TITLE:
Time and Equilibrium: 2 Important, But Invisible, Concepts of Economics, with Application to Shipping Industry
AUTHORS:
Alexandros M. Goulielmos
KEYWORDS:
Time, Equilibrium, Maximization of Profits, Chaos Theory and Complexity, 3 Dynamic Models Applied to Shipping Markets
JOURNAL NAME:
Modern Economy,
Vol.9 No.3,
March
27,
2018
ABSTRACT:
As the World built, time established. Economists,
however, put the “time” in the “ceteris paribus” basket, i.e.
outside demand, supply and price. Moreover, Newton was mistaken in assuming
that time flows independently. We saw that since the establishment of analysis,
one science borrowed from the other, and economics borrowed from Physics: equilibrium, continuity—where nature does not make leaps—as well as Adam Smith’s invisible hand; in addition, management borrowed negative feedback from
mechanical engineering; Newton, unwillingly, however, made harm to management by giving ground to managers to consider “humans as
machines”. A whole array of theories and concepts-mentioned-followed from this. But our research
passed from surprise to surprise: time in finance has 3 types: clock, trading (investors)
and fractal (fractions). Given the difficult concept of “fractality”, we gave a mathematical and a simple geometrical
exposition. Moreover, time… in time series is distinguished in further 3 types:
random (white noise), persistent (black noise) and antipersistent (pink noise).
So far 8 types of time… Einstein added another one: time as the 4th dimension of the Universe… Mathematics in its role in presenting reality-par excellence expressed by “Marginalism” in 1870 in economics—and by using the 1938 “logistic
equation” (re-discovered in 1971)—we saw what a “control coefficient” changing in time can achieve by leading the system
from stability to chaos. Equilibrium is only a special case when the degree of
chaos is low. Economists (Hicks, Joan Robinson) attributed to equilibrium
subjective interpretations; we agree that equilibrium is not technical,
mathematical or belonging to markets, but psychological. Be happy when accepting a price to be in equilibrium
with seller. Samuelson, before modern theory of chaos (after 1968) appeared, he
dethroned equilibrium and proved that equilibrium is when firms “maximize
profits”...