Abstract
Without positioning a production system, it is impossible to imagine any economic doctrine. During recent years, however, many economists have been very reluctant to use actual observations on the structure of production systems and heterogeneous interactions among production processes, i.e., inter-industrial analysis, and commit to a positive picture of production in society. Instead, they have focused on a particular idea of the production function, where the aggregate level is very similar to the microscopic one. The representative agent is ubiquitous in standard economics, across the globe and historically. As Robert C. Allen (2011) noted, some economists do not hesitate to subordinate even human history into a special production function. They stress behavioral decisions by game theoretic analysis to dispense with productive structural analysis. In this chapter, we will examine the meaning of a price system based on the production system in the sense of classical economic doctrines, and will then give a new network analysis of production and consider its empirical application to the Japanese economy over recent years.
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Notes
- 1.
- 2.
See “Updating a standard commodity” in Aruka (2012, p. 180).
- 3.
This opinion was given by him when I visited his office at TUM in Munich, March 2012.
- 4.
- 5.
Source: The pamphlet Ministry of Economy, Trade and Industry (2012).
- 6.
This usually means that non-negative elements are found either in each row or each column. This situation is irrelevant to the idea of net producibility. All-entering in a strict sense means that most cells are non-positive. This property is always satisfied in the input–output matrix.
- 7.
- 8.
The current members of the program are the Ministry of Internal Affairs and Communications (coordinator), the Cabinet Office, the Financial Services Agency, the Ministry of Finance, the Ministry of Education, Culture, Sports, Science and Technology, the Ministry of Health, Labor and Welfare, the Ministry of Agriculture, Forestry and Fisheries, the Ministry of Economy, Trade and Industry, the Ministry of Land, Infrastructure, Transport and Tourism, and the Ministry of Environment. See http://www.stat.go.jp/english/data/io/outline.htm.
- 9.
In this definition, we will be faced with the difficulty of infinity if the system under consideration is disconnected, but another definition is possible to avoid this. See Opsahl et al. (2010).
- 10.
Our observation, either in terms of technological property or of data availability, may be supplemented by Ohkubo’s rule. Ohkubo and Yasuda (2005) and Ohkubo et al. (2006) proved the equivalence between a Polya urn process and a renewal of the network spanned by a closed number of links. Taking into account that a finite set of productive processes on the input–output table is given, and using Ohkubo’s rule, we can show a renewal process of the network of production under the preferential attachment within the closed set of links. Here we regard a replacement of link attachment as a replacement of a productive process.
- 11.
See the METI report: http://www.meti.go.jp/statistics/tyo/entyoio/result/result_14/pdf/h2eio101j.pdf.
- 12.
Covariance analysis of household demand in Japan assisted by the random matrix theory can be found in Aruka et al. (2013).
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Aruka, Y. (2015). Network Analysis of Production and Its Renewal. In: Evolutionary Foundations of Economic Science. Evolutionary Economics and Social Complexity Science, vol 1. Springer, Tokyo. https://doi.org/10.1007/978-4-431-54844-7_3
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