Classicàl Forms of Economics
Economics is generally broken down into two disciplines- Microeconomics & Macroeconomics.
a. Microeconomics: It focuses on the behavior of individual consumers & producers, how they
make decisions. These individuals can be a single person, a household, a business/organization or
a govt. agency. It explains-
- How different goods are valued differently.
- How individuals make financial decisions.
- How individuals best trade, coordinate & cooperate with one another.
b. Macroeconomics: It studies an overall economy on both national & international level. Its
focus can include a distinct region, country, continent or even the whole world. It includes-
- Foreign trade
- Government Policies: Fiscal policy & Monetary policy
- Unemployment rate, The level of inflation & interest rates,
- The changes of total production output: GDP Growth
- Business cycles results: Expansion, Boom, Recession & Depression.
New Horizon: Decentralised Economy
This is the invention of new format of the economics at this century. It is initiated by cryptocurrencies and distributed by blockchain.
This is totally decentralized system. Very much market-oriented and synchronised with demand supply that is very much scientific and realistic ecosystem.
How decentralized Economy changes the Production theory
Today I will discuss about the classical theories of prodution that was explained by Macroeconomics. How it is influenced and changed by the new economic decentralized system.
The Factors of Production
Production is the process of using resources to produce goods & services. These goods &
services are called Outputs. Economic resources are the inputs used in the process of production. These inputs are called productive resources or factors of production.
The factors are classified into four major groups: Land, Capital, Labor & Entrepreneurs. Recently Information & Time are also considered as productive resources, although their uses are always linked to other factors.
In economics, Land refers to the “gifts of nature” or natural resources not created by
people. These are physical resources in nature, to be used in production in their raw, natural form.
Land includes deserts, fertile fields, forests, mineral deposits, livestock, sunshine and the climate necessary to grow crops.
Because a finite amount of natural resources are available at any given time, economists tend to think of land as being fixed, or in limited supply.
Another factor of production is Capital—the tools, equipment, machinery and factories used in the production of goods and services. Capital is unique because it is the result of production involving other capital goods.
However, economists also use the term capital in a special way as in Nominal Capital, referring to money that is also considered a capital resource. Money is needed to buy all the other necessary factors of production, including Real Capital.
Capital resources also include the available knowledge of techniques and processes of producing goods or services i.e. information, technology etc.
A third factor of production is Labor— it represents the physical and mental services of human beings in production, including the time spent working.
This category includes all people except entrepreneurs, whom we single out because of their special role in the economy Historically, factors such as birthrates, immigration, famine, war, and disease have had a dramatic impact on the quantity and quality of labor.
It is the most crucial input of all, as labour is needed to manage the use of all the other inputs too.
Entrepreneurs are individuals who start a new business or bring a product to market. They are often thought as the driving force in an economy, because they are the innovators responsible for much of the change in our economy.
This is a specialized kind of labor for its special role in the production process. Entrepreneurial skill includes the scarce human ability to organize & operate other resources efficiently in order to
produce desired goods & services.
How production theory is changed by decentralized economy
According to the new horizon of economic system that is termed as decentralised monetary or crypto economy, the theory of production have been changed.
discuss below about the four major factors how they have been influenced by the new economic system.
Land: in this new economic system land have been being vertualized or vanished. It has no natural resources required to produce because you are inputing data and output is virtual currency.
Capital: The main challenge of classical theory is to minimise the trade of between profit and capital. As capital is to be increased due to enhancing profit, but the increasing of capital incur extra cost to handle the resources that decrease the profit. So it has to be balanced and try to reach at an effective equilibrium point. In new decentralised theory, capital is sometimes very few that the impact of capital may be ignored. At data mining system, the capital is proportional to profit.
Labor: The term labor has been replaced by the term expertise because it requires human labour rather than human effort and skill. If you don't have technical skill, you could not produce money. The main utility in this sector is your skillness and expertise.
Enterprenuer: On the classical theory there was limited entrepreneurs who transform capital and initiate production. But in decentralised monetary system, every single participant of economic activities are recognised as an entrepreneur. That's the magic of crypto world.
Finally the conclusion may be drawn that the new idea of decentralised monetary system has totally changed of all economic believes. It's high time for academic research about it's impact on all economic activities.
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