Many strands can emerge from a node, and these strands can converge on nodes anywhere in the structure. The pattern thus becomes much more complex than the simple net. This complexity figures decisively in the sageeny’s usefulness in economic analysis
The internet has popularized the concept of a network whose complexity greatly exceeds the complexity of the conventional net. The fundamental concept of a net nevertheless remains, the idea of nodes and links which connect the nodes, and converge on them.
The gathering of every genon, every kind, in the sageeny, and bringing it to shore and collecting the good and casting out the bad symbolize events which occur in the nodes. Processes internal to them accept inputs from other nodes, and send outputs to still others, along the connecting strands.
The pragmatic Christian runs every New Testament concept thru the mustardseed expander.
In Mark 4:30-32 we read,
And he said, how may we liken the kingdom of God, or by what parable may we place it? As a seed of mustard, which when it is sown on the earth, smaller being than all the seeds on the earth, and when it is sown rises up and becomes greater than all the herbs, and makes great branches, so that the birds of heaven are able to dwell under its shade.
This little parable introduces the concept of the brancher. River systems, the arteries and veins of the blood stream, corporate organization, and classification schemes all conform to this pattern. The parable not only introduces the brancher, however, but commands the pragmatic Christian to expand New Testament concepts out into every possible expansion. Preachers illustrate this concept of expansion when they take two or three verses from somewhere in the Bible and expand them out into a lengthy sermon.
In the mustardseed expander, the sageeny expands out into all structures which exhibit any kind of network structure. The brain conforms to this pattern, as does the consumer economy.
For The New Testament to put the webnet in an economic setting explicitly makes it a predictor of comprehensive economic theory. Goods and services flow in one direction, from node to node, and money flows in the opposite direction. The goods and services motivate the flow of money, and the flow of money motivates the flow of goods and services. The phrase goods and services means the stuff we buy in stores and from catalogs, and the things we do for each other, from haircuts to car and appliance repair to medical intervention. The acronym gosser conveniently abbreviates this phrase. In the economy, then, gosser and money flow and counterflow in a dynamic pattern of mutual activation.
In the real economy, people performing economic behavior accomplish this flow and counterflow. The nodes represent actors performing the behavior which the economic system asks of them. Economic behavior occurs in the form of transactions between two transactors. Each transaction involves a flow of gosser and a counterflow of money, altho not necessarily at the same time. Cash and carry greatly simplifies the analysis of economic processes, and our model can exploit that simplicity, but time delays also figure importantly in it because time delays characterize many of the transactions which occur in the real economy.
When this time delay becomes permanent, supply behavior has then become the giving of gifts. Some moral systems make altruism, the performance of economy supply behavior without any expectation of return, a higher form of economic behavior than transactions.
One person can hand money over to another with the expectation of return. If the expected return does not materialize, the money handed over becomes a gift. A swindler intends this outcome, but it can also happen in spite of the best of intentions. Again, altruism makes the giving of money gifts a higher form of economic behavior than transactions.
Transactors supply gosser to the economy, and consume gosser which they withdraw from it. Money mediates these transactions. Suppliers earn money, and become buyers when they spend this money. Similarly as time delays complicate cash and carry, investments of money can involve a time delay in the expected return. Loans, to cite an obvious example, involve a time delay when debtors pay them off in incremental payments. Investments impose a similar delay of return to the investor.
A specialized version of Spencer’s hedonistic principle says that people want to do what they ought to do, and therefore ought to do what they want to do. The nodes of the model lust to perform the behavior which enables them to participate in the dynamics of the real economy. For example, since economic behavior occurs as transactions between two transactors, those transactors must have found each other so that they can transact. They lust to make that find. This finding corresponds to the establishing of a linking strand between two nodes. The nodes of our model, therefore, lust to send out strands which attach to other nodes. This behavior of the nodes corresponds to economic behavior such as advertising, job hunting, and social gatherings where you hope to meet somebody who hopes to meet you. Some of the strands which a node sends out do not make any contact with other nodes, but some do, and those which do set the node up for transactional dynamics.
The Sageeny Schematic for the economy lacks the symmetry and repetition of the fishnet, but in the real economy the links do in fact exhibit a tangled, shifting pattern. Strands accommodating supplies to a factory, for example, converge on it from its different suppliers. Strands accommodating what the factory supplies to the economy radiate out from it to its different customers.
In a real economy, the economic behavior of transactions and gifts continue incessantly to occur. At equilibrium, however, for example the equilibrium of a heterogeneous chemical system, or an equilibrium of forces, nothing happens, absolutely nothing. The concept of equilibrium does not and can not apply to an economy which exists in the real world. A mathematical superstructure based on economic equilibrium, however elegant, has no relation to the real world.
More than one strand can link two nodes. Employees at a supermarket, for example, may also shop there. They then have a strand which links them as employee to employer, and another strand which links them as customer to supplier. If an employee happens to own stock in the company which owns the store, then a third strand links them in this relationship.
Richard Cantillon wrote the first modern economics treatise in his Essai of 1734 (Essai sur la Nature du Commerce in Général, Macmillan & Co., 1931, edited with an English translation and other material by Henry Higgs, C. B., reprinted by Frank Cass and Company, 1959). In this Essai he introduced the word entrepreneur in its modern meaning. In that same year a murderer knifed him as he slept, and set fire to his house. In my reconstruction, those actually responsible for the murder, who arranged for it to happen, intended to nip the French Revolution in the bud.
Cantillon traced the effect of the infusion of gold from the New World on the economy of Spain, and then into the European economy outside of Spain. In his book Economic Theory in Retrospect (Cambridge University Press, 1985, reprinted 1995, page 21) Mark Blaug gave the name Cantillon Effect to the propagation, into the economy, of the effects of a cash infusion into a local part of it.
These pages expand the Cantillon Effect out into the propagation of changes in the nodes and strands out into any sageeny. Thus expanded, the Cantillon Effect governs the neural dynamics of the brain. Signals from nodes in the brain’s neural webnet flow thru the axons and synapses to other nodes, where they have effects. Since the brain generates all thoughts whatsoever, from theories of the stellar universe to opinions about celebrities, and generates all behavior, the Cantillon Effect mandates recognition as the most fundamental of all physical effects.
In these pages the term, to cantil, means to propagate between the nodes of a webnet, along the links between the nodes. A propagated effect cantils along a Cantillon path from one node to the next, until it reaches a node from which it does not propagate. All Cantillon paths end somewhere, and all Cantillon Effects damp out, otherwise the sageeny would become an unstructured chaos of reverberating effects.
Cantillon (Essai, page 47) writes,
The circulation and exchange of goods and merchandise as well as their production are carried on in Europe by Entrepreneurs, and at a risk.
He goes on to explain that the entrep (short for entrepreneur) pays relatively fixed costs for his inputs of materials, products, and labor, but sells in a risky and somewhat unpredictable market. The entrep recognizes the risk he takes. His mind does intuitive statistical calculations which yield numbers, the prices he should pay and the prices he can expect when he sells. He has more going for him, however, than mere price comparisons. He works in an economy which offers him invariants that he can count on. He knows, for example, that the market exists, and can anticipate that consumers out there will buy something at some price. He needs only to estimate how many consumers will buy what at what price, and what his competition will likely do.
When he actually buys his inputs, he places bets with his money. He does not gamble, however, in the sense of placing bets based on pure chance, like the throwing of honest dice. He loads the dice, so to speak, in his favor by making shrewd purchases and offering his outputs in a market which he has more or less correctly anticipated.
Pragmatic Christians have already internalized the risk element of entrepal behavior. The pearl merchant bet the ranch on the expensive pearl that he found.
A person typically works at the same place for a pragmatically long time, dwells in the same place, goes to the same stores, and exhibits fairly predictable buying behavior at those stores. Providers of gosser can depend on sufficiently stable consumer behavior to make successful business decisions about what to buy from suppliers, so that they can then sell to those whom they supply.
Most of the money flowing in an economy stays in it. The dollar that I spend in the grocery store, however, does not ever return to me. The money which flows into a node reenters the sageeny when it flows back out, but usually along different strands. Tthe term reentrant flow characterizes this pattern of money movement.
Changes in a node and in its strands have effects on the other nodes linked to it. These nodes can change the outputs they send to still other nodes, and the effects thus propagate out into the sageeny. If these outputs decline, or fail alotgether, the nodes which receive them as inputs respond to the new curcumstances. Some of them may in fact fail altogether to produce their outputs. Other nodes, in turn, which depended on those outputs can also fail, and cease to exist.
This cantiling of failure thruout an economy can result in a dramatically reduced volume of transactions in it. Financial panics, especially the Great Depression, illustrate this application of sageeny dynamics to the real world. The recent subprime mortgage crisis, and its effect on the credit system, provides a contemporary illustration of the model's dynamics.
Prediction of these events depends on identifying nodes which will likely reduce their outputs, or fail to produce them. Subprime mortgage borrowers who could not make their payments or sell their homes started this panic. Observers who detected the decrease in or absence of buyers for homes at their bubble prices could readily predict the sequel which in fact occurred.
The Bear Stearns bailout aimed at averting the consequences of that firm's sudden demise. The Wall Street Journal for May 28, 2008, page A13 reported,
At 5 a.m., Federal Reserve Chairman Ben Bernanke convened a conference call with top government officials, including Mr. Geithner and Treasury Secretary Henry Paulson Jr., to discuss the fallout from allowing the brokerage to collapse. They saw ripples spreading to thousands of firms world-wide that would involve trillions of dollars and take days to sort out.
We could not ask for a better capsule description of economic Cantillon Effects.
In spite of the subprime crisis, other parts of the economy continue to perform their usual transactions, even if at a lower volume. The sageeny economy model easily accomodates this lack of relation between what goes on in one place and what goes on in other places. It easily accomodates the fact that some geographical regions, even within the borders of a nation, can prosper, while other regions do not.
A supply chain links suppliers to buyers who want to sell their outputs to still other buyers. Coffee grown in Ethiopia, for example, can pass thru several hands, both physically and transactionally, on its way to the consumer who drinks it. This consumer does not expect to resell his or her cup of coffee. Every supply chain requires ultimately to terminate either in a sale to a buyer who does not buy for the purpose of resale, or to a buyer whose resale intentions did not work out, who then becomes a consumer, or to the giver of a deliberate gift.
Every Cantillon path terminates, washes out, in this way. The money involved in the transactions loses its history. The sellers in these transactions need not know how the buyers got their money. Transactions in the financial system, to the extent that they do not cancel each other out, must ultimately wash out in a consumer transaction or a gift. The supply of phantom money created in a credit system can escalate to such a high magnitude that the economy can not wash it out in consumer transations. That economy faces the collapse of its financial system, or else the collapse of the economy itself.
To morph the Sageeny Schematic into a mathematical simulation of an economy, the analyst can set up Sequence Of Events Modules for each node. One module accepts inputs into the node, another specifies events which occur within it, and the third specifies outputs from it. Transactions match the outputs of one node to the inputs of one or more others. These modules can simulate actors in the real economy closely enough to yield meaningful calculations. Simplifications can produce a model with only a few nodes and a few events, but even these models can have a measure of real validity.
The sageeny links together three other parables which teach economic doctrine. The first of these, the parble of the lilies (Matthew 6:25-33) promises that god will supply food and drink and clothes, and thru mustardseed expansion, consumer goods generally. With theology stripped out of the parable, it teaches that consumers will consume goods which they, themselfs, have not produced.
The second of the three parables, the needy stranger, Matthew 25-35, the faithful give goods and services without getting anything in return. Again with theology stripped out, producers produce goods and services for others whom they do not generally know.
In New Testament times the Classical philosophers enjoyed much more popularity than they do now. Most people knew about Herakleitos with his logos and insistence that everything changes, and his union of opposites. Philosophers would recognize immediately that the lilies parable and the needy stranger parable define a pair of opposites, consuming and producing. Following Herakleitos, they would unite these opposites into one thesis. The same people now both consume and produce. They consume what they produce for each other.
The division of labor enables producers to produce their specialized products in vast excess of what they can consume. Most of their production goes to others. In turn, these producers consume what other specialized producers have produced. Only a complex distribution system can distribute these products to their consumers. That system consists of a sageeny.
The complexity of the real economy makes necessary an incentive for producers to work in often personally unrewarding jobs. Money provides that incentive. The producers of both goods and services, conveniently abbreviated as gosser, receive money payments for what they do. They then spend this money for the gosser which they consume.
It soon became a commonplace, and remains a commonplace among many Christians, that money can not motivate virtuous behavior. This doctrine diametrically opposes the teaching of Jesus. In Matthew 6:21, after commanding his matheties to lay up treasure in heaven, Jesus says,
Where indeed in the treasure of you, there will be also the heart of you.
With theology stripped out, Jesus says that a person responds to money incentive. Treasure in heaven becomes savings and investments. In other words, don't spend all your money.
From the Greek of Matthew 6:21 we can coin a word kardiothêsaurôsis, literally hearttreasure. In broad terms it tells the mathety of Jesus to enjoy pursuing self interest within the constraints of a pragmatic understanding of that phrase. Kardiothêsaurôsis makes the economy go.
The New Testament teaches all the elements of a modern consumer economy, and urges the faithful to participate fully in its dynamics, both producing for others and consuming what others produce, with money resolving the otherwise intractable complexities of the economy's sageeny structure. We need not wonder that the modern economy first arose in Christian lands.
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