Nature of Competition: The Creation Function

 

In the real life of economy, we create things and matters for the purpose of utilization. Using for the present, we name the thing or matter as “product.” Otherwise, we call it an “asset.” Momentarily putting the demand side on hold, we conceive a mathematical function in account for the creative activities. In addition, we idealize away destructive activities no matter how creative they may be.

             In present-day economics as discipline of studying economy, however, we produce something only for the sake of consumption at present. Consequently, we have the so-called "production function." On the other hand, the future consumption and construction of assets therefor are out of question. We in economics can hardly find any theories on the asset, even if we are alive and (hopefully) well for so many more years until “we are all dead.”

             For simplicity, we might just imagine that the future years are incomparably more than the present year. “Girls and boys, Be ambitious! The asset is your future! It is by and of you at present and for you in the future.  

             We herein choose the practice of economy over economic hypotheses: we are interested in the creative function, with the product and the asset jointly taken into account.  

 

What for (or where to). We again quote Ted Levitt (on Marketing, 2006) more fully this time:

Some years ago, I wrote that “if you don’t know where you’re going, any road will take you there” and noted that nothing is more wasteful than doing with a great efficiency that which should not be done.

 

             Fortunately, most of us are benign and rational. We seldom if ever set the “where” hellish or indefinite. We are determined to create a certain utile thing for the present year and many decades yet to come.

             Granted, we at the moment single-mindedly go for efficiency in terms of the output per input. This is only for the sake of deriving the creative function which precedes “supply” to and in the market.

 

The inputs. Out there are three categories of resources, that is, human labor (L), physical capital (K) and land with natural resources (N). When and only when ready to run on the job site, each is called a “power”: each must be employed or “”Hired” in the first place. As a result, we are interested in LH, KH and NH out of the respective national stock, where H represents “hired and ready to run.” 

             Our currency while in Here is the time, needless to say. Herein we take “hr” (for hour) as the unit of time account, not exactly legal yet sufficiently legitimate. Again, time is the currency in private while legal tender is it in public.

 

The creative function. Typically at the factory level, or the workshop level more precisely, we define a creative function: q= f(lh∙hr, kh∙hr, nh∙hr), as for a named product or for a defined asset.

             Financial accounting is monetary, financial and algebraic. Accordingly, it is immune from fallacy of composition. Ergo, the creative function of the collective economy will be: Y≡ AS= f(lh∙hr, kh∙hr, nh∙hr).

             Now we have the creation function, for each and for all.

 

The acid test. The end in economy sits on the demand side. When we want apples, the creative function shall beget apples. However so many oranges created will be useless and become nuisances. In other words, we always and everywhere keep the demand side in mind before coming to the creation site. Back home at the end of the day, what we want are utilities, say, delicious apples.

             We might well not mind if macroeconomists point finger at the demand side. After all, demand is the wrong tree to bark up in recession, secular stagnation, stagflation, just inflation or hyperinflation. 

             All through the day, the effectiveness takes the front seat. No matter when and where, don’t forget to remember, “Demand first, please.”

 

The accounting period. Again, the time is our currency. “Taken there” is only half the story. Without “How soon” each and all shall be useless as long as we stay in Here. For instance, “q” would be per mensis and “Y” per annum. The rest of us wouldn’t be interested in: either a container full of “q” in apples per mensis for each or a 100-time growth of “Y” in AS per annum for all.

             It’s the time dimension, Sirs. Even more so, if one wants to avoid being “intellectually dishonest.”

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