How to Evolve Economics at Second Step: Modifying Axioms
Although modern economics has developed for a quarter millennium, it has become far from the usefulness in the economic lives of people because one of the most fundamental troubles has not been resolved yet; its unrealistic preconditions such as scarce resources, rational behavior, perfect competition and prompt balance. In other words, the axioms of economics should be modified at first for economics to evolve further in order to be useful for the economic lives of people and the managements of company and national economy as follows; resources are scarce while their scarcity is relative and changes, economic subjects try to rationally behave, and the economy tends to balance into equilibrium. This modification of economics’ axioms induces a new term of dynamic equilibrium which is operated by the interaction between the convergence power and the departure power just as both action and reaction work in physics. These new axioms and the term of dynamic equilibrium would result in revolutionary changes of economics. For instance, it is newly discovered by the authors that there is another principle to determine price, that is, the principle of price decision, which would enable for economists to predict even the trend of stock market while the interaction between demand and supply does not determine it, but the fluctuation of price. And this paper clarifies the reason why Keynesian policy used to fail to recover the economy in recession, causing stagflation and hyperinflation at last, which enables to establish a new income theory composed of the principles of decision, fluctuation and chaos.