Nature of Competition: Machine Power Rental 01
As opposed to the human asset, there in traditional
economics are two types of physical assets, namely, physical capital and land. Instead, we herein use the terms “a machine” for physical
capital and “a (piece of) soil” for land.
Incidentally,
“physical capital” is a type of asset while “financial capital” is not. An
asset creates a value on a side over the
time; while a financial instrument balances
previously-created values between two sides time after time and “many times
over.” On the other hand, a unit of land is rented either as a site for
occupation or as a soil for creation. We might regard a site as an asset
without being a power; the site stands still while the power keeps on running.
The problem of “full employment.”
When ready to run, a machine as asset
changes both the “nominal” name and the “real” hat to a mechanical power. The machine in the warehouse is
an asset but no power, not only physically in the economy but also financially in
the national books of accounting.
The
Wealth of Nations when exogenous to Cambridge is only of Potentiality and “useless
until we hire them” as power in Actuality. The economy in the General Theory of
Economics runs with powers, “employed” not only in name but also in real. Again,
the running is over time (T-1), never across (L-1). Typically,
GDP stabilizes or grows per annum,
never and nowhere per millimeter as illustrated
in the IS-LM model.
What
about the “part-time machines”? That’s everywhere a great question but for two
blind spots. First, the degree, from part time to less than full, cannot and
doesn’t create a science. “It takes an abstraction,” before all else.
Two,
no mechanical asset can work “full-time without indolence” while the national
income is being created over 24 hours a day all through the 365 days per annum. Heard of burnout? Umm, full-time
running can be more vicious than un-running. The burnt out are out for good, but the idling are in not only until employed but also when
employed (less than full time of course).
The
rest of us wouldn’t even think about “full employment.” If ever, we say it only
“in nominal,” never really meaning “in real.” The answer to the great question:
all machines in the economy are “employed part-time” but for in a particular town
The durable machine. There
are many kinds of machines around us which all alone supply goods and services.
For instance, there are vending machines and laundry machines. The owner of the
machine collects the rental fee before all the costs of maintenance and
recoupment. The net fee is the value added by the machine of the proprietorship.
Wayside, there is no such thing as the law of diminishing returns like in a
certain Growth model.
Demand for the industrial machine. In
general, many humans work with a single machine at a fixedly defined workshop so
as to be subject to the law of diminishing returns per human power(-hour).
When
it comes to the rental market for the defined machine, the renter is the firm,
or named as such at least, with a given
capacity with a certain fixed number
of human powers among other “constants.”
The
demand for the machine declines first due the diminishing returns per machine
power. At a lower rental rate, in addition, more firms will stand in the demand
line. All in all, the demand curve slops downward.
Supply of the machine.
First of all on the supply side, where there are soon-to-be rentals there are soon-to-expire
contracts. Heard of “reincarnation” or “samsara” (轮迴, lúnhuí in
pinyin). Those newly-to-be-rented machines shall stand in the supply line. Rolling
and rolling is the asset to be rented.
Secondly
among other routes to supply, additional machines can be constructed at a
higher rental rate. We cannot create the human asset unilaterally but we can construct
the machine if we will. In this regard, asta
mañana!
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