The Supply Model

The Fallacy of the Downward Sloping Supply Curve

Economics enshrines the evil invisible hand by Paul Samuelson which promotes selfishness. This makes the suppliers chase money-revenue instead of production efficiency, creating an upward-sloping supply curve.

The supply..curve is..the relation between market prices and the amounts of the good that producers are willing to supply. At a higher price of wheat, farmers will take acres out of corn cultivation and put them into wheat. This increases output at the higher prices offered.

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Paul Samuelson Economics, Chapter 4

So it really plots the supplier’s REACTION to market prices instead of the ACTUAL real costs of making products.

This violates the 2nd Law of Value which uses value to remove the lack in Society, since value was used to enrich oneself or avoid lack for the self at the expense of society.

Supereconomics restores the 2nd Law by replacing the downward sloping supply curve with a real supply curve that is based on cost instead of market price.

This makes it slope downwards as costs go down the more you produce, consistent with Adam Smith’s supply curve:

A commodity is sold at its natural price when its costs pay the natural rent, wages, and profits in making it. The natural price is the lowest price that a seller can sell his goods.

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Adam Smith The Wealth of Nations, Book 1 Chapter 7

Beyond the limits of your equipment or capital, the costs go up. This means you should either:

• add more equipment or
• give up sales to your competitor

Either way, this produces the lowest prices at the highest volumes.

This happened after China entered the World Trade Organization and sold a lot of goods at low cost.

This is opposite of the Economic paradigm, wherein the seller would monopolize the market by buying the competitors then reducing production to what was most profitable for the capital invested.

This creates high prices and low production.

This is why Supereconomics uses a downward sloping supply curve to achieve a goal of zero inflation opposite of Economics where prices always go up.

Economies of Scale: Maximum Efficiency

The proof of the downward-sloping supply curve is the phenomenon of economies of scale.

This happens when capital is pooled or accumulated in order to create supply efficiency and reduce the real value as the cost of production.