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The Next Economic Paradigm; Part 1

by Dan Robles on April 3, 2009

Technological change must always precede economic growth. We are going about the process of Globalization as if economic growth can precede technological change. This is the singular flaw of market capitalism that needs to be reversed.

The Innovation Economy will not be delivered by corporations, Government or Academia. There no single person, country, ideology, or philosophy that can meet the challenges of the future alone – everyone will be required to participate because everyone has a stake in the outcome.

The Ingenesist Project outlines a very optimistic future. The problems ahead have a relatively simple solution that can be implemented today using existing tools and infrastructure. These tools acting in the right system can have profound impact on future economic growth and the sustainability of our resources.

The Ingenesist Project identifies a core problem:

This is the human productivity chart. Every time humans invent better ways of doing things, they become more productive. Where more people are more productive, the economy gets bigger. This is a fact.

About 50,000 years ago, humans began to make tools using tools and innovation increasing exponentially. Tools made hunting and gathering easier. As farming developed so did the emergence of cities. When people could produce more than they needed, they had time to think about things like philosophy, art, astronomy, written language. This led to a scientific revolution that continued to make new observations about the world. These observations were applied to systems that made people still more productive. The industrial revolution followed. Industry produced a lot of information. The ability to process that information using computers led to the information revolution. Soon people began seeing new trends among the information, facts, and data. This ability largely defines the knowledge economy that we see today.

Obviously, There were economic “eras” in the past and there will be more in the future; of this is not the end of human economic development. Something else will happen after the knowledge economy. This next economic paradigm is not easy to see.  Many people have a sense that civilization is changing – it must change.

Looking at the productivity chart, we notice a few interesting trends.

  • Every level of economic development was derived from the prior level of economic development.
  • That transformation was achieved by integrating the tools that were developed during the prior economy.

The two greatest tools in the knowledge economy are the Internet and Social Media. The Innovation Economy must integrate these tools.

Now, this is the Human Gross Domestic Product Chart. This is obviously very similar to the productivity chart except that the bottom axis is labeled with Global Gross Domestic Product over the same time period. The global GDP of 50,000 years ago was about 200 Million in current dollars.

Today, the Global GDP is about 65 Trillion Dollars.

If this curve was to continue, and it can, the next level of economic development could easily value in the Quadrillions. However, this cannot happen without some adjustments to the current system:

The only way to create more money is to increase human productivity and the only way to increase human productivity is to Innovate. This is the guiding principle of an Innovation Economist.

The problem is that the financial system is highly organized while the “Innovation system” is nearly random.

Economic growth with “money” as the scorecard lives in a complex, global and highly integrated system where billions of dollars circle the globe daily at the click of a mouse.

By contrast, human innovation lives in the patent system which is extremely slow, static, and prohibitively expensive. Of course, innovation certainly happens in places like Silicon Valley, Government Laboratories, Universities, and let’s not forget the proverbial “Steve’s Garage”; but these sources are not integrated and they do not behave like a system – except at the mercy of the financial system.

Innovation is market driven, markets should be innovation driven.

It is clear; there is no Innovation system to match the financial system in speed, efficiency, and integration. The objective of the Ingenesist Project is to specify an innovation system that integrates the tools of the knowledge economy into a structure that mimics the financial system. If it looks like money, it will behave like money and people will trade it.

The Financial system has 5 essential components that interact with each other as a system.

The 5 Essential Components of an Economy

1. A Currency to store value

2. An Inventory to account for the storage and exchange of value

3. Institutions that are supposed to keep the game fair

4. Entrepreneurs to do the “fuzzy math”

5. Business Plan or philosophy such as “Capitalism”

If any of these pieces are missing or corrupted, the market will fail. All 5 of these elements must be operational and integrated in order for a market to be efficient.

In the next several articles, we will go through each of the 5 elements and develop the corresponding knowledge system that will be integrated as we create the structure of the Innovation Economy.

If you give people a game they can win, they will play it all day long. In this regard, human behavior is highly predictable.

{ 4 comments… read them below or add one }

Lloyd_bardell January 8, 2012 at 9:24 pm

Meet up for those interested in a more Equitable form of Capitalism.
Contact above if you are interested in forming a Party with a voice for
the average Citizen. We will tend to ally more with the Democratic Left.
Put the Tea Bagging Scum out of Business.

Capitalism is not a Frozen Ideology. It is an evolutionary process in
economics. It has been redefined several times and its most recent
redefinition as a result of the Thatcher-Reagan Revolution has proven to
be very flawed. Capitalism thrives with proper governmental interaction
and regulation. the noveau-laissez-faire approach is a tremendous and
catastrophic failure. The New Capitalism will or must be Democratic
Capitalism for democracy to survive or it will be the Chinese form or
some form of autarky and democracy will fail.

At some point almost everything in a highly developed society will be
made by Robots or by labor overseas; and, then even there ultimately by
robots. What are we to do then with the great mass of people? Robot
Socialism or some form of Democratic Social Capitalism is inevitable.
Income distribution will need to be broad – people will need to be paid
like share and stake holders across the entire economy. Technology makes
this inevitable. Marx used what has become a loaded word “Communism” –
due to travesties of implementation and propaganda like in Stalinist
Soviet Russia, but some form Technical Capitalistic Communism is
inevitable unless we destroy ourselves before this. The wealth will
eventually have to be shared across the population in the most developed
countries with citizens being afforded benefits like those of
shareholders in a corporation, with guest workers receiving wages but
not shares, etc. Those who continue to work will receive their shares
and additionally will receive income above those shares. People who
receive shares, and don’t work, may elect not to do anything work
related or may elect to start their own businesses, may join in a modern
type guild to pull Capital and Start new ventures, or may invest
overseas, etc… to bring another economy up to a higher level of
development. The most advanced economies will thus benefit, like
stockholders, from their advanced technological state. We need to
democratize Capitalism, think outside of the box, require Federal
Charters for incorporation, require distribution of profit across the
employee base and in pension plans rather than in the hands of a few, if
the corporations were started by an individual – then require a phased
ESOP plan in which that individual receives an income but not the
absolute power for life and not the enormous sums to the detriment of
everyone else employed, we need to offer direct stock – preferred to
speculative stock in the market, stakeholders must be placed above
shareholders, we need first to tax back to life the dead capital or mort
main in the hands of the 1% and its minions, we will thus stimulate
demand, increase production, reduce unemployment on the road to
Democratic Wealth Distribution referred to above, and enhance both
quantitative and qualitative growth of industries of scale. The problem
is that our leadership, especially the conservatives, are stuck in an
antiquated mode of political and economic thought. We have the
governmental infrastructure in place and it may be fine tuned. We lack
the economic vision in our leadership and the population at large
because it is always looking backwards for answers to questions that
require a forward looking, non-puritanical thought process. Keynes was
right period! Now build on that! Marx was right about some things! Adam
Smith was right about some things! And, technology is always a game
changer! Call it whatever you like – but the future consists of elements
of all these economic theories blended into Robotic Socialism or
Democratic Capitalism with the most advanced countries treating their
citizens as paid shareholders as more and more of the means of
production are taken over by automated functions. This will also have a
democratizing effect on economic power.

Reform Capitalism – Social Capitalism Democratizes the Economic System.
Require a Federal Charter for Incorporation with social responsibility
being a requirement of the Charter. Move away from State incorporation.
Require that all corporations be employee owned with profits distributed
across the entire employee base rather allowing a few to make immense
amounts of money. Pool Capital in real pension funds that are not
controlled by the company. This will improve employee morale, increase
progressive and positive control for companies rather than allowing CEOs
and shareholders to make speculative raids on companies and then
running them into the ground so that people like some of the current
Republican candidates make a financial killing (literally), and it puts
stakeholders above shareholders, improves productivity, etc. The
conservatives like to use “loaded words” like class warfare to distract
and frighten people into voting against their own best interests. During
the Eisenhower years and through much of the 50s and 60s, The wealthy
were taxed at 70% or better and still made a handsome profit. I would
suggest using the Referendum in an effort to circumvent the deadlock in
government. The 1% control the government due to special interests and
the money linked to them. At the beginning of the industrial revolution,
England redistributed land to the commoners thereby increasing Capital
liquidity and freeing Capital up to finance the industrial revolution.
It is time to redistribute the Dead Capital that has been amassed by the
super rich or the 1% et al. During the Middle Ages, the church gained
control of enormous amounts of land that in effect were removed from the
economy and became a dead hand or Mort Main. The Capital amassed by the
1% is equivalent to the Mort Main of the Middle Ages. It is Dead
Capital both from a quantitative standpoint and a qualitative standpoint
in that it is Dead Capital, an enormous drain on the economy, and in
that fewer individuals or groups with ideas have access to capital and
thus are not able to develop valid economic ventures. Allowing the
current legal infrastructure to protect the 1% in effect allows the
formation of a permanent overclass, read Thorstein Veblen. The
democratization of Social Capitalism is the answer that will save some
form of open and competitive capitalism. We must take control of the
legal infrastructure and reinterpret the laws to advance Social
Capitalism vis-a-vis the current emergence of Corporate Feudalism that
has arisen. It can be proved through linear algebra that as income is
more evenly and broadly distributed that consumption will increase,
production will increase, and unemployment will decrease. The first
instrument to effect this process is to tax the dead capital in the
hands of the 1% back to life. The 1% are Feudal Capitalists who attempt
to defy the State and International Organizations and to bring the
employee back into a semi-feudal status. Income Distribution
Convergence, with allowances for Capital Accumulation for reinvestment,
progress, and growth will actually improve the quality of life for all.
There will be a reduction in crime, increased empowerment for all,
increased demand, increased production, increased consumption, increased
employment. Control of the legal infrastructure is key. The alternative
is social upheaval in the long run. Ask a question – Is it truly better
Capital when it is concentrated in the hands of one person than in the
hands of an organized group of employees who are just as interested in
economic advancement? Are all CEOs and their minions so much superior to
everyone else – if so, why so many economic disasters? I think not! I
believe that some people, conservatives in particular, suffer from penis
envy or “The Great Man Theory” of economics and cannot envision a
different or progressive capitalism without an individual blowing smoke
up their asses. Adam Smith said something to the effect of “It is the
vilest maxim of the masters of mankind….all for ourselves and nothing
for anyone else.” Smith also warned that Businessmen make the worst
political leaders due to their greed.

Social Capitalism is the new face of Capitalism – We need to remake
Capitalism in a new image with a Social Conscience, to democratize it,
and to address the issue of wealth distribution. We need to take control
of the legal infrastructure, Federalize the Corporation Statutes moving
them from State control to Federally issued charters, require ESOP with
bite as well as bark, divorce pensions from corporate control, spread
profit benefits across the employee base – thereby giving stakeholders
precedent over shareholders and by distributing Capital across the
employee base we will increase consumption, increase productivity, and
substantially reduce unemployment, The image of Capitalism needs to be
altered from 1% of the population gaining all the benefits – one can
prove mathematically by means of linear algebra that as wealth is more
broadly distributed – income convergence, with the allowance of Capital
Accumulation for investment and growth, that the health of the system
actually improves. Allowing huge amounts of wealth to gravitate toward
the 1% removes Capital from the system and allows it to stagnate, to
form a permanent over class, and it reduces the qualitative advantage of
more ideas and more liquidity in the economy, the wealth of the 1%
actually becomes dead capital or the modern equivalent of Mort Main
wherein the Church, during the middle ages, was allowed to acquire huge
amounts of real estate and to remove it from the economy and thus that
land became a dead hand and unproductive. We need to change the legal
infrastructure. At the beginning of the industrial revolution in
England, the state redistributed enormous amounts of land from the
wealthy to the commoners thereby allowing for the growth of Capital. We
are now at a stage where this must be done again with the Capital
amassed by the 1% et al. This is not necessarily class warfare – like
the Conservatives like to say with their propaganda thereby making an
emotional appeal using “loaded words” meant to evoke images of Stalinist
Communism. It is social engineering that allows for the survival of the
system without the horrors of over-centralization or of total social
upheaval. Adam Smith said something to the effect of “it is the vilest
maxim of the masters of mankind….all for ourselves and nothing for
anyone else.” The current concept of the corporation in America came
about as a result of the power of the “Robber Barons” of the late 19th
Century and an overly pro-conservative, business packed Supreme Court of
the early 20th Century. Adam Smith also said that “businessmen make the
poorest political leaders” due to their own self-interest. Madison
feared that the system of politics would be thrown out of balance by
special interests – the most dangerous current special interest group is
the 1% that has largely taken control of the political apparatus by
buying it for its own self interest. I theorize that as wealth is
distributed broadly across the populace that there is a relative point
at which demand increases, productivity increases, and employment is
maximized. Capital could be accumulated in pension plans or in other
sources, moving away from speculation and toward employee ownership of
the companies for which they work will increase competition, innovation,
pride in ownership and quality, stabilize society, reduce poverty and
crime – with immense savings in costs to society at large, etc… The
relative difference in wealth accumulation certainly is not ideal with
1% holding more than the rest of society. Employees should be able to
decide who they want to run the company and remove them should the
company not be progressing. We have legal precedent for this vision of
corporations vis-a-vis the one that is currently in place. The State has
the power to enforce this redistribution and it alone can effect it
first through taxing the Dead Capital/Mort Main back to life and then by
reforming its interpretation of the legal framework. None of this
impinges upon fair trade concepts, competition, Capitalism (other than
its redefinition), etc.. The legal framework’s reformation is key to an
effective outcome. This is not war upon a class, although a few
oligarchs may have to come to an epiphany with their consciences or face
the fate of the Romanovs. What we have right now is emerging Corporate
Feudalism with the super rich challenging the power of the State and
International Organizations while brow beating the populace into
relative economic serfdom.

Come on – is this the best that our Republican Leadership can come up
with to address the issue of illegal immigration? How about addressing
the real economic issues in the USA and our neighbors to the south –
come up with with a plan to erode the control of the elites in our
country and the other countries affected – how about wealth
redistribution and Social Capitalism and Economic Agreements and a
realistic Economic Union among all the countries involved? Why don’t we
get together with Mexico and address real economic issues to begin with
and then look at our other neighbors – come up with a worker exchange
and investment and development program for the region. The Great Wall
failed to hold back the invaders – are our leaders so stupid now that
our best answer is to build a wall several thousand years later?

The movement should concentrate on reforming the legal infrastructure.
An excellent first step would be to organize a longterm effort to obtain
positions with the government and agencies involved in the application
of administrative law and to reinterpret the law at the ground level.
Next, we should try to obtain legislative positions to rewrite the laws
where we can’t effectively gain control of the bureaucracy. A big part
of the Occupy Movement should include a wing aimed at helping
progressives gain control of the government through obtaining positions
with the government.

I would like to run for Congress as the First Democratic Capitalist Candidate.

I believe in a more equitable distribution of the wealth.

I believe in Evolution.

I believe in Freedom of Religion or Non-Religion

I believe in Self-Determination for Nations.

I believe in intervention in the Case of Genecide.

I believe in a Woman’s Right to Choose

I believe in a Universal Health Care Solution.

I believe in T-Cell Research.

I believe in an Adult’s Right to Marry Whomever they like.

I believe a National Education System Solution.

I believe in letting the UN handle a majority of international problems.

I believe in Alternative Education solutions like distance education and home solutions.

I believe in assisting 3rd world countries in bringing unaccounted for
property into a legal system so that it may be Capitalized.

I believe in Enhanced Keynesian Economics.

I believe in reforming the military for a 21st century world with more
and more robotics and unmanned devices while scaling back the investment
in manned aircraft and surface ships – submarines and aircraft carriers
are the most useful today.

I believe in a foreign workers permit program to address illegal
immigration and also in an Economic Union with Mexico, Central and South
America and Canada.

I believe that this EU should work both ways for workers and investors.

I believe in developing economies of scale – especially in technology
and sustainable energy and in dealing with the pollution and its
potential impact on the environment.

I believe in promoting a better revaluation of the dollar to improve
imports and not in rewarding nations that take advantage of currency
policies while not giving anything in return.

I believe in the legalization of Marijuana.

I believe in the Portuguese solution with regard to other drugs.

I believe in taxing religious organizations that become actively involved in promoting a particular political agenda.

I believe in a more equitable solution for Israel and Palestine and will
suggest that a University with a Universal Synod be built and that it
be a dome that does not interfere with current structures. All
philosophies and religions will be invited to study here.

Lloyd Bardell AKA: METATRON=NATO TERM, ANTE MORT, TEN TO ARM, AM ROTTEN, ART TO MEN, TAROT MEN, A TORMENT

Lloyd_bardell November 13, 2012 at 2:03 pm

 rm of Capitalism is Self-Destructive as it is,
even in production methods, largely speculative Capitalism and that it
relies mainly on a drive for the least production cost without proper
compensation to drive the economic engine to the next level rather than
to make it migratory. Finance Capitalism has no interest in products or
production an d fails to
comprehend that production oriented capitalism is the essential and
underlying framework of true capitalism. Something has to be made and
must increase value. Ford, etc understood this. Since, Financiers
increase value on existing productive value through planned scarcity per
the relative value and need of an item and not on the labor or
production of any material thing – they have no ability to understand or
do not wish to allow for the economics of plenty and ever increasing
value across the broad base of society. In other words, there is no
reason to say no. Poor people cannot buy anything of significant value -
hence suppressed wages suppress the economy overall. The traditional
economic approach has been based on a system of limited production and
scarcity of goods with value being determined by scarcity – this system
is no longer appropriate as we now have the production means and
technical capabilities to have an economy of abundance – it makes no
sense to limit value and production anymore – except as an environmental
challenge. We should be able to overcome and adapt with the environment
in mind. Of course, if property is to continue to be a feature of
society, there will be some differentiation, but it need not result in
poverty or denial for so many. LB

Lloyd_bardell November 13, 2012 at 2:05 pm

 What most people fail to comprehend is that
the current form of Capitalism is Self-Destructive as it is, even in
production methods, largely speculative Capitalism and that it relies
mainly on a drive for the least production cost without proper
compensation to drive the economic engine to the next level rather than
to make it migratory. Finance Capitalism has no interest in products or
production an d fails to
comprehend that production oriented capitalism is the essential and
underlying framework of true capitalism. Something has to be made and
must increase value. Ford, etc understood this. Since, Financiers
increase value on existing productive value through planned scarcity per
the relative value and need of an item and not on the labor or
production of any material thing – they have no ability to understand or
do not wish to allow for the economics of plenty and ever increasing
value across the broad base of society. In other words, there is no
reason to say no. Poor people cannot buy anything of significant value -
hence suppressed wages suppress the economy overall. The traditional
economic approach has been based on a system of limited production and
scarcity of goods with value being determined by scarcity – this system
is no longer appropriate as we now have the production means and
technical capabilities to have an economy of abundance – it makes no
sense to limit value and production anymore – except as an environmental
challenge. We should be able to overcome and adapt with the environment
in mind. Of course, if property is to continue to be a feature of
society, there will be some differentiation, but it need not result in
poverty or denial for so many. LB

Lloyd_bardell November 13, 2012 at 10:55 pm

 Certain economic systems are cannibalistic of others when they are coexistent. LB

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