Symmetric Model of Economic Equilibrium: Circular Organization of Economic Processes

Abstract

Paata Leiashvily

On the basis of dialectical analysis of basic economic categories a new understanding of economic value, price formation and general equilibrium has been proposed. Market economy appears as the form of a complex, non-linear, functionally closed and causally open system of economic actions. Such systems have a number of unique properties that are well studied by second-order cybernetics. The self-organization of a market economy is carried out through the recursive processes. Recursive processes in the economic system, as well as in other complex nonlinear dynamical systems, generate "eigenvalues" ("fixed points"). These "eigenvalues" are the equilibrium prices and quantities of goods to which through the recursive processes tend the actual prices and quantities, thus providing a tendency to the general equilibrium. However, due to constant influence on the system of random external factors, the general equilibrium is never achieved. On the base of created model the hidden relationships among the gross profit, gross saving, gross investment and gross consumption in debt, as well as the relationships among the other economic parameters are revealed.

This article is a shortened and modified version of my article The Relativity Theory of General Economic Equilibrium (American Journal of Economics 2017, 7(5): 216-229), freely available at http://www.sapub.org/journal/archive. aspx?journalid=1083&issueid=3455.

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