Class #3 industries are those which have service rather than a tangible product as their output. These industries are called (1) households, and (2) governments. Their output is human activity of a mechanical sort, and their basis is population.
AGGREGATION
The whole economic system can be represented by a three-industry model if one allows the names of the outputs to be (1) capital, (2) goods, and (3) services. The problem with this representation is that it would not show the influence of , say, the textile industry on the ferrous metal industry. This is because both the textile industry and the ferrous metal industry would be contained within a single classification called the "goods industry" and by this process of combining or aggregating these two industries under one system block they would lose their economic individuality.
THE E-MODEL
A national economy consists of simultaneous flows of production, distribution, consumption, and investment. If all of these elements including labor and human functions are assigned a numerical value in like units of measure, say, 1939 dollars, then this flow can be further represented by a current flow in an electronic circuit, and its behavior can be predicted and manipulated with useful precision.
The three ideal passive energy components of electronics, the capacitor, the resistor, and the inductor correspond to the three ideal passive energy components of economics called the pure industries of capital, goods, and services, respectively.
Economic capacitance represents the storage of capital in one form or another.
Economic conductance represents the level of conductance of materials for the production of goods.
Economic inductance represents the inertia of economic value in motion. This is a population phenomenon known as services.
ECONOMIC INDUCTANCE
An electrical inductor (e.g., a coil of wire) has an electric current as its primary phenomenon and a magnetic field as its secondary phenomenon (inertia). Corresponding to this, and economic inductor has a flow of economic value as its primary phenomenon and a population field as its secondary phenomenon of inertia. When the flow of economic value (e.g., money) diminishes, the human population field collapses in order to keep the economic value (money) flowing (extreme case -- war).
This public inertia is a result of consumer buying habits, expected standard of living, etc., and is generally a phenomenon of self- preservation.
INDUCTIVE FACTORS TO CONSIDER
Population
Magnitude of the economic activities of the government.
The method of financing these government activities (See Peter-Paul Principle -- inflation of currency.)
TRANSLATION
(A few examples will be given.)
Charge -- coulombs -- dollars (1939).
Flow / Current -- ampheres (coulombs per second) -- dollars of flow per year.
Motivating Force -- volts -- dollars (output) demand.
Conductance -- amperes per volt -- dollars of flow per year per dollar demand.
Capacitance -- coulombs per volt -- dollars of production inventory / stock per dollar demand.
TIME FLOW RELATIONSHIPS AND SELF-DESTRUCTIVE OSCILLATIONS
An ideal industry may be symbolized electronically in various ways. The simplest way is to represent a demand by a voltage and a supply by a current. When this is done, the relationship between the two becomes what is called an admittance, which can result from three economic factors: (1) hindsight flow, (2) present flow, and (3) foresight flow.
Foresight flow is the result of that property of living entities to cause energy (food) to be stored for a period of low energy (e.g., a winter season). It consists of demands made upon an economic system for that period of low energy (winter season).
In a production industry it takes several forms, one of which is known as a production stock or inventory. In electronic symbology this specific industry demand (a pure capital industry) is represented by capacitance and the stock or resource is represented by a stored charge. Satisfaction of an industry demand suffers a lag because of the loading effect of inventory priorities.
Present flow ideally involves no delays. It is, so to speak, input today for output today, a "hand to mouth" flow. In electronic symbology, this specific industry demand (a pure use industry) is represented by a conductance which is then a simple economic valve (a dissipative element).
Hindsight flow is known as habit or inertia. In electronics this phenomenon is the characteristic of an inductor (economic analog = a pure service industry) in which a current flow (economic analog = flow of money) creates a magnetic field (economic analog = active human population) which, if the current (money flow) begins to diminish, collapse (war) to maintain the current (flow of money -- energy).
Other large alternatives to war as economic inductors or economic flywheels are an open-ended social welfare program, or an enormous (but fruitful) open-ended space program.
The problem of stabilizing the economic system is that there is too much demand on account of (1) too much greed and (2) too much population.
This creates excessive economic inductance which can only be balanced with economic capacitance (true resources or value -- e.g., in goods or services).
The social welfare program is nothing more than an open-ended credit balance system which creates a false capital industry to give nonproductive people a roof over their heads and food in their stomachs. This can be useful, however, because the recipients become state property in return for the "gift," a standing army for the elite. for he who pays the piper picks the tune.
Those who get hooked on the economic drug, must go to the elite for a fix. In this, the method of introducing large amounts of stabilizing capacitance is by borrowing on the future "credit" of the world. This is a fourth law of motion -- onset, and consists of performing an action and leaving the system before the reflected reaction returns to the point of action -- a delayed reaction.
The means of surviving the reaction is by changing the system before the reaction can return. By this means, politicians become popular in their own time and the public pays for it later. In fact, the measure of such a politician is the delay time.
Cont ...