Chapter

The New Paradigm

Mia de Kuijper

in Profit Power Economics

Published in print October 2009 | ISBN: 9780195171631
Published online February 2010 | e-ISBN: 9780199871353 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780195171631.003.0006
 The New Paradigm

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In Chapter 5 the new economic paradigm for the 21st century—a paradigm that is consistent with the emergence of perfect information—is introduced. This chapter demonstrates that due to the second inevitable trend, in transparency several aspects of mainstream economics need to be revisited. For instance, in transparency the two conditions for a general equilibrium cannot coexist, hence a general equilibrium is not possible. Also, the often-used simplifying assumption of normal distributions is not valid. Extraordinary profits and profit power, in contrast, are being proven to be valid economic concepts. In transparency, interdependence of decision making will turn a group into a network. For instance, an economic aggregate, such as “buyers,” becomes a network. The question is what kind of network. Powerlaw distributions—and powerlaw networks—can provide a new paradigm under certain conditions. These four conditions for powerlaw network dynamics in economic aggregates are derived in this chapter. This is the basis for the economics of perfect information, powerlaw economics.

Keywords: new economic paradigm; general equilibrium; power laws; powerlaw distributions; powerlaw economics; economics of perfect information; four conditions; powerlaw network; aggregate; economic aggregate; expanding roles of power nodes

Chapter.  5898 words.  Illustrated.

Subjects: Macroeconomics and Monetary Economics

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