Oscillations in Rational Economies
Toros University, Mersin, Turkey
Economic (business) cycles are some of the most noted features of market economies, also ranked among the most serious of economic problems. Despite long historical persistence, the nature and the origin of business cycles remain controversial. In this paper we investigate the problem of the nature of business cycles from the positions of the market systems viewed as complex systems of many interacting market agents. We show that the development of cyclic instabilities in these settings can be traced down to just two fundamental factors – the competition of market agents for market shares in the settings of an open market, and the depression of market caused by accumulation of durable overproduced commodities on the market. These findings present the problem of business cycles in a new light as a systemic property of efficient market systems emerging directly from the free market competition itself, and existing in market economies at a very fundamental level.
Citation: Mishchenko Y (2014) Oscillations in Rational Economies. PLoS ONE 9(2): e87820. doi:10.1371/journal.pone.0087820 Editor: Alejandro Raul Hernandez Montoya, Universidad Veracruzana, Mexico Received September 12, 2013; Accepted December 30, 2013; Published February 5, 2014 Copyright: ß 2014 Yuriy Mishchenko. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Funding: This work had been supported by Bilim Akademisi - The Science Academy, Turkey, under the BAGEP program, and by BAP Scientific Research Projects Fund of Toros University. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript. Competing Interests: The author has declared that no competing interests exist. * E-mail: email@example.com
completely different perspective on business cycles have been assumed by the more recent real business cycles theory [9–12]. The real business cycles theory supposes that business cycles always have an exogenous cause such as disruptive new
technologies, geo-economical changes, political crises, wars, etc. and, in that sense, are just a response to the changes in real markets’ conditions. Credit/debt cycles theory [7,8], on the other hand, attributes business cycles to the dynamics of over-borrowing by businesses during the times of economic booms, followed by economic slowdown and, finally, a debt crisis and a recession. Political cycles theory [5,6] attributes business cycles directly to political manipulations and improper government interventions. Some of the oldest views on business cycles in Marxian economics [13,14,23] associate business cycles with the intrinsic property of businesses to lose profitability and fail with time, translating into recessions accompanied by mass unemployment, wealth inequality and economical restructuring aimed at recovering profitability. In recent years a number of works, especially in the context of the new physics of complex systems, had emerged pursuing the
understanding of market phenomena from the perspective of market systems viewed as complex systems of interacting agents [24–33]. Such works had offered new insights into phenomena such as
financial fluctuations [24,26,34–38], market panics [29,39–41], financial contagion [42–45], and many others. In this work, we present new findings for the problem of business cycles assuming a similar perspective on the business cycles as a systemic property of market systems originating from the collective behavior of rational market agents. We show that the development of business cycles in such settings can be traced down to just two factors – systemic overproduction caused by the competition of rational market agents for...
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