Challenging Old Biases with New Insights
This is a book that is destined to be controversial and will be a book that stands up to criticism. The ideas of economics discussed in this book are almost completely different from what one usually sees in economics, with different starting points, different perspectives, different depths, and different conclusions. Yet the ideas here, after being discussed with such depth and clarity, are so obvious that one can hardly doubt their validity.
In this book, many new concepts have been introduced, and the book presents the following concepts:
1. The quantity supplied of goods depends on its profits and is not a function of its prices. On the contrary, price is a function of quantity supplied, with the price rising as the quantity supplied decreases and falling as the quantity supplied increases. This also explains the phenomenon of price counter cyclicality in the real economy, which turns out to be Marshall's reversal of the independent and dependent variables.
2. The unmet need for commodities usually exists only among the larger, poorer classes, so the quantity demanded commodities in the market depends on prices. The market for goods expands immediately after the reduction in price, leading to a diminishing rate of profit, investment, and new employment. This also corrects Keynes' major misunderstanding of the cause of diminishing marginal efficiency of capital.
3. The flow of money to the rich prevented the spread of the goods market to the poor, thus leading to the recession and depression. This new theory of volatility, which perfectly explains the nature of the economic crisis, for the first time, brings out the inequality between rich and poor as an obstacle to economic development, not only as a socio-political problem, and breaks the implicit premise on which Say's law is based.
4. The monetary savings of society represents the inventory of enterprises in the society, and when they cannot be turned into investment or consumption, the inventory represented by the savings becomes a surplus backlog, which reveals the serious error of Hicks in the IS-LM model that makes S=I.
5. Skilled labor hardly increases, commodity prices hardly rise, wages cannot easily fall, and investment cannot easily stop. These sticky variables cannot easily change and are the stability factors that determine economic changes. Previously, similar explanations of the New Keynesian School were inadequate, and there was no solid support base.
6. The fundamental element that determines economic development is the quality of all workers in society. Low quality limits the improvement of economic efficiency in every part of society, and the improvement of these qualities involves the transformation of many concepts. The transformation needs to be driven by role models. However, economics has never been considered the most important factor of development.
7. The international monetary system is still lacking a "stability anchor". If the world adopts the international monetary price measure (IMPM) proposed in this book, a unit of measurement "U" can ensure the stability of the international foreign exchange market, but also make up for the deficiencies of Bancor Keynes suggested back then.
The author is now retired from the Beijing University of Posts and Telecommunications(BUPT). Before retiring, he served as the deputy director of the e-commerce research center at BUPT, during which, for more than ten years, he mainly engaged in economic management research and consulting for the telecom industry. Dozens of consulting clients include The headquarters of China's three major telecom operators and their provincial and municipal companies, multinational corporations like Microsoft, Huawei, Lucent; consulting organizations like Deutsche Telekom Consulting, Nomura Research Institute, Chinese Academy of Engineering, and government departments like the Ministry of Industry and Information Technology, the State-owned Assets Supervision, and Administration Commission, Beijing Economic and Information Commission, and the likes. He provided decision-making consultations for the relevant national ministries and commissions on top-level affairs in the telecom industry at that time, such as telecom operator reorganization, 3G, and 4G license issuance, which were adopted with remarkable results. The author has done various jobs in farming, maintenance, assembly, manufacturing, engineering, research, development, teaching, training, leadership, management, marketing, and consulting. In his decades of various experiences, he has continued to conscientiously summarize and think about the various social, market, and academic phenomena, experiences, and the deep reasons behind them.