Economy: Family Business and State Are Just Matters of Scale

(h/t Andy Curzon )(edited and revised)

[I]f we look at Austrian business cycle theory as merely an instance of the cycle of ‘flocking and schooling’ that follows any kind of change in knowledge that as a consequence produces an opportunity, then the century of pseudoscience was just another business process by which to exploit a market opportunity, and it played out as a series of eddies and pools, which are currently in the process of maximum exploitation and collapse.

And so governments are just temporary corporations exploiting business opportunities. And management(government), employees(bureaucracy), customers(consumers), and investors(citizens) all compete for the maximum returns.

This matches all political theory throughout history that suggests that people seek opportunities until it is possible to seek rents, and rents expand until the civilization collapses. It also matches the data that without private(shareholder) public(corporation) alliance no city state became economically competitive.

I disagree with Diamond for example, since I am pretty sure the reason for these collapses is a breakdown of incentives : the information system that allows for the organization of production. I would say that civilizations collapse either due to extreme efficiency followed by shocks (1200 BC), or the equivalent of cancer: damage to the information system that eliminates the relationship between production and consumption.

But since humans flock and school, then break off in smaller schools, to exploit opportunities, we are pretty good at a sort of fractal exploitation of every possible opportunity until it’s been exhausted.

I suspect either an expansion of statism in order to extend the status quo, or an upcoming era of increased statist tyranny in the name of order. If not I suspect collapse of the western control of commerce and trade, and an expansive war or system of wars, to fill the vacuum; and an acceleration of civil wars to take advantage of change at home.

It is better to study businesses than states, because the model is sufficient and the data is better.