Believe it or not, the concept that you are going to learn will make you understand why economic crisis raise, and the opposite, why economic prosperity raise. And you may even learn how do money is earned. I’m not joking. If you are an economist, you have even more interest to learn this.
Most economists try to find the reasons on some behaviors at the macro and micro levels, that is, on common behaviors that can be classified and measured, over economic behaviors of wide and small scale. I don’t wonder why economists are so lost: I wonder why nobody is not pushing them to leave old ideas. And there is the most probable answer: they are the authority, laureated by titles and certificates of having studied and approved tons of courses and lectures. Just garbage.
Crisis are not matter of economists or macro/micro level behaviors. Some events can cause sadness on a social group, so the economic movement reduces. Economists try to play ths psychoanalist or sociologist roles and it seems to work occasionlly. But that’s just the wrong track.
Crisis are a matter of the Systems Theory developed around 1900 and without changes until now. The new Theory of Interaction (TOI), an essential link on the Systems Theory offers all the precise answers, even disqualifying economists or the 2nd law of thermodynamics with very simple concepts. Let’s learn some of them before applying the systems knowledge to a crisis. We will talk about the TOI, because this special field is the essential fact that profits of the old Systems Theory, which has not changed almost at all.
To understand the TOI we need to understand what is order and chaos, which are new concepts that are formulated on the TOI. For the TOI, order and chaos are opposites. But what is order?
You can find a detailed explanation of order and chaos here: http://blog.ydor.org/OrderAndChaosTheory
So, we’ll provide a very simple definition of order. But that requires changing some paradigms. We’ll make it fast.
First, a system is anything that can be named. Even the ending point of this sentence is a system. A formula in a paper is a system. A fire is a system. Clouds are systems. Ideas are systems.
Systems can interact, that is, exchange some contents. Trees exchange oxygen and CO 2? with animals. You exchange smiles with your son. Atoms exchange electrons. You exchange concepts with a formula written in a paper. A dot in a sentence provides you a signal and you give it a meaning. Don’t try to think too much in the types or magnitudes of the interaction contents. Interactions are weird. If you really want to get into the details, you may want to read the article mentioned above.
So, we continue with the concepts: interaction provides existence. A family is nothing more than a bunch of people interacting in a “familiar” way. Families exist mainly on the minds of their members. If you see a group of persons where some of them are family, you would not recognize them. Even if you listen them talking a lot. So, people interacting in a “familiar” way is a family. If interactions stop (they stop interacting, they live in different towns, they don’t talk each other, they don’t remember them), then the family has dissipated. The same way on atoms: H 2 O? exists as long as there interactions between the three atoms. When the interactions end, they split into three atoms moving in different directions. The molecule no longer exists. The lack of interaction has caused the molecule to dissipate.
When interactions between systems are present (either atoms or family brothers), molecules exist (a water molecule, or a family molecule, understand as a group linked by some behavior). Positive interaction causes attraction (atoms or brothers keep minimal distances in several dimensions, like atoms reduce physical distance and brothers reduce emotional distances). But if interactions cause negative results (atoms get mechanically unstable or brothers get emotionally unstable due to the family), then interaction causes rejection.
Ok, now that you have clear the concept of order, let’s see what kind of social interactions mean economic order. And we’re not going to look at the macro indicators. We’re going to observe one individual. let’s call her Marie.
Marie lives in Greece, before the crisis. She wakes up in January with all her internal organs in order, all her internal interactions doing fine. She takes the train, despite she is reluctant to do it. The train is expensive, she tries to take as less trains as possible.
That means that she’s trying to stop interacting with the trains company. Whether she wants it or not (either because she doesn’t like it or either because she doesn’t have the money), what she is doing is creating chaos. The tendency of reducing interaction between her and the trains company means this: she is causing rejection, both systems are trying to increase their distance. The reasons can be several, but what nature is doing is trying to get both of them farther and farther. Until stopping interaction.
What is this mechanism? Simple: positive interactions (interactions that cause both members to increase order or at least keep the same level of order) cause systems to continue existing. But negative interactions (interactions that cause at least one member to decrease order) tends to destroys systems. That is because in order for the systems to persist in time, they should get positive results from their interactions. If some system is not working well in a society, that system receives and causes rejection.
So, maybe it’s Marie, that is a bad interactor because she doesn’t earn enough money (money is just the expression of the final result of social interactions), or maybe the trains company is the bad interactor (it is expensive in relation to the service provided), but they should be trying to interact, not to stop interacting. But the fact is that the rejection exists. And this is the small crisis that sums up the national economic crisis.
Then, basically everything is on the citizen. Companies, services and even friends try always to get money. But if the citizen is not paying for them, causes should be analyzed for the most important and common individual interactions: sex, food, communication, rent, transport, family, friends, fun, television, etc.
One example with communication. I arrived to live in Spain during the crisis around 2010. I remembered subscribing to Vodafone, to get a contract for a simple cellphone, because I liked the phone they’ve offered me. When a call costed around 0.20 EUR, I was paying 70 EUR for the monthly service, and never made neither 10 EUR in calls. So I went to the company to change the contract. But I wasn’t able to. They didn’t explained me that I have signed for 24 months, yes, that’s common with foreigners in Spain. So I waited some months, but as the service was the same hoax as the contract, I’ve chosen to pay the cancellation fees (350 EUR) to end the contract. After that, I always make contracts that have no permanence clause. Moreover, I choose the more volatile contracts. I don’t like cheap stuff (it ends costing the double), but in Spain I prefer choosing the cheapest options. The service is always, always, always as bad as signing the expensive bundles.
Am I the only one that thinks this way? No. I learned that from other spanish people. So, the telecommunications spanish business branch may be increasing their sales due to the increasing need of communication. But the quality of interactions with them is the essence of the definitive attraction or repulsion. That is what economic analysts need to observe and classify.
On the other side, this gives you an idea of how money is earned. You make one positive interaction with someone (sell something, valuable with an acceptable price), you cause attraction. Attraction will cause the interaction to repeat. Repetition will cause you to grow. Growing will cause you to increase your clients coverage, using the same basic mechanism. So, if you want to have clients, give them the best interaction results. They will come back, it is inevitable. Rich people accumulate money by doing wrongful interactions to protect them for the future: the future of bad interactors is isolation. So, they are preparing for that. Personally, I don’t need to accumulate money: this mechanics explain how it can get in a very simple way. But it has a drawback, because if you are doing fine, you are exposing your real being to the client: if you are for the money, the client will notice it and cause future rejection. And isolation.
Systems that interact have an interesting property: buffering. A tree absorbs some elements, buffers it inside for some time, and after that, generates oxygen. Almost all systems behave the same way. Reactions take time. So, in an economy, statistic variables can show a beautiful development. But the reality is being buffered inside each citizen. The reaction will come back.