.

Minimum Strategy

The minimum strategy to sustain wealth generation is given by the capacity to grow. Growth implies being able to introduce the necessary innovative technologies to be able to have a real competitive advantage, having the necessary monetary circulation that allows expanding markets and having the necessary social competitiveness in order to build more efficient solutions to generate additional value.

Monetary circulation is the active function of any growth strategy, which implies that any action that aims at achieving growth needs to be supported by the existence of an adequate level of monetary circulation. This implies managing currency as a growth driver avoiding inflation, which destroys currency and generates spurious growth.

Competitiveness implies, on the one hand, being able to compete based on differentiated values, and, on the other hand, based on lower costs. Wealth generation weakens when the competition is only based on cost differentiations. Social competitiveness is the entropy inhibitor of the economic scenario, which implies that highly competitive cultures are stronger to face economic crises.

Finally, the minimum strategy can be ensured when there is sufficient provision of innovative technologies. The minimum strategy of economics is given by growth.  That is why the lack of growth generates serious side-effects because it has a direct relation with its complement which is wealth generation.