{∅, {∅}, {∅, {∅}}} :: The Tip of the Big Mother Iceberg

The immediate aim of the Harvard project was to discover the economic structure, what forces change that structure, how the behavior of the structure can be predicted, and how it can be manipulated. What was needed was a well-organized knowledge of the mathematical structures and interrelationships of investment, production, distribution, and consumption.

To make a short story of it all, it was discovered that an economy obeyed the same laws as electricity and that all of the mathematical theory and practical and computer know-how developed for the electronic field could be directly applied in the study of economics. This discovery was not openly declared, and its more subtle implications were and are kept a closely guarded secret, for example that in an economic model, human life in measured in dollars, and that the electric spark generated when opening a switch connected to an active inductor is mathematically analogous to the initiation of a war.

The greatest hurdle which theoretical economists faced was the accurate description of the household as an industry. This is a challenge because consumer purchases are a matter of choice which in turn is influenced by income, price, and other economic factors.

This hurdle was cleared in an indirect and statistically approximate way by an application of shock testing to determine the current characteristics, called current technical coefficients, of a household industry.

Finally, because problems in theoretical economics can be translated very easily into problems in theoretical electronics, and the solution translated back again, it follows that only a book of language translation and concept definition needed to be written for economics. The remainder could be gotten from standard works on mathematics and electronics. This makes the publication of books on advanced economics unnecessary, and greatly simplifies project security.
INDUSTRIAL DIAGRAMS

An ideal industry is defined as a device which receives value from other industries in several forms and converts [it] into one specific product for sales and distribution to other industries. It has several inputs and one output. What the public normally thinks of as one industry is really an industrial complex where several industries under one roof produce one or more products....
THREE INDUSTRIAL CLASSES

Industries fall into three categories or classes by type of output:

Class #1 — Capital (resources)

Class #2 — Goods (commodities or use — dissipative)

Class #3 — Services (action of population)

Class #1 industries exist at three levels:

(1) Nature - sources of energy and raw materials.

(2) Government - printing of currency equal to gross national product (GNP), and extension (inflation) of currency in excess of GNP.

(3) Banking - loaning of money for interest, and extension (inflation/ counterfeiting) of economic value through deposit loan accounts.

Class #2 industries exist as producers of tangible or consumer (dissipated) products. This sort of activity is usually recognized and labeled by the public as an "industry."

Class #3 industries are those which have service rather than a tangible product as their output. These industries are called (1) households, and (2) governments. Their output is human activity of a mechanical sort, and their basis is population.
AGGREGATION

The whole economic system can be represented by a three-industry model if one allows the names of the outputs to be (1) capital, (2) goods, and (3) services. The problem with this representation is that it would not show the influence of, say, the textile industry on the ferrous metal industry. This is because both the textile industry and the ferrous metal industry would be contained within a single classification called the "goods industry" and by this process of combining or aggregating these two industries under one system block they would lose their economic individuality.
THE E-MODEL

A national economy consists of simultaneous flows of production, distribution, consumption, and investment. If all of these elements including labor and human functions are assigned a numerical value in like units of measure, say, 1939 dollars, then this flow can be further represented by a current flow in an electronic circuit, and its behavior can be predicted and manipulated with useful precision.

The three ideal passive energy components of electronics, the capacitor, the resistor, and the inductor correspond to the three ideal passive energy components of economics called the pure industries of capital, goods, and services, respectively.

Economic capacitance represents the storage of capital in one form or another.

Economic conductance represents the level of conductance of materials for the production of goods.

Economic inductance represents the inertia of economic value in motion. This is a population phenomenon known as services.
ECONOMIC INDUCTANCE

An electrical inductor (e. g., a coil of wire) has an electric current as its primary phenomenon and a magnetic field as its secondary phenomenon (inertia). Corresponding to this, an economic inductor has a flow of economic value as its primary phenomenon and a population field as its secondary phenomenon of inertia. When the flow of economic value (e. g., money) diminishes, the human population field collapses in order to keep the economic value (money) flowing (extreme case — war).

This public inertia is a result of consumer buying habits, expected standard of living, etc., and is generally a phenomenon of self-preservation.
INDUCTIVE FACTORS TO CONSIDER

(1) Population (2) Magnitude of the economic activities of the government (3) The method of financing these government activities (See Peter-Paul Principle — inflation of the currency.)
TRANSLATION

(A few examples will be given.)

Charge — coulombs — dollars (1939).

Flow/Current — amperes (coulombs per second) — dollars of flow per year.

Motivating Force — volts — dollars (output) demand.

Conductance — amperes per volt — dollars of flow per year per dollar demand.

Capacitance — coulombs per volt — dollars of production inventory/ stock per dollar demand.
TIME FLOW RELATIONSHIPS AND SELF-DESTRUCTIVE OSCILLATIONS

An ideal industry may be symbolized electronically in various ways. The simplest way is to represent a demand by a voltage and a supply by a current. When this is done, the relationship between the two becomes What is called an admittance, which can result from three economic factors:

(1) hindsight flow, (2) present flow, and (3) foresight flow.

Foresight flow is the result of that property of living entities to cause energy (food) to be stored for a period of low energy (e. g., a winter season).