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2014 | OriginalPaper | Buchkapitel

1. The Underlying Thesis

verfasst von : Jean-Pierre Aubin

Erschienen in: Time and Money

Verlag: Springer International Publishing

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Abstract

Léon Walras cleverly designed an evolutionary system guiding “Adam Smith’s invisible hand”: the Walras tâtonnement is regarded as a mathematical translation of the law of supply and demand. It describes an a priori dynamical process governing the evolution of prices. If this evolution converges to a price, which is a (mathematical) equilibrium, it happens to be viable by design.

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Nächstes Kapitel How Long and How Much Endowing One Commodity

For instance, dark pools of shadow finance, multilateral trading facilities, securization, collateralized debt obligation, credit default swaps, leverage by-outs, naked short selling, high frequency markets, etc. How this wonderful word “equity” came to mean the interest of shareholders (shareholders’ equity) in a company and other stock owners? When returns on equity (ROE) measuring the rate of return on the ownership interest around 15 % and more became standards after the years 1980, were equities really equitable? Not being a native speaker English, I am quite reluctant to use in this context the concept of equity, which should only mean, as in other Romance languages, impartiality, fairness, justice, rightfulness, not to mention the concept of ethics. See among many other references [73, Vingt propositions pour réformer le capitalisme] by Gaël Giraud and Cécile Renouard.

Proposition 12.2.11, p. 499, of [15, Viability Theory. New Directions] states that, using viability multiplier theory, closest “connection matrices” of links between agents to the identity matrix regulate the same viable evolutions than the ones governed by prices with minimal norm.

For motor engines, oil is provided to lubricate the functioning of the engine powered by fuel. The endowment of oil should remain constant whereas fuel is consumed to power the engine. However, even for simple mechanical engines, oil endowment has to be modified during short crisis periods for avoiding the engine breakdown.

For metabolic reactions, specific enzymes greatly accelerate their rate and are not consumed by the reactions they catalyze. However, enzymes may be inhibited or deactivated during the catalytic process.

The word “endowment” is also polysemous. We shall mention the “endowment effect^{35 − 96}” assumption. An endowment fund is a fund in which regular withdrawals from the invested capital finance specific purposes, too rarely proposed except by nonprofit organizations, universities, hospitals, etc.

Numéraire, a term coined from …metallic coins with a legal course since around 1720 and used during and after the French Revolution, is a basic standard by which values are measured.

The minimization problem popping up below does not belong to the class of intertemporal optimization problems studied in optimal control theory: the integral criterion is replaced by a supremum criterion, which is not differentiable. The tools of viability theory allows us to overcome this difficulty.

Jean Fourastié notable for having coined the expression Trente Glorieuses (“the glorious thirty [years]”) to describe the period of prosperity that France experienced from the end of World War II until the 1973 oil crisis (1945–1973), proposed in 1950 to use men’s hair-cuts as such an index: “A specimen Paris hairdresser did not’produce’ more hair-cuts in 1950 than in 1900; the number was 3.5 hair-cuts per working hour in both periods. […] the ‘consumption’ of hair-cuts has increased more than that of wheat, although the productivity of hairdressers has remained stationary, while that of wheat growers has sharply increased.”

The risk issue is not dealt with in this text, but is the theme of a companion book [17, Tychastic Measure of Viability Risk. A Viabilist Portfolio Performance and Insurance] devoted to the financial system, whereas this one is devoted to the economic one for avoiding confusion by mixing problems.

See, among many references, [41‐46, Cartelier].

Who have succeeded where the alchemists failed in turning paper into gold, who invented perpetual debt where physicists had to abandon the perpetual movement, and operated at their exclusive benefit the “exuberance” of the exponential (see Sect. 1.3, p. 13).

Named after Charles Ponzi, who rediscovered a variant of pyramid form of fraud relying as on a mistaken belief in a nonexistent financial reality, including the hope of an extremely high rate of return, that pays returns to its investors from their own money or the money paid by subsequent investors. In 2008, Bernard Madoff used a similar scheme that cost his investors about 53 times the losses of Ponzi’s scheme.

The English bankers, being informed of that, had a law passed by the British Parliament prohibiting the Colonies from issuing their own money, and ordering them to use only the gold or silver debt-money that was provided in insufficient quantity by the English bankers. The circulating medium of exchange was thus reduced by half, triggering the Revolutionary War against England, followed by the Declaration of Independence in 1776 and the American Constitution, signed at Philadelphia, in 1787, which stipulates that “Congress shall have the power to coin money and to regulate the value thereof” in article 1, Sect. 8, paragraph 5. It was the beginning of the still existing recurring conflict between the US treasury and the privately owned Federal Reserve Bank created in 1913.

As, in molecular biology, when Ronald Laskey called in 1978 “molecular chaperones” proteins assisting other macromolecular structures to fold and assembly, or as old aunts were chaperoning their young and temporarily innocent nieces in older times.

Lettre de Turgot à Hume : La valeur fondamentale est ce que la chose coûte à celui qui la vend, c’est-à-dire les frais de la matière première, intérêt des avances, salaires du travail et de l’industrie. La valeur vénale est le prix dont l’acheteur convient avec le vendeur. La valeur fondamentale est assez fixe et change beaucoup moins que la valeur vénale. Celle-ci ne se règle que sur le rapport de l’offre à la demande; elle varie avec le besoin, et souvent la seule opinion suffit pour y produire des secousses et des inégalités très considérables et très subites. Elle n’a pas une proportion nécessaire avec la valeur fondamentale, parce qu’elle dépend immédiatement d’un principe tout différent; mais elle tend continuellement à s’en rapprocher, et ne peut guère s’en éloigner beaucoup d’une manière permanente. Il est évident qu’elle ne peut rester longtemps au-dessous; car, dès qu’une denrée ne peut se vendre qu’à perte, on cesse de la faire produire jusqu’à ce que la rareté l’ait ramenée à un prix au-dessus de la valeur fondamentale. Ce prix ne peut non plus être longtemps fort au-dessus de la valeur fondamentale, car le gros prix, offrant de gros profits, appellerait la denrée et ferait naître une vive concurrence entre les vendeurs. Or l’effet naturel de cette concurrence serait de baisser les prix et de les rapprocher de la valeur fondamentale.

And chemists, as the Nobel prize Frederick Soddy who wrote four books on money, including his [117, The rôle of Money] published in 1934, in which he underlined that financial debts grew exponentially at compound interest but the real economy was based on exhaustible stocks of fossil fuels, anticipated some reforms such as the floating of exchange rates, etc., and coined the word ergosophy, leading to the present day energy economics. I thank Hélène Clément-Pitiot for having mentioned this reference.

Napoléon clearly understood the root of Europe’s problem. For, after seeing a table of interest charges, he commented:“The deadly facts herein revealed, lead me to wonder that this monster, interest, has not devored the whole human race. It would have done so long ago if bankruptcy and revolutions had not acted as counter poisons.” according to the books [65, The Economic and Social Problems] by Michael Flürscheim and [40, Lincoln Money Martyred] by Butler. However, the four Rothschild brothers used this deadly weapon to defeat him in Waterloo by building a network of agents shipping millions of coins to the Duke of Wellington, together with an “information mix” of true news and false rumors all over Europe, as a private intelligence service (subsidizing also the German, Austrian, Belgian, and Russian allies) who warned Nathan Rothschild the news of Wellington’s victory at the Battle of Waterloo by optical telegraph a full day ahead. Hence by mimetic behavior other panicked investors sold their savings at their lowest price before the official news. ThenRothschild bought what he had just sold, and is fortune was multiplied twenty times on that day when misfortune sent Napoléon to Saint Helen to meditate on what would happen had he won in a world without compounded interests nor speculation!

Under the Code of Hammurabi, one could hypothecate his wife. But a creditor could seize her for only 3 years and would have to return her in as good condition as she came.

“Unto a foreigner thou mayest lend upon interest; but unto thy brother thou shalt not lend upon interest; that the Lord thy God may bless thee in all that thou puttest thy hand unto, in the land whither thou goest in to possess it.” (Deuteronomy 23:20).

“Why then didn’t you put my money on deposit, so that when I came back, I could have collected it with interest?” (Luke 19:23)

“O ye who believe! Devour not usury, doubling and quadrupling (the sum lent). Observe your duty to Allah, that ye may be successful” (Quran 3:130).

Welch became in 1981 the youngest chairman and CEO General Electric and has been nominated in 1999 the “manager of the century”!

See http://www.ft.com/intl/cms/s/0/294ff1f2-0f27-11de-ba10-0000779fd2ac.html#axzz1eiLpL2PZ.

Such as accounting scandals in 2001–2002 with Enron and so many others, the options backdating scandals of 2005–2006, and the subprime crisis of 2007–2008, which did not stop and even thrive after the crisis, up to the 2012 Libor Fraud.

The Demise of the Seer, the Rise of the Demiurge. Essay on contingency, viability and inertia of systems, waiting for a publisher who will take the same risks that Éditions Beauchesne took in publishing this 900 page book fitting no standard categories for translating it in English.

See Sect. 5.2 of [12, La mort du devin, l’émergence du démiurge].

Physics use experimentations to establish this validation task. Life sciences seldom allows the possibility of experimentation or because the chosen variables have no units of measure.

This assumption is rarely mentioned by the proponents of the fair efficiency of the “Marker.” Allocating ɛ% of the total income to n − 1 agents and \((1 - (n - 1)\varepsilon )\)% to the remaining one leads to a Walras equilibrium.

See for instance [55, Debreu], [4, Arrow & Hahn], [88, Hildenbrand W. & Kirman], [5, Aubin], [34, Bewley], [119, Stachurski, Venditti & Yano], etc.

Among them, [83, Hahn & Negishi], [112, Ostroy & Starr], [116, Smale], [121, Uzawa], etc.

See [118, Solow & Stiglitz], [27, Barro & Grossman], [61, Drèze G. & de la Vallée Poussin], [47, 48, Champsaur, Drèze & Henry], [111, Neary & Stiglitz], [72, Gale], [30, 31, Bénassy] [56, De Vroey] for instance.

See for instance [5, Mathematical Methods of Game and Economic Theory] and [10, Optima and Equilibria] to show that we, too, were seduced, not for long, by general equilibrium theory.

Under which criterium or subset of criteria, most of the time alluded to?

The “Ideal Heresy Law” , like the “Ideal Gas Law” , states that the intensity of the struggle against heresy is inversely proportional to the deviance that separates it from dogma. The enthusiasm of new converts to transform an old heresy new dogma is proportional to the violence they practiced for the persecuted before denying it. New beliefs— credulitas —are established mostly at the cost of thousands cruelties— crudelitas (see Box 173, Sect. 4.4.5, of [12, La mort du devin, l’émergence du démiurge]).

Amable B (2005) Les cinq capitalismes: Diversité des systèmes économiques et sociaux dans la mondialisation. Seuil

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Titel: The Underlying Thesis
verfasst von: Jean-Pierre Aubin
Verlag: Springer International Publishing
Buch: Time and Money
Print ISBN: 978-3-319-00004-6

Electronic ISBN: 978-3-319-00005-3

Copyright-Jahr: 2014
DOI: https://doi.org/10.1007/978-3-319-00005-3_1

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