Thursday, August 30, 2012

The Three Entrepreneurial Stages.

At the beginning of this elucidation about entrepreneurship it is important to know how natural and basic entrepreneurship is to the human being. Humans seek truth, by nature, because it is what leads to betterment. Truth can be seen as the discovery of the laws in operation all around us and once these laws are relatively more understood the potential for advancement is present.

But humans are not always engaged in truth-seeking. Everyone has down time. Some have significantly more down time than others. This gets us to the first stage of entrepreneurship: latency. As is implied in latency, humans have the potential to be entrepreneurial - to be truth-seekers - but when that potential is not activated then it is in a state of dormancy.

Transforming from the first stage to the second stage requires a spark of interest, a quest for knowledge, an alertness or a desire for alertness, which transforms latent entrepreneurship into active entrepreneurship. Although somewhat rare, a pure entrepreneurial discovery can occur at this stage and bear its immediate fruit. With a pure entrepreneurial discovery the betterment that results from this pure entrepreneurial discovery requires nothing other than the discovery.

Most of the time the pursuit of knowledge in the active entrepreneurial stage is accompanied by the recognition that other economic realities like physical and human resources and/or capital are important additional means that are necessary for success.

This is when the third stage of entrepreneurship is entered. The search becomes purposeful, not just for the 'new discovery' but also for all of the new combinations, including those that occur over time. Purposeful entrepreneurship is the driving force in the economy and it is a manifestation of the operation and tendency of the equilibrating power in the market process which, by the way, always happens to be in a state of disequilibrium.

In summary, the three stages of entrepreneurship are: latent, active, and purposeful. For more about the three entrepreneurial stages go here.

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Thursday, August 23, 2012

Wednesday, August 22, 2012

Anatomy Of The Divine Economy

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Friday, August 17, 2012

Divine Economy Theory Passes The Test Of The Four Kinds Of Proofs.

First of all let me list the four kinds of proofs:
  1. Through sense-perception
  2. Through the reasoning faculty
  3. From traditional or scriptural authority
  4. Through the medium of inspiration

These are the standards that people use as proofs but each one is subject to error. I will give an example of an error for each of these 'proofs' that shows the weakness of relying soley on that kind of proof.
  1. Sense-perception is fooled by a mirage.
  2. Reasoning faculty alone falters because not all logicians come to the same conclusion.
  3. Which tradition or scriptural authority can claim to be the correct one?
  4. Could the promptings of the heart that lead to the inspiration be a vain imagining?

The point that we are getting at is that one or a couple of these 'proofs' is not sufficient and that only if all of these kinds of proofs are satisfied can there be certitude.

Now we will examine and test the divine economy theory using each of these proofs.
  1. Sense Perception: The Divine Economy Model © is a visual graphical representation of the economy.
  2. Reasoning Faculty: The divine economy theory uses logic consistent within the philosophy of classical liberalism to build the theory.
  3. Traditional Or Scriptural Authority: Not only does it stem from the classical liberalism tradition but it ties together the ethical foundations inherent in all religions.
  4. Through The Medium Of Inspiration: The model in its simplest form appeared to me in a dream in the autumn of 2004 and I hurriedly wrote it down so I would not forget it. I then applied my training as a technical economist to unfold it in its various applications (macroeconomics, microeconomics, ethical economics, and economic justice) over the next seven years (2005-2012).

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Tuesday, August 14, 2012

Definition Of An Unhampered Market Economy.

An unhampered market economy is one where everyone recognizes that human knowledge is finite and cannot comprehend the nearly infinite nature of the market process. This recognition translates into the understanding that all intervention corrupts the process because it is necessarily arbitrary and shortsighted.

Only those who are ego-driven can have the arrogance to pretend that they know what is best, but in the future these scoundrels will be rejected because of their ignorance of reality and because of their selfish intentions.

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Monday, August 13, 2012

Is There A Model Of The Unhampered Market Economy?

The answer is yes. In the tradition of classical liberalism much of the logic and reasoning is done by the use of words and so the model of laissez-faire or an unhampered market economy is visualized in the minds of the readers of the authors of the causal-realistic approach to economics.

The most extensive and intensive and unified example of a causal-realistic model of the unhampered market economy is the Divine Economy Model © which laid the foundation for the divine economy theory.

As proof of the unhampered market economy nature of the divine economy theory we only have to look at the clear and definite scientific verification found in the theory: there is absolutely no moral authority for any intervention into the economy!

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Saturday, August 11, 2012

Evenly Rotating Economy Versus The Unhampered Market.

Both of these are mentioned in the Austrian economics literature but they are quite different. Conceptually they are both models in the sense that they are attempts to picture certain conditions for the purpose of gaining insight into how the economy works.

Evenly Rotating Economy

"The evenly rotating economy is a fictitious system in which the market prices of all goods and services coincide with the final prices. . . In reality there is never such a thing as an evenly rotating economic system. However, in order to analyze the problems of change in the data and of unevenly and irregularly varying movement, we must confront them with a fictitious state in which both are hypothetically eliminated. " 

"The only method of dealing with the problem of action is to conceive that action ultimately aims at bringing about a state of affairs in which there is no longer any action, whether because all uneasiness has been removed or because any further removal of felt uneasiness is out of the question. Action thus tends toward a state of rest, absence of action."

"The essence of this imaginary construction is the elimination of the lapse of time and of the perpetual change in the market phenomena."

For all intents and purposes the use of the words 'imaginary construction' is conceptually just another way of saying the word 'model.' The chief characteristics of the model of the evenly rotating economy are given above.

Unhampered Market

In contrast, the concept of the unhampered market as an imaginary construct (model) has as its chief characteristic only the elimination of economic interventionism. All of the natural processes and the natural laws and economic laws that pertain to human actions are permitted full expression in this model.

The essential difference between these two conceptual models is that the evenly rotating economy is one that is in the state of equilibrium whereas the unhampered market is in the state of disequilibrium. Since the economy is always in the state of disequilibrium the unhampered economy conceptual model is significantly more powerful.

Those familiar with the literature of Austrian economics may then wonder whether this powerful model of the unhampered economy has ever been further advanced. The answer is yes. It has been explored and explained further using deductive reasoning and logic by many of the great Austrian economists. I am aware of no more penetrating and complete exposition of the unhampered market model than the divine economy model and the divine economy theory.

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Saturday, August 04, 2012

Austrian Business Cycle Analysis Is A Part Of The Human Civilization Equilibrium.

World over there is only one explanatory economic theory that truly and truthfully identifies the cause and effect of intervention, yet it cannot break through the unfathomable uncertainty inherent in the world and so the exact time and the intensity of the inevitable correction is not known. The intensity is related to the degree of the distortion of the equilibrium forces and how close to the entropy of equilibrium the system returns.  No one knows what the trigger event will be and no one knows how much cascading will take place.

The one explanatory economic theory that provides this great insight and offers viable and ethical solutions is the Austrian Business Cycle (ABC). This is the theme of the work that won Fredrich von Hayek the Nobel Prize in 1974.

The boom of the cycle is caused by economic intervention which stimulates overconsumption and malinvestment. The bust is the recession and depression that follows. If the bust is interrupted by economic intervention in an attempt to artificially stimulate the economy then the even more severe consequences are simply pushed into the future. The longer the correction is delayed the worse it will be and the less effective will be the attempts to artificially get out of the bust.

One interesting discovery in the divine economy theory is the broad view of the human civilization equilibrium. What is significant about the concept of the human civilization equilibrium is that all intervention into the economy not only disrupts the economy but it also disrupts liberty, order, peace, justice, law, ethics and morality!

The divine economy theory shows scientifically that laissez-faire is not only the most efficient economic system but that with laissez-faire all facets of human civilization are kept in balance optimally. No claims can be made that any other way - the various types of interventionism - can yield more liberty or more order or more peace or more justice or more ethics or more morality!

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