Wednesday, January 9, 2013

Can Economic Equilibrium Appear Either As Latent Or Active?

There are times when economic equilibrium is invisible. Those who do not know about economic equilibrium may therefore be oblivious of its existence. Those who know it exists probably are just rest assured that it is always there, always operating.

There are many reasons why economic equilibrium may appear latent but I think there are two main reasons. When the economy is not far from its balanced path the counterbalancing force of equilibrium is not very great and so the pressures exerted on the economy are minor. To those alive during that time the force of economic equilibrium may appear latent.

Another time when it may appear latent is when the State intervention is very great and its control over information (propaganda) paints a false picture. Those unaware of economic equilibrium are easily fooled and those aware of economic equilibrium may not realize how extremely far from the balanced path the economy is and so they may misjudge the consequences to come. Those who are aware of economic equilibrium have a duty to cut through the propaganda and educate others about the consequences of interventionism.

Another point of interest with regards economic equilibrium is the significance of the change of appearance of economic equilibrium from latent to active. As I mentioned, at times it appears latent because of a relatively balanced economy and that is when the concept of laissez-faire fits well as a descriptive term. But laissez-faire is not a strong enough term to override the State, either as an argument or as an opposition force. Consequently once we entered the era of nation-building the State was able to embark on potent measures that disrupted economic equilibrium. Of course the State then uses its propaganda to hide these disruptions.

Here is where the appearance of active economic equilibrium not only becomes crucial but its reality will make its presence known. Think of a pendulum. It can be pushed so far but at some point the forces are so great that it cannot be prevented from returning to its entropy point. The reason the economic equilibrium is active is because there is no moral authority for any of the economic interventionism and the power of human action, in response, purges the corruption.

Those who are aware of the appearance of active economic equilibrium forces have a duty to educate others about the inevitable consequences of interventionism and about the complete lack of moral authority for any economic intervention. This is what a true and powerful laissez-faire concept like the divine economy theory has to offer.

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