Development Course

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  • 1. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsArrows (like ⇔) are textmarks enabling navigation through the contents: ⇒ Module BMS—D1a Business Management Systems INTRODUCTION TO BASIC DEVELOPMENT ITS TERMS AND CONDITIONS Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 2. Module BMS—D1a Business Management SystemsIntroduction to Development - Its Terms and Conditions Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 3. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions Module BMS—D1a: Business Management Systems : Business Development—Terms and Conditions⇐ Studyguide ⇒ I. ⇒ Contents II. ⇒ Preface III. ⇒ Introduction to some model aspects—Is Development Growth? A. Development a Succinct Historical Review A.1 ⇒ Balmer Rink’s Formula and the Harmonic Division A.2 ⇒ Society’s Progress—Development is linked to Scientific Discoveries A.3 ⇒ Schumpeter’s Definition of Development and Distinction from Growth A.4 ⇒ Applications of Keynes’ Model : Keeping up Development by Blowing Debts A.5 ⇒ Internet—Final Stages into the Infinitesimal and the Upcoming Jump. B. The Theory and Model of Development B.1 ⇒ Terms and Conditions for Development B.2 ⇒ Mathematical Approach: The Three means at Start and End B.3 ⇒ Development’s Start and End and Some Striking Consequences B.4 ⇒ The Harmonic Division Bridging Development’s Opposites C. Application of the Model in Business Practice C.1 ⇒ Development, Corporate Governance, and Ethical Issues C.2 ⇒ Sustainable Development and Success Stories D. D Glossary E. . Index F. . Literature Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 4. Module BMS—D1a Business Management SystemsIntroduction to Development - Its Terms and Conditions Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 5. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and Conditions ⇐ Studyguide = a symbol to indicate your assessment.Studytips •Read the contents of each chapter carefully while gradually proceding. If according to your timeschedule time to study runs short—do not start a new chapter. •In order to get the gist, every single chapter should be read completely before detailed study starts. •After a second careful reading explanations which seem important to you should get full attention: Get the idea by printing out textpassages if you think it’s important, or mark them and try to analyse every detail and core thoughts. •After a longer pause contents should be studied a third time. •Review any gaps in knowledge and comprehension. Contents can need clearification and adaptation from other information resources. Don’t lose your joy studying otherwise study will soon be too much of a burden to carry. •Don’t start answering any questions before you fully completed the studymaterial. •Written abstracts are to be succinct, relevant to the topic, formulated in your own words in a concise easy-to-follow way. We grade your knowledge of the material offered. •As you know, correction and validation of the assessments is electronically. You will be informed in time by email and you will receive a graded report sended to your postal address. •Make you own template—f.i. in MS Word—and plot dates on a copy of it. Save your files properly. This way you will always be in a position to arrange and work things over easily. •We need sufficient space for proper correction—so before writing down your answers, take care of the layout and leave at least half of the page blank. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 6. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions •Never hesitate to contact your lecturer or another responsible member of staff if something needs to be cleared. •Visuals like graphs and diagrams should be kept concise and clear. •In this course by times clicks on navigations arrows or highlighted words will bring up pop-up windows to give additional definitions or explanations. Allow your browser popups and cookies as well. Apart from MS Excel or required plugins like Flash Player 5.0 we avoided embedding files of technically advanced software—f.i. CAD software—in order to make the contents more easy to adapt for all students. But please do not forget that we innovate and keep up with new possibilities for blended learning. We expect you to appreciate this. •This study will cover a part of your lifetime and this time will never return. So make the best out of it. We wish you a great time !⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 7. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsII. ⇐ Preface | Πόλεμος πάντων μὲν πατήρ ἐστι | “War is the father of all.” Heraclitus of Ephesos - 6. Century B.E.To put it succinctly: —Today development as a topic needs a renewed scientific approach. Only ascientific concept as a background fundamental for development- and risk management in allapplicable fields can overcome critical problems occurring at various development stages. A renewedapproach would enable us to discern what to look for and where to look at should crises occur andthreaten to block off rational reasoning. In realworld practice we see that development do can havedangerous impacts like commencing wars to maintain an upward trend of a country’s GDP1. Thoughthis would be thoroughly in line, because, conflicting potentials are innate to development at its start aswe shall see in upcoming units. As stated by Heraclitus in another famous aphorism; gods play withthe tools of creation [i.e. of development]. Of course development should not only be regarded just asa playtoy for heavenly beings, but as a magnificent tool in the hands of responsible mankind—yetnecessary to fully comprehend for a proper application. Development indeed carries an inflammablepotential of innate energy, which—once enticed at start—could release the inextricable intertwined—and initially strict opposed—forces into undesired directions.So it’s time for the quest on development and its conditions, because entering the third millenium weseem to embark for a totally new era of dynamics, in which development and the feat of its handlingwill be a main issue for globalized society to uphold prosperity and to maintain peace. It seems clearthat once again at various fields the world is preparing to meet the challenges for a totally newdevelopment stage—this time on a global scale. However we may say, that if there is no awareness ofthe implications of development—still to be uncovered—we do can expect a future of increasingconflicting interests, of increasing hostilities, of chasms emerge. If not handled properly it will likelyresult in endless cruel wars. May war be the generator of all as Heraklitus stated and is to a certainextend still valid today, it never may be developments aim as such. And as we shall see; if war is nofinal target, then prosperity and harmony must be developments final result this by means of theconvergence of development forces initially opposed to each other as we shall cover further on.1 GDP = Gross Domestic Product. An economic term to indicate the total market value of all final goods and services producedin a one-year period of a country. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 8. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsThis course will give you a small overview of what we actually ought to capture mentally—thinking andreasoning in terms of development and growth. Anticipating on items to come: development is by nomeans just growth and vice versa growth is by no means just development. From J. Schumpeter—theknown Austrian economist—we inherited crucial thoughts how to distinct between both expressions.Society though seem not inclined to learn very fast. So for reasons of convention teachers andeconomists are forced not to stress the difference and not to distinct properly; talking about growthwhile pointing at events that would probably characterize development and talking about developmentwhile pointing at events that would under circumstances characterize growth. We can’t blaim them, butwe should sense a responsibility not to continue with the usus. Still there is a job to do, to get theproper underlinement of developments terms and conditions. This starts in the first place with a properdefinition i.e. of a proper distinction of meaning and comprehension of ideas like “development” and“growth”. We have our famous forerunners in development research and are very grateful for it. One ofthem is the Austrian economist Joseph Alois Schumpeter. To regard Schumpeters contributions todevelopment as a basic construction indispensable for all further research on development is a mustto acknowledge for us and for generations to come. Therefore it’s up to us to handle the topicaccordingly. Much has been undertaken already. A look at the evolutionary economists contributionswith respect to Schumpeter will convince us. With this introduction course we try to contribute to thecomprehension of the term development by stressing some very basic maths as well.Of course there would be a lot to say about development to get all the different views conveyed. Thereis literature galore dealing with this. What could make this special course useful to the reader is thenew approach of development with respect of what’s going on—and going wrong—in real-worldpractice, emerging development dynamics with its complexity, weird globalization aspects, potentialdangers and unique possibilities. For individuals living in this crucial time—appreciating innovation withrespect to development— it’s possible to choose; either to adapt and step in the heart of realworlddevelopment dynamics or to step aside in reluctance, while looking how the stressy world is passingby. As PhD Tad James, leader in the neuro-dynamic field of Accelerated Human Change, once put it:We can regard ourselves being “through time” i.e. endogen active in development’s process or rather“in time” i.e. dependent on development’s exogen conditions.The model of development introduced, together with the findings stated in this course is the result ofseveral years of indeep research and is by no means “new” in a sense that it has never been sensedby mankind before. But it is forgotten. And since those times of the ancients things has been changedenormously. A new world emerged. But these ancient insights mostly expressed in covert aphorismsare valid still today and can have their say even more trenchant then our modern views.Having said that, the model, presented here, is nevertheless backboned by maths and we were luckybeing enable to trace its principles from developments start right to developments entropic end. Thisturns out to be of great help on how to sail between the “rocks of Scilla and Charybdis” as in the story Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 9. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsof Odysseus, when we want to be successful achieving our targets through the subsequent stagesand inherent bottlenecks in the flux of developments progress. Odysseus blindfolded the crew to passthe crises. Nowadays there can be no intention to blindfold our mates again like Odysseus did with histeam. On the contrary; we should strive to keep eyes open widely.This brings us to a next issue: Imagine, if a med has the wrong anamnesis the cure won’t be much ofa success—will it? In the same way if an enterpriser or an economist has a biased anamnesis, whatwill be his planning for the firms management or what will his advice to the policymakers bring about?Speaking about development, we definitely need to look at the emergences of such phenomenons like“crises”.Those complex and often enough desastrous situations should receive a proper foreseeingtreatment and—like Odysseus for his time—we also should have the right anamnesis resulting in theright action or cure to deal with it, to feat the critical situations inherently anchored in all development.But it has to be said, that people would like to avoid crises. We can easily imagine why. Mostly we allare inclined, not to go through those development traps and bottlenecks, that nevertheless will actuallybring us through and up to higher stages of development quality. So we can expect, that avoidingcrises, treating them as if they were accidents, is like preparing for the wrong anamnesis. And oftenenough a wrong advice or a fruitless strategic idea ends up in a derailed and tensefull developmentenvironment—of course an organizational mess is the result. That in turn can lead to a destruction ofall previous achievements. This doesn’t make much sense and is an at all times painful experience. Afirst remedy were to take Schumpeter serious. But just avoiding the challenges of crises is nor a cureneither a way to envisage and treat such phenomenons. We got to look at it from a positive side. Inreality all crises are the sole potential possibility for the eliciting of sensefull but necessary steps andfor the passing to next stages of development, because the incremental rationals and gameplay logicof methods appropriate for growth periods—admittedly most often a strategy f.i. of dull operationalresearch methods—can’t really do the job. We must state:—Crises do not put off their ‘iron helm’ andreveal themselves if regarded as merely threats and dangers to creep away from. So for those, wholauch developments and want them sound there is a great need for clearance and for the work up of alot of biased established views, attitudes and subsequent behaviors in order to master developmentand its requirements in a more sound way. A lot of literature on crises seems only ripe for the bin.Development is not something to be materialized off one’s own bat, but demands a lot of courage ofall involved. As William Easterly in his study: “The Elusive Quest for Growth” put it: “If you bake acake, according to a recipe, would you take just one or two out of 10 ingredients needed to start outand make you cooking a success?” The answer of course is, no. Instead we take all ingredients andnot just two of them. If Easterly is right, then why is the cooking of a cake so simple and the inducingof development so difficult and complex—even though we take all ingredients the same time?Because the cooking of a cake does not require the experience of fatal crises nor the need of termsand conditions—like morality—inseparately connected with development. Nobody dies when somecooking failed, but inappropriate handling of development and crises on a large scale can have Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 10. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsnumerous victims. So in order to induce development we need not only all ingredients that makedevelopment a success as Easterly proposes, but the right reading of the recipe i.e. the ideas of whatelse is required to accomplish development with success. This implies, that—especially for third worldcountries as was Easterly’s focus—all stake- and shareholders, donors and participants, need tocontribute in practical support as well as in a proper educational as well as ethical preparation2. Inorder to induce development we don’t need consensus of all different views—on the contrary. Butthere can hardly be any successful development without a spark of development knowledge. Becausedevelopment for one thing is the result of the satisfying of demand and coming from two different sidesit is the ephemer result of an agreement based on mutual interests. Mutual interests are lucky facts,providing the basic for solutions as a satisfying, but ephemer outcome of originally opposed worlds.Entireties with opposing interests become partners and agree to create the - economic - opportunity ofexchance of resources. But there can hardly be any development without a simple grade of trust, ofgood will: i.e. honesty, constructiviness, clear thinking, extrapolation of mutual advantages and finallythe dynamics of good teamwork.In general, people – you and me - are not altruistic and there is not always that innate skill or what’ssoever to immediately gist the advantage of all by focussing the advantage of others. There is a moralaspect to this. To see the advantage of all involved in the process has to be trained on a daily base.On the field of business it is our conviction, that an enthousiastic enterpriser with the most valuableand usefull ideas and products in his output basket, with the best plannings to materialize it throughhis firm, but embarking with poor development capacities, simply isn’t aware of the real power of hiscontrahent—the stakeholder, like a groom unaware of the real value of the bride. In the course ofdevelopment stakeholders increasingly penetrate the firm and can even overrule its managementstrategy with their own interests and power, especially the customers. To strive for the volatile andever ephemerical balance of harmony of opposed energies by way of development is a tremendouschallenge for the firms owner if he is just focussed on generating his own profit. As a strategy to aimfor this focus is not enough and will not hold very long.Nowadays people—nations—unfortunately tend to fail to meet terms and conditions of developmenteven on a global scale. This study provides a small contribution at least to find the cause as to whyfailures were made in the past and can reasonably be expected for the future—f.i. by instigating wars—and what can be done to prevend them.⇐2 For a view on main ingredients to induce development—not just growth—in the tropics, according to Easterly, look at theEasterly’s recipe (PPS file): ⇒ (rightclick PPS to full screen using spacetab to navigate). Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 11. Module BMS—D1a Business Management SystemsIntroduction to Development - Its Terms and Conditions Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 12. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions Module BMS—D1a: Business Management Systems : Business Development—Terms and Conditions III. ⇐ Introduction to some model aspects—Is Development Growth? Overview This course “Introduction to Development Its Terms and Conditions”—MBS-D1a—is organized in four core parts (A to D) with some usual additionals: A.Historical ReviewMainchapters B.The Theory and Model of Development C.Application of the Model in Business Practice D.Application of the Model in Macroeconomics E.Epilogue F.Glossary G.Index H.Literature Chapters A gives some historical background. The focus is on the introduction of some main contributors to the issue as a concept introduced here. Introducing them we would like to stress, that these men—mainly economists—and there findings are still crucial for an understanding of ‘law and order’ in dynamics and dynamic’s progress, though of course they all need revision and actualization. Chapter B introduces some main mathematical principles and conditions underlying the model. As mentioned in the preface, the material is certainly not new, but the context is. They are gathered piece by piece and reorganized to be compatible with development theory. Chapters C and D introduce some back of the envelop applications from realworld practice. Chapter C with relevance to corporate governance and strategies of firms. Chapter D with relevance to certain development phenomenons emerging on macroeconomic level. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 13. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsTargetIn this introduction we would like to emphasize, that the core target of this course is to give you anincentive to workout for yourself a new look on development. Partly we do this by let you pay attentionto the emergence of development nodes between two subsequent growth stages. In physics we knowthat in oscillation and wave theory two amplitude waves build nodes as a result of two or more wavesin case there frequencies differi. ⇒ In development theory we would like to adapt this knowledge—justwith one small extension: We stress the additional fact, that—during time development is runningthrough a critical node—an unseen kind of backward looping of developments motion takes place. Inphysics there are two opposed kinds of energy: potential and kinetic energy. We assume a change ofthe weighing of these two kinds of energy: From kinetic or direct (“ignitional”) energy beingdevelopments’ physical energy or main driver during direct progress into its opposite: The potentialenergy as the main energy during the sensening—no physical reality—of a retrograd progress orbackward looping. So inbetween the change of two growth periodes in development the two differentkinds of energy actually alternateii. ⇒ This chapter is but an introduction to the material—you canexpect a more indeep discussion in situ. We also would like to introduce the fact that, during the shorttime development goes through these nodes, we assume that this unseen motion of backward loopingis—in this world—experienced as a jump from a just completed to a next development stage. It is thisfamous jump in development which once Schumpeter regarded as being the actual developments’procedure. This with distinction to the subsequent growth stages. Basically these development jumpscan be regarded as jumps of quality rather than quantity (which would actually mean growth). Now, thecurve rising up from quality to quality can’t be visualized by showing a wave in a graph, but by astraight line showing the rise in potency. In order to create a straight line for potencies we need alogarithmic scale. Thus: We can best show changes in quantity with a linear scale. We can best show changes in quality with a logarithmic scale.Here are two graphs with the same data showing the difference – mind the different grid pattern. Clicks lead to *.pdf files so make use of Adobe Reader to view them. Fig A. a logarithmic scale Fig. B a linear scale Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 14. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsWe can best use linear scales on y-axes (vertical axes) to make changes in quantities clear. We canbest use logarithmic scales on y-axes to show changes in quality with regard to potencies’ and theirprogression. We use both linear and logarithmic scales—superimposing them in the same graph—toshow you data changes of both developments’ progress and it’s inherent growth stages. Technicallythis isn’t quite doable and seemingly in mathematics even not correct, but this graph—a first scetch ofdevelopment—depicts pretty good what we mean: ⇒ But mind the underlying basic difference !For an introduction these short explanations will do. However to explain the model of development wehave to introduce to you a lot more aspects.VisualizationsWe can’t touch, hear, smell or see development. Being unmaterialized its process is going on beyondour physical senses. We only experience our joy, relieve, tenses, our expectations, and the results asour failors and success and so on when we start to develop an idea. So in order to bring things a bit“down to earth” and to make it more comprehensible we use certain visualizations like symbols. Thusfor the purpose of completition and comprehension and as an ideally visualization for the start of eachdevelopment we take the transparent cube as one of the platonic solids. Secondly to characterize theend of development we take the transparent regular dodekaedron—a second platonic solidiii. ⇒ Thishas a lot of reasons, which are to be explained later. Between both solids, the cube and the regulardodekaedron, as a way to show developments’ progress we visualize a straight staff or rod with twooscillating waves (or snakes) wrapped around the rod, which would symbolize the amplitude of any ofthe harmonic swings. All three symbols together are a complete visualization of the model ofdevelopment. As you perhaps know these symbols are famous since antique cultures of the Middle-East and there is a good reason for it. To stress it again:—nobody has ever physically seen thiscomposition of symbols, but as a whole it is a meaningful auxiliary and it can help us to clear the ideaof development. This model is basic to all natural development.The nodes in the progress of development are allready mentioned. They are absolutely crucial and byall means indispensable. Not in a sense, that we would promote the final desaster and the ‘going off’of someone wrestling to come through. But nobody can and may escape critical situations inevitablecoming with the nodes. We should make it a rule for live never to try avoiding them. On the contrarywe are encouraged to master them and indeed pass through those bottlenecks in order to enter a nextperiod of growth on a higher level of quality. Lots of literature have been written about how to avoid orto minimize the emergence of crises. Sorry, but it simply won’t work. Better mime the enterpriserscourage in your life and accept Schumpeters’ idea of “creative destruction” and you’re far better off.From our exposition in theory we will procede to present a model with it’s inherent development laws.A next step is the adaption of the model by some characteristical examples taken from realworldpractice to show you that the outline of this model structure holds. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 15. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsWe complete the course with some examples in three appendages on fields that are not related witheconomics or business. However we presume that they are welcome for an additional criterion. Youshould know, that we are always glad with constructive critics and additional information from yourpoint of view.⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 16. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsA. Balmer Rink’s Formula and the Harmonic DivisionA.1 ⇐ Balmer Rinck’s Formula and The Harmonic DivisionAt the outset of our explanation of the model of development we first take a tour through the world ofphysics. This is required to give the new approach a framework and background for reference.From the range of research fields we take a look at atomic physics. There is a reason for starting ourtour with Balmer Rinck and his discovery. The formula discovered will be explained on the next page.Why is Balmer so important? Because with Balmers discovery of the mathematical background for theoccurrence of a specific spectral lines signature we, for the first time, get a glimps of what nature usesas a specific ‘tool’ creating the numerous varieties and increasing complexity of levels of physicalmatter. Scientists later found out, that, with the use of logarithmics (potentials) nature seem to repeatits basic mathematical principle every time again, but each time on a higher level i.e. on a subsequentspectral line signature. The basic mathematical procedure however always stays the same. Havingdiscovered the quotient of this principle is Balmers important contribution to science. Since the time ofBalmer, search went on from Bohr to Einstein putting questions about the nature of the nucleus and itsshell, the excitation of photons and electrons, jumping from one to a next discret absorbtion level, if notexcited enough falling back while emitting X-ray. They discovered that by times the excitation isenough high, that photons jump all over the shells potential barrier and into the socalled continuum orplasma – ionizising and altering the nucleus and its compound.If we realize on one hand how nature procedes to materialize and change physical matter creatingdifferent levels of quality and if we realize on the other hand how this is done, we get a clue whatSchumpeter had in mind defining development as a creative destruction and a leap or a jump to a nextlevel of growth. This higher level would be more suitable and convenient for a next developing stage ofthe original entity. Explaining principle and procedure of the spectral line signature we compare thetechnics nature uses as a kind of template for research on developments procedure in general. Weregard it as an important key process, a method or a rule to follow enabling induction of development.Let’s have a more indeep look at Balmer’s discovery.According to one of the statements of Schumpeter in his Festschrift “Development”3, real and usefuldiscoveries always start with specific experiences on specific areas in praxis 4. J.J. Balmer Rinck was a3 For this source go to (assure internet connection) scroll down to find the link to open ’development.There is also an original text in german language available, for this look at: ’Entwicklung’.4 Quotation from Schumpter: “Development” 1932 p1: A preliminary remark is in order to protect the following unpretentious considerations from obvious misunderstanding: Everything I will have to say is to be understood from the perspective of each particular science, and not in a Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 17. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsSwiss mathematician and physician, who, in 1885 defined the second of a set of six different series5describing the spectral line emissions of the hydrogen atom. Balmer discovered the visible part of theelectromagnetic spectrum and in that year 1885 used an empiricial equation for it: Where λ (gr. Lambda) is the wavelength in Ǻngstström, n—referring to the ground e.g. lowest energy level—is equal to 2, m refers to the principal quantum number an integer above ground state of energy (m > n), C is a constant (potentialbarrier) with the value of 3.6456×10-7 m or 364.56 nm. The Balmer series is characterized by theelectron transitioning from m ≥ 3 to n = 2. The next levels or transitions are named sequentially by agreek letter: Starting m = 3 to n = 2 is called Hα (Hydrogen alpha), 4 to 2 is Hβ, 5 to 2 is Hγ, and 6 to 2is Hδ. As the first spectrallines associated with this series are located in the visible part of thespectrum, these lines are historically referred to as "H-alpha", "H-beta" and so on. The spectral lines ofhydrogen correspond to steps—though not yet jumps which in turn we would compare with anexpression of J. Schumpeter as a: “creative destruction”—promoting the electron within its shell tovarious energy levels. In general theory, excited photons promote electrons to higher levels or fallback while emitting X-ray as soon as energy returns to a lower state. The thing to remember here isthat the innate potential to ‘step’ of the excited photons can increase to a real jump and override thepotential barriers of the atoms shell with its specific energy levels. In consequence they can unbound,freeing themselves into the socalled continuum and from there transforming the nucleus into a higherorganized atom with a changed shell and spectral lines signature. In science this potential barrierspenetrating jump is called the process of i o n i z i n g the atoms nucleus. Ionizing of an atom meansremoving electrons from their genuine orbit system (shell). The imaginary space between two shells orpotential barriers—the continuum—is indicated in the energy level diagram of the Lyman and Balmerηερε. Thus, excited photons with energy exceeding 13.6 eV (look again at the foregoing graph) canmake electrons disappear into the continuum ionizing the nucleus. The ionized nucleus reaches a nextpotential level with a different spectral lines signature. So the story goes.6 For us this all is to a certainextend comprehensible. However the magic ‘unveiling of the secret’ for the context of development isthe following:—From the formula’s term in brackets (see Balmer’s formula above) we can derive thesocalled : HARMONIC DIVISION. philosophical sense – if not exclusively from the perspective of one particular empirical science, then, solely from the general perspective of working in the particular sciences. If what is said here, in any case, turns out to be of some interest, it is because it has emerged from an altogether concrete problem found in one particular science. It is further because the awareness that a formally analogous situation is found in all the other particular fields of science and the supposition that such a situation is rooted in the structure of our mental apparatus, were in neither case merely postulated, but emerged afterwards, and step by step.5 There are six different spectral line series: Lyman (n=2), Balmer(n=3), Pascher (n=4), Brackett (n=5), Pfund (n=6), Humphreys(n=7).6 An applet can show you the jumping of the electron on five of the sixt series. The last series—Humphreys series— is not yetdepicted. This animation requires Flash Player 5.0 to see it and the explanations are in german. ⇒ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 18. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsTo keep things simple, we take the first of all series, the Lyman series with m = 2 and n = 1. (See theforegoing graph.) Being a mathematical component basic to development this harmonic division iscrucial for all progress by development. _What’s the big thing about this harmonic division? Here is how explains harmonic division: “Aharmonic division is about a specific dividing of a given linesegment. In geometry, harmonic division ofa line segment AB means identifying two points X and Y such that AB is divided internally andexternally in the same ratio. In an algebraic equation shown below, the ratio is two (2/1): XA YA = XB YBHarmonic division of a line segment is reciprocal as well; if points X and Y divide the line segment ABharmonically, the points A and B also divide the line segment XY harmonically. In that case, the ratiois one third given by: BX AX = BY AYwhich equals 1/3 in the second example above. Ratios (2/1 and 1/3) are not equal !” So far AX YXHere comes a third possibility to build a ratio (=2/3): = AB YAThis third ratio makes perhaps more clear that there are two o p p o s e d points of view. The leftsideterm of the equatation starts at point A (linesegment AX), the rightside term at point Y (linesegmentYA). The ratio is the same (the rightside terms doubled), but, what’s important to notice, we view thescene from opposite sides. Here a few pictures of the harmonic division: 1. the divided square withpythegorean triangles drawn: ⇒ 2. the same triangle derived from the harmonic division ⇒, and 3. thethree means derived from the triangle as well as the harmonic division ⇒ and compare this 4. with theinherent opposition of forces: ⇒ then we don’t need much calcul at first to perhaps get an idea in whatcompound “harmony” is actually embedded shown in terms of algebra and geometry. Let’s just takecognizance of this and procede with decomposing the quotient in Balmers formula:  m2  λ = C 2   m − n2    Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 19. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsWe see that we can do this decomposing into basic quotients to derive the harmonic division. For thededuction we use m = 2, and n = 1 equaling the value of the first of seven of spectrallines signaturescalled after it’s discoverer Harvard physicist Theodore Lyman (1906): Fig. D Balmer quotient with Lyman valuesSo the squared term in the equation indicates the result of the harmonic linking of that inner and outerdivision as is shown by the harmonic division. From the quotient of Balmer’s formula and the harmonicdivision (again: m = 2 and n = 1) we can also derive the famous pythagorean triple: 3 : 4 : 5. Wealready showed you the graph (⇒). To get this extension we simply draw two semicircles onlinesegment AY connecting all four points AXBY. As you can see it shows a clear relationship: Alldevelopment starts with a potential controverse situation, shown as semicircles being linked.Remember this carefully: It is thís energetic, tenseness, and intertwined situation, which the ancientgreek called ‘harmonic’. Of course from this ancient point of view we nowadays differ in opinion abouthow to define harmony. To us, harmony is a way of arranging pleasant sounds, objects and colours.Harmony however according to the opinion of the ancient greeks is the linking—the ephemeralagreement on a specific place7 of genuinously different, even opposed forcesiv. ⇒So, to summarize some conclusions: A geometric harmonic division divides a given linesegment likeAB harmonically into two different line segments. If this is done in a manner to really show the innateopposites you will get the same ratio. From segment AB segment AX = 2/3 and from YA segment YX= 2/3. From starting point A (AB) there is a ratio directing to AX and from the ending point Y (YA) thereis a same ratio directing to YX. In both cases the ratio is the same (2/3), but each time we take theopposite point to start. ⇒ Please put your mind on this, because it is important to realize that: The law of harmonic division is the result of an—ephemeral—linking of opposed starting points causing ‘harmony’.What are implications? To really see the implications we have to complete our deduction. A sounddevelopment like in the field of enterprising is defined as well restricted by principles causing harmony7 We assume, that, If an ancient Greek would describe the function of his temple, he would probably state, that his temple is thespecific place in which the ephemeral agreements (daily votive offerings and rituals) between strictly different entities (god andmen) take place. These consecrate activities—according to the Greek—is the constant attempt to create harmony momentum. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 20. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionscoming from opposed directions i.e striving from opposed forces, because as will be seen in a nextchapter in an ultimate sense the linking of the opposition—and, if critical enough vor the next changeof state, emerging in logarithmic periods—can be defined as being an encounter of rational as well asirrational forces with there inherent different principles. Through the fact, that during developmentthese opposed realms regularly meet each other in the harmonic division, progressing from start tillend, we see the cause behind the appearances of nodes and thus from crises appearing.Now, what we assume in the context of development as well, is our sensitive apperception of a kind ofretrograde motion occuring while our development passes the periodical nodes. This doesn’t occurphysically. It’s just our experience of an illusion. What’s a retrograde motion? Spoken in terms ofastronomy: Direct or prograde motion is the motion of a body in a direction similar to that of otherbodies within its system. Retrograde motion is motion in the contrary direction. Search the internet tofind applets depicting a retrograde motion to8. In the field of physics we can show the emergence ofnodes by a simple synchron movement of two waves with slightly differing wavelenghts. In astronomywe can demonstrate the occurrence—and the illusionary impact—of a retrograde motion through theorbiting of two entities on two distinct levels around one fixed centre, observed from one of the orbitingentities. As in physics we as well state that retrograde motion is the optical illusion of the movement ofentities with different orbitals caused by the point of observation, though our sensening of that fact isnot.We introduce to you a second phenomenon. Though it has nothing to do with the formula’s mentionedabove nor with retrograde motion. We just want to give you a next example of this peculiar passing ofa node necessary for the entering of a next level of quality.If we heat water in a glass while looking at the constant rise of the quicksilver bar of a thermometre weput in the glass, water will reach a temperature of 96°C and start boiling—correct? Not correct,because for the boiling it actually needs 100°C. However for a moment the indicating quicksilver barjust slowed down. After reaching 96°C we—again for a moment—don’t see any further rising lookingat the thermometre. The difference is 4°C. We now look what happens in the other direction: If wedecrease temperature, water can fall to 0°C before turning into ice—is this correct? Again no, for, to letfreeze water to ice temperature actually requires –4°C. So, in both cases we don’t know observe wateras a liquid with a temperature of +100°C or -4°C. Instead of real water we have either gas or solid ice.Look carefully: At 96°C increasing and at 0° decreasing the temperature the quicksilver will slow down.And it will take a short time till water starts to change it’s state to either get a solid or evaporates togas. Obviously, in order to change its states, water passes nodes of ‘development’ as well. It will reachanother level of quality or state—be this gas or ice. During the short time water passes it’s nodes tochange it’s state we, looking the thermometre, can’t observe an increase or a decrease of temperatureat first. We of course don’t know if it’s experiencing a retrograde motion while changing the state, butwhat we do know is the fact, that it can only change it’s state trespassing a node.8 An internet link to one of the numerous java applets which shows pretty clear what retrograde motion is. (You will need a java plugin.) Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 21. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsThis is the simple conclusion: The trespassing of nodes in a process of development is positive relatedto the entering of new states or levels of quality. It has important implications for our conventionalview on development. We could of course start a discussion if water indeed can ‘develop’. Suchdiscussion however would nevertheless miss the point. Water can’t develop in a sense living entitiescan, but it is highly sensitive acquiring kinetic energy not being in nodes—as is growth. Water is alsohighly sensitive acquiring potential energy while trespassing a node unto other levels of state orquality—as is development. A thermometer can show an increase and decrease of kinetic energy, butit can’t show an increase or decrease of potential energy (let’s say skill). The quicksilver simply stopsincreasing. So, observation of half of reality is enabled. It’s the physical side. Development is linked tothese phenomenons as well. Here comes the first of the implications. We can see nodes occur as aresult of two waves with slightly different wavelengths. They diminish the amplitude of the resultantwave. In development we experience those same nodes the same way as stagnating highly criticalsituations. Thus in order to explain development with it’s nodes we need the assumption not only ofone wave as used for instance to show the business cycle but of two waves. And if any nodes in theflow of development’s progress do appear, then these two unsensed waves have: 1.SYNCHRON MOTION—e.g. processing within the same shell—in the flow of time 2.Slightly DIFFERENT WAVELENGTHS (frequencies or speed)9 3.a third fixed point (nucleus) to SENSE the ILLUSION of retrograde motion during a node.In development we observe, that a crisis is the mostly tragic impact of the passing through thesenodes—the meeting of initialy opposed forces—, as discussed above, necessary to gradually reach atarget at the end of development. Here you see, that our view on harmony needs a revision. Harmonyis no big ‘relax, have a seat and listen’ idea. The emergence of harmony, or let’s say harmonic, in theway it occurs in nature is a sudden robust change of all fixed variables—experienced as a most criticalsituation. To make the critical impact of this ‘harmonic’ even more clear, we have to add some moreinformation on what typifies or characterizes both opposite worlds, which will be done after explainingthe three means: the arithmetic, harmonic, and geometric mean (hereafter with abbreviations: am, hm,gm).The idea of Balmer’s discovery was subject to further scientific research. From his definement we seethat in the field of atomic e.g. nuclear physics Rutherford and Bohr, Heisenberg, Hahn a.o. contributedto develope, refine and apply atomic shell models. At start Einstein was very enthousiastic about thefindings. However seeing that in the hands of scientists like W. Heisenberg (who later on derailed finalresearch in german projects for moral reasons), this knowledge was used to build nuclear bombes hegot shocked. Let’s quote from an article written by Hugh Gusterson published by Global Research:9 Spectral lines theory acquires the assumption of wavelengths discretion subject to integers of variable n: ny → n y −1 Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 22. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions "The attitudes of those working in the life sciences contrast sharply with the nuclear community. Physicists since the beginning of the nuclear age, including Albert Einstein, understood the dangers of atomic power, and the need to participate actively in managing these risks. The life sciences sectors lag in this regard. Many neglect thinking about the potential risks of their work."10The uranium bombe—developed and constructed by german and american physicians—turned out tobe the scientific result of a search for the power of ultimate power through destruction never intendednor used by mother nature.As in the situation of the excited electron transitioning from one energy level to a next, entities thatneed to be developed as well—f.i. the launch of a firm—need excitation in form of a vision or acreative and sound idea, that gets a haul of enthousiastic energy and sufficient financial resources tomaterialize over the long run of say 30 years. This idea emerges in the head of an enthousiasticindividual and is never the result of a discussion about the utility of an idea of a range of boardmembers of some corporation, institute or a policy party. A fertile idea is a sound idea for enterprisingwith rational expectations promising a high return on their investment (ROI) in the long run. The thrustinvestors put in a fertile idea is inextricable linked to the thrust they put in the individual enterprisermaterializing his idea by launching and leading his firm. Again to put thrust in an individual makessense, but to put thrust in the strategy of a collective of a group mutual agreeing in the utility of a firmto be launched is at odds and will hardly hold. So take cognizance to this: All development can start only with entities capable of excitation - individuals and the subsequent materializing of their sound ideas for the long run.On the other hand a firm relies on it’s customers. Their behaviour, targets, and plannings for the futureis crucial for the strategy and tactic of the firm to survive. The bigger the firm gets the more customerswill be attached to it, the more interests are involved. The more ROI of the firm will need to change it’scomponents, because—gradually—ROI will not only consist of pure financial interests any longer. Thisneed some explanation: In this context with the term ‘customers’ we mean everyone in some way andto some extend linked to the firm, be it customers, stakeholders, investors, managers or government.If we look in a broadened scene at the range of interests somehow linked to the firm we can look f.i. atthe plant’s location. Interests can be highly conflicting if only the enterpriser’s interests are beingmaterialized. So in order for firms to survive they become gradually more dependent on the communityof it’s location or within the virtual network they are operating in. If input can not be materializedanymore to a satisfying output (with or without changed ROI) firms are going bankrupt. This will be inall cases when throughput of resources or production factors (input) may still lead to high quality10 Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 23. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsproducts, but nevertheless do not lead to sufficient ROI anymore. Firms then suffer from resources’entropy. The only solution for survival is enhanced concentration on the skills best acquired duringpast development, a turnaround management project, the firm’s embedding in greater industrialnetworks and/or the launching of a series of new small firms with the same identity. The key idea is toconcentrate the firm in some way with respect to the community to meet it’s interests again. All individual development will end by an entropy of throughput capacity of the entity. If development stayed sound, society will tend stronger and finally it’s interests will supercede.This knowledge can lead to important inferences: 1.Real development at all time starts on an INDIVIDUAL base. 2.Development can not be extended (or restarted) without a RECURRENCE of conditions equal or similar to the conditions at development’s start. 3.Development will always end if ENTROPY of throughput offsets the benefits of ROI.Comprehensing the general idea of development conditions and of nature’s methods with respect todevelopment enabling to create all her varieties is important indeed. Therefore it is perhaps a goodthing to stay succinct. To conclude this chapter we return to the first topic and add some graphs thatshow you the spectral lines signatures on a specific grid already introduced in this unit. It is thelogarithmic grid. A section of that grid we showed you before. ⇒ But remember this grid ? ⇒ It showsa series of those sections as a rythmical recurrence of the first development stage on subsequentlevels! Unfortunately even recurrencies of this kind do not promise the firm’s ‘eternal life’ and can leadto an end, which we shall explain later.11⇐As an assignment: 1. Go to hotpots and fill out the gaps in the sentences. ⇒ Sending your results tomy email address, please 2. Write a brief summary of the contents of this unit in your own words.Blended learning involves three educational methods:11 ⇐ For a background please read this paper of a speech Schumpeter in 1931 held for the readers of Keizaigaku-Ronshuof the imperial university in Tokyo. It’s english written  Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 24. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions •distribution - the individual gathering of information f.i. lessons units. •feedback - the interaction part; small tests, modules, forums, journal, chatting. •collaboration - the real project part. The first part can be done on your own. The second part is teamwork. Feedback tools which you can do together. The third part you should do with additional help from outside practice.So, for the feedback build teams (all of you). Then: •discuss the points of view you have acquired by reading this unit. (15 min.) •specify, what implications in praxis de velopment could have with resp ect to the terms and conditions explained. (20 min.) •write a short essay applying the knowledge to your own experiences in life. (2p. A4)We skip the project part at this first unit.⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 25. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsA 2. ⇐ Society’s Progress—Development is linked to Scientific DiscoveriesSeen in a broadened sense we observe the fact, that Balmer’s discovery in the field of theoreticphysics was not a ‘standalone’ and out of the social context of the days. Researchers in all kinds ofdisciplines became curious and strived to lift the many hidden mysteries of nature. As a research topicthey as well got sensitive for the ‘quest for the development principle’ as employed in nature. Since theera of Enlightment society in general was evolving from an exploratory life heavily controlled by thechurch or other under patronage of the feudal aristocracy into a situation were scientific explorations,research, reasoning and development started to set the scene. Aspirations to enhance objectivity andtransparancy in science, to gain individual freedom in political and cultural, and to explore rationalismin social fields were trendy. The psychological cause for this change in mentality can obviously beseen in the coming into prominence of capitalism into society. Gradually the influence of capitalismled to a change in apprehension of moral and social values, of ‘humanities’. One of the impacts ofcapitalism was, that people lost traditional bonds which bounded them to their community. In the UK inthe early decades of the 20th c. questions raised, if capitalism could provide a comparable socialstability as experienced before. Schumpeter’s opinion being a known economic was appreciated. Hestated, that capitalism could provide in a technical stability, but called the economical and socialimpact of capitalism to the people as a kind of “throw on their own resources”. Here we quote from aspeech hold by Schumpeter in 1927 in Leeds in front of the Board of the British Association for theAdvancement of Science: “If we take a look back we see that in the Middle Ages people lived in an environment essentially stable. There were the church, the castle, the village community, the communal processes, which carried things on year after year in essentially the same way, and neither church nor castle were discussed. There was no reason to discuss them. Discussion was always the precursor of revolution. Thus the environment of the day made the minds of people stable. It was not a system of castle and churches to which they were attached, but a certain visible church and castle and community and a family life quite different from the modern family life. It was an essentially traditional way of life and thinking. These did not exist anymore. Capitalism, with its private property and the motives of private property, was tending to destroy them. It broke up the village community and two things necessarily followed. People lost their sense of anything absolute existing and of the existence of something which commanded allegiance irrespective of personal judgment. Hence they were thrown on their own resources. They had to fight their way on slippery ground, and doing so naturally focussed their attention on the rationality of their behaviour, on Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 26. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions producing something that would fetch what it had cost at least. The feeling of dependence on their own judgment influenced their culture, duty, mentality, religion, art, and so on. It tended also to cut a man off from all his humanities to other persons and things which in the past were among the most valuable of stimulants. Many of the things dear to our fathers were dear [to us] no more. Not only the bonds which formerly bound an employer to his factory and workpeople, but also the bonds of private life, the relations of man and wife, of parents and children, did not mean now what they meant when they were a necessary form of survival.”12If we look at this change—but in the context of development—we see that since the introduction ofcapitalism society experienced a kind of split up or diversification of its social structure. Capitalismhad its few though strict principles (compare these principles with today real world practice): •private property and private initiative •production for the market and the division of labour •enforcement of these principles by government rule •financial resource creation by banks (legalized fractional banking system)Together with capitalism a social shift prone to the above principles occurred, which created: •a small upper class of a few rich industrials •a big labour force of dependent people with an ‘organized’ income •a shift of population from rural to urban society •a stagnant pool of a few unemployed, left behind in a desolated state.Due to the induction of capitalism in society of most of the nations, the role of church and landlord wastaken over by other institutions like governments, with its rulemakers and politicians. U.K.’ and laterU.S.’ led liberalism and capitalism enforced society the social ‘throw on the own resources’. The fewthat could not bring up there own resources in a sufficient way which would enable them to survivestayed dependent on government. Since then government provided them with institutionalized formsof ‘human aid’. Together with the uprise of liberalism and capitalism, with its rationalization of socialand individual behaviour we see a next and most significant phenomenon occur: The economic boomsand depressions caused by the uprise of the business cycle.This uprise of the business cycle was the necessary form economic evolution took under capitalisticconditions. And the questions for economic and social stability coming in around 1927 got its robustanswer; the boom—destroying equilibrium—followed by the depression—creating equilibrium: twocharacteristical trends of the business cycle. In 1929/30 an economic depression—never experiencedbefore— occurred in the USA. People were unknown about any tools to manage the amplitude of thewave of the business cycle and for a moment they were baffled. The occurrence of this very unstablesituation in economics was swiftly followed by political and social instability. It was clear that society12 „The instability of our economic system“ Speech of Schumpeter held in Leeds in 1927. Published in Manchester Guardian1927, and The Times 1927. see Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 27. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionshad entered a totally new era. With the introduction of capitalism and the business cycle society wasshifting—let’s speak in terms of development as introduced here—from a : “linear grid into a linear + a logarithmic grid” !With this unseen shift of terms and conditions, determining the change in background, all principles ofdevelopment were induced for the first time in mankind. Of course people had to struggle with the newgiven ‘logarithmic’ rules of development. But they learned to take over responsibility. And so they tookcare for their individual lives. Through rules and their institutionalized enforcement on governmentallevel they started to take care for the poorest and for the entire society to survive.This is just a scetch of the broad social context which however should be seen as inextricably linked toindividual scientific discoveries summarized to mathematical formula’s like those of Balmer, Bracket,Lyman a.o. To mentally link the uprise of the business cycle with it’s booms and depressions withseemingly irrespective occurencies like scientific discoveries, we can learn to discern and can indicatewhat concerted facts led to a global change of society’s structure. To do so, we don’t stress a logicalstring of single facts, but we put characteristical events in a context that enable us to perceive theimpulse, in what way society is on the march to build up a society’s structure that strongly differs fromthe one known since the Middle Ages.In order to induce development it is necessary to start a concentration of powers by way of individualinitiatives like is the case with capitalism. We can see as well, that such a massive concentrationinevitably leads to a freeing of boundings of former social structures, leaving a few at the opposite sitethat—at the same time—are forced to experience a great loss and isolation on all levels. The fact thatsociety as a whole can not be left on its own, but has to be organized and managed as well gavefinally rise to the opposed principle of capitalism and open market economy, to the theory of plannedeconomy. From this it was a short step to the collectivistic policies of socialism and communism.There is something inevitable in this contraction and spreading of powers. Sea starts to swell. In termsof development it is a condition sine qua non that such a beating of forces takes place. That the theoryof planned economy by communistic principle didn’t work out as planned was due to the fact, that itoccurred in space and time NEXT to the synchron evolvement of capitalism (like in the SU, in China,Korea, and Myanmar). Instead of creating and materializing a theory of planned economy, this impulseshould have been embedded into the development model of capitalism and liberalism itself—simply asthe economic scene of development’s final stage. This fortunately start to happen now. So, torsos ortrunks of stages of the model of development were materialized at the same time in several countries.The torso of developments start is represented by capitalism, introduced in the US, the UK, Australia,Canada, and Europe; The end of development is represented by the range of collectivistic theories,introduced in countries like the SU and the PRC. In the course of time, both sides experience amissing part in developments inherent structure. Such a power contraction could never have beenocurred in the MA, in which daily live was ruled by values of tradition. However economic developmentcan not be induced by a day-to-day ‘caroussel’ of economic events. Instead it bears all charactistics of Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 28. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsunfolding, evolving potentials, of being a project; it shows a plan, a start, a way to go, it experiencescrises, it matures with the expected output and finally it is brought to an end. Considering betweenindividualism and collectivism, leaders, politicians of course choosed the trunk of the development’smodel what they thought would best suit their country. Being opposed to all negative influencesentailed to capitalism, communistic leaders didnt focus on individual freedom (demand-consumption),but on the contrary stressed the distribution aspect of people’s collective wealth (supply-production) inorder to satisfy individual needs. One might argue that in the end choosing the one or other policydoesn’t make much of a difference. But it does. And so it holds true, that those leaders, choosing theend trunk (communism and socialism), were at first far more worse off, because—in spite of the fact,that they were absolutely convinced about the value of their social collectivistic concept—, in realworldpractice they cut off themselves from development before it even could start out. That was theeconomical, political, and socio-cultural tragedy as a result of the rationalizing behaviour and of thetrial and error method worked out in the 20th century.History came with the prove, that for the main part the choice of the collectivistic minded turned out tobe of target from the start and the choice of the capitalistic minded turned out to be stained by greatestsocial deficiencies on practically all levels at the very end. So, question remained: — Who was in thepossession of the right key? - As an assignment for this second unit write a short essay in your own words about the business cycle, its characteristics and first occurrence in society. - Since about the19th c. society of industrialized nations evolve into mainly two political and economical systems seemingly opposed to each other. Discuss this topic in your team striving the historical context, the reasons for their appearance and final decay in the last decade of the 20th c. Put the findings together and get the point by choosing one or two of you to make a short review in front of class with use of presentation tools (black- whiteboard, beamer (slideshows, filmed interviews, dvd’s?), visuals with ohp etc. - As a first project : Look for practical solutions to embed : •the principles of socialism into policies of countries based on capitalism. •the principles of capitalism into policies of countries based on socialism. This is teamwork defined by the method of: 1.making your own individual written down point of view in advance 2.a meeting of the team members discussing the matter from all sides. 3.coming to theoretical e.g. practical solutions—only as a result of the meeting! 4.question: can you find Schumpeter remarks in this matter? (late Schumpeter) Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 29. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions Admittedly you can contribute to, but not really find a solution on your own, because it would contradict terms and conditions of development, that as a rule need harmony of opposites. You can forward the opinion of the team and do not need to agree being still personally convinced of a different view. While looking at some websites for solutions just keep it simple. Here are a few pages:,2763,1098533,00.html◄ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 30. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsA 3. ⇐ Schumpeter’s Definition of Development and Distinction from Growth Development is changing all variables previously known ! So, if we restrict ourselves and just look at development of firms—in the end firms are basic to all society’s progress—, then development can’t be characterized nor foreseen by a trend regressionline. Development isn’t characterized by the idea of the unfolding of something identical. In development variables don’t stay within their conventional context, they change simply because context changes. A change of context is dramatical, occasionally experienced as a great luck, accidently causing a tragedy. But at any time it’s impact always results in the emergence of the unexpected. Again development can be and was paralysed by influence of a bad policy of governments, but it can’t be induced by the policy of the good ones either. Business is not a matter of governments but of enterprisers. Though we Schumpeter (left) with a personal friend observe the fact, that governments have strong links to named Redvers Opie in Bonn. certain enterprisers, which of course can give governmentsa strong impact on economy. Apart from government’s main task to control by rule and to provide afair distribution of the country’s wealth it can—to some extend—outweigh unexpected trends throughmonetary and fiscal tools, but neither rule nor governmental policy can really give the kick-start of anindividual excitation (enthousiasm) affordable to materialize a firm’s idea with goods and services. Itcan work on a propitious environment giving incentives necessary for firms to invest. By doing sogovernment can contribute to stabilize productivity on a favourable level to keep economy ongoing.However the efford to make a stable trend upwards just by outweighing instabilities towards a futureequilibirum will hardly be government’s policy reaching through. The business cycle tells us that—forgovernments—the best recipe to achieve a prosperous economy is not only characterized by“stabilizing” upcoming instabilities striving to equilibrium, but additionally by granting the industry theflux of the business cycle - with it’s booms and depressions - and by providing sufficient incentives forindividual business activities.These are some thoughts explicitly in the line of Schumpeter’s reasoning. It is not our aim to give a fullreview of Schumpeter’s main thoughts on economy or biographic details. Together with KeynesSchumpeter was a leading economist of the 20th c. and made crucial contributions to economics andeconomic reasoning. He was not the kind of a shrewd thinker as Keynes perhaps has been, but he Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 31. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsinstead seem to be a wiseful man. For the first time in economic history he specified development as aleap to other quality levels changing all fixed variables. By explicitly devining development as the jumpinto a new level of quality he distincted it from growth and it’s only possible change by way of everdiminishing to infinetisimal marginal utility rates.So in order to introduce development in a way we presume be appropriate, we stress the importanceof J. Schumpeter. This can probably best be done by referring to one of his articles, a speech writtendown by Schumpeter in 1932 already in the aftermath of the Great Depression. 13 Before quoting him,let’s have a look at the logarithmic grid of the Lyman spectral lines series. We would like to point at thegradually decreasing spaces (see: ‘Gosschen’s law’) between the various spectral lines within thesignature (indicating possibilites to ever decreasing steps to a next spectral line) as well as at thecontinuum space after passing the Lyman’ potential barrier a space between other spectral linessignatures. ⇒. The graph indicates clear what Schumpeter had in mind, explaining growth as beingthe result of ever decreasing steps of marginal rates of utility caused by rational reasoning anddevelopment. It’s a leap or a jump into a total other quality level as the result of creative destruction.First of all Schumpeter defines the problematic of the traditional view on development. According toSchumpter development does not involve things that stay identical: “The ambiguity of the unfortunate term "development" requires a <…> remark <….>. Expressions such as development or unfolding suggest the idea that some of what is developing has to remain identical, an idea that can readily be the source of prejudice and aberration.”People are used to understand changes—characterizing steps in development—only, if they can giverationalistic or logical reasons pointing to a cause for the change of variables even if this changeshould appear as a change in norm. As an example he mentions the attempt to explain evolutionlogically by way of adaptation to changed circumstances as with Charles Darwin’s theory. Schumpeterstresses the fact, that we can reasonable understand things changed, when we put them into arelation to each other. “The fundamental economic truth, which is primarily accessible to observation, can be formulated as follows: all observable variables seek to place themselves in a certain relation to each other, or in other words, they at all times react adaptively to changes in data.”It is obvious that these changes in variables are but reactions of the previous cause. So, peopletend to capture all changes in datas/variables as results from a cause. This enables an explanationfrom as historical point of view. Schumpeter continuous: “Obviously, the point at which this procedure fails is where a leap-like change of the norm occurs. Where such a leap-like change of the norm follows a leap-like change in the data, we cannot say anything about what will happen in our subject area, except13 Internetsource. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 32. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions for some trivialities or vague conjectures. From the perspective of each particular science, however, we can consider ourselves excused – we will shortly see that from a more general standpoint the matter is not quite the same – which is why we now want to part with phenomena of this class. In the case of a jerky change of the norm that erupts spontaneously from the system itself, the same problem is much more serious. An example can best show what we have to think of in the economic sphere: Without further ado, → a continuous increase in population and wealth explains an equally continuous improvement of roads and an increase of the mail coaches in circulation in a step-wise adapting manner. But add as many mail coaches as you please, you will never get a railroad by so doing. This kind of "novelty" constitutes what we here understand as "development", which can now be exactly defined as: transition from one norm of the economic system to another norm in such a way that this transition cannot be decomposed into infinitesimal steps. In other words: Steps between which there is no strictly continuous path.”To distinct this defintion of development from the one of growth: “Only recently have I also become aware of the fact that precisely the kind of change defined above is often excluded from the notion of development and is indeed considered the abrupt termination of what many want to understand as development, i.e. change that in some sense or another is "lawlike" and predictable, essentially continuous, and within which each state becomes intelligible when it is based on the previous one. <…> What is called development in the sense just mentioned, I usually call growth – which may, of course, also have a negative increment.”We admit the lots of quoting to reflect the view of Schumpeter for an appropriate understanding ofthe term development and it’s differing from growth. But let’s keep this in mind: As transitions of anexcited electron from one spectral line to a next one—proceding in ever decreasing steps within thesignature—differ from the absolute jump into the continuum, while ionizing the core of the atom, inthe same way will growth—steps defining growth—differ from development—jumps to other levels.Therefore a change in norm or level—be it productivity, quality or a chemical change–is not causedby excitement within the shell—called growth—but by a sufficient amount of excitement causing ajump over the shell’s critical potential barrier—called development. If you get this idea, you willknow the difference between a closed system focussed on growth, stability ánd equilibrium and anopen system focussed on envision (german: ‘Gestalt’), on dynamics of destruction and creation.Dynamic development always involve growth, but actually enables the typical jumps to a next level.But, as Schumpeter stressed, the mess we make reasoning with the same expressions yet thinkingwith total different contents is a greatest barrier for understanding and research. Let’s jump over Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 33. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsthis conventional barrier and understand what development is about.⇐ 1.Quiz with ‘hot potatoes’ software ! Click quiz sites 1 to 5 ⇒ to answer a few multiple choice questions in my quiz. (As soon as you click, testtimer will start running – we test comprehension and distinction, so take your time and send your results to my email address for grading. And please, mind correct writing - bad writings is bad gradings!) 2.Build a team and try to find out—f.i. by internet—, •what opinion did John M. Keynes have about J. Schumpeter’s ‘heretic’ contributions to the business cycle in economic theory? •Discuss this topic with each other: In a closed economic system—focussed on maintaning stability, rational control and equilibrium of the economic system (Keynes)—enterpriser’s profit is regarded as a surplus and actually a spill, just handed out to keep business going; however, in an open dynamic economic system—focussed on dynamics of change and of the increase of productivity (Schumpeter)—enterpriser’s profit must be regarded as a necessary resource to finance the productivities of the future enabling the creation of future jobs. The rationalist argues, that taking individual profits is something amoral and resources should be returned to society (socialistic view).The irrationalist argues that profit—and thus capitalism—is not an amoral thing at all, because it secures the maintaining and creation of jobs for society. 1. Guess who is right ? 2. What has this discussion to do with growth and development? Tip  : Discern between economic theorists focussing on maintaining static equilibrium (growth) and those economic theorists focussing on creative dynamic destruction (development). And here is a next precious tip  : 3.Schumpeter once had a job in Cairo, Egypt. What was he actually doing in Cairo and what noble person in particular was interested in his financial advice? (tip: internet search) Lucky for you? No collaboration part as a project. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 34. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsA 4. ⇐ Applications of Keynes’ Model : Keeping up Development by Blowing DebtsIn this unit we added a lot of text. Again your task is to read it carefully. It provides an overview of themain trend of development in economy. The Great Depression of the 1930s and all it’s subsequenteffects for economic reasoning in theory and in politics occurred in the United States. Since the GreatDepression the US had set the trend for development and it’s alignment till today, thus in this unit wewill focus mainly on US economic scenery.In a theoretical sense we will line out the conditions for development in upcoming units, but with thishistorical overview in mind you will be able to trace development’s basic conditions more easily.Conditions at the start of development can change dramatically in the course of development’sprocess especially at it’s end. So while reading try to focus on the slowly changing of development’sguiding principles, as they force the context of economic systems and behavior to change merelybeyond rational reasoning.With Adam Smith in the late 1700s—the beginning of micro- and of macroeconomics—economicreasoning starts with a relative closed system of rational guiding principles operating on a small scale.Today these principles are prone to trends of congenital unpredictable behavior on both sides of thesupply/demand and the monetary sector, in an open unprotected system on a global scale. Thus thetrend goes from rationality to irrationality; from launching ingenuous industrial ideas into society likethe invention of the spinning wheel, railroads, automobiles, electricity etc. to an increase of industrialand monetary entropy as never experienced before. Internet could either bring global society to a radical change of ethic or moral behavior (which will not likely happen) or provoke a stagnation like the one experienced in the 1930s, though—this time—with hardly a tool for a quick restabilizing the ‘old’ shell. So in this first decade of the third millenium development has indeed reached a crucial potential barrier.The central economic question from the dawn of capitalism in the late 1700s has been over thestability of the relationship between production and consumption. There have been roughly threeanswers to this question, yes, no and maybe. Adam Smith, the father of economic reasoning, claimeda completely harmonious relationship, Karl Marx claimed a completely contradictory relationship, twoother economists, Nicholai Kondratiev and John Maynard Keynes, fell between the two extremes. Theone constant between these views seems to have been a common acceptance of the labor theory of Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 35. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsvalue, although not always explicitly stated, but with different beliefs in the labor theorys implicationsfor the production-consumption ratio and monetary policy. In short: Smith believed that productioncould never greatly exceed consumption, while Marx believed that production would catastrophicallyoutstrip consumption.Nikolai Kondratiev believed in a long term—but cyclical—stability within capitalism over forty to fiftyyear time spans with serious periodic depressions. He felt that there was an internal restabilizing factorwithin capitalism, which reasserted itself during serious depressions, with each major down turnholding within itself the seeds for the next upturn.Keynes knew that capitalism could build more capacity than it could absorb. However he believed thatthese imbalances could be resolved through counter-cyclical deficit spending by the federalgovernment. For Keynes, the weak point of capitalism lay within investment, and serious depressionsmade further private investment difficult, opening the door to direct federal intervention through thecounter-cyclical deficit spending. This type of intervention has become known as fiscal and monetarypolicy.Thus Smith created the labor theory of value to describe how a small village economy worked, butMarx later showed the consequences of how the labor theory would function within a larger capitalistsystem, leading to excess production and a serious economic downturn, followed by a politicalcollapse. Kondratiev believed that periodic downturns were resolvable within capitalism. Other longwave writers suggested that new labor-based innovations brought capitalism out of the seriousdepressions, in effect reestablishing the labor theory for another period, of perhaps twenty years.The 1920s experienced a different type of innovation, more accurately, the reapplication of an earlierinvention electricity, to the assembly lines. Electricity-based changes to the assembly lines allowedtotal manufacturing output to increase, while decreasing thenumber of manufacturing workers. A similar trend occurredon the farms simultaneously. The increase in productivity ofalmost fifty percent over five years during the early andmiddle 1920s allowed profits to rise, driving the stock marketforward during 1928 and 1929. Yet as wages failed to keepup with productivity, overproduction increased and amountain of inventory arose, leading into the GreatDepression.The Great Depression marked the end of conventional labor-based, innovation-driven long waves.Innovation during the 1930s continued the model of the 1920s and was more oriented to decreasing Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 36. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsthe number of workers by individual companies, in a partly successful attempt to maintain short-termcorporate profitability by decreasing labor costs. The countrywide effect was that production continuedto exceed consumption throughout most of the 1930s…The description of this economic collapse by Keynes was secular stagnation. Keynes attempted touse federal deficit spending to reemploy out-of work labor, thus in effect refloating the labor theory ofvalue until private investment could restart and support the labor theory again. Only worldwide wargave Franklin Roosevelt the political power to wrest control over the 1920s-1930s-investment model from the corporate sector and direct investment in such a fashion as to rebalance production and consumption through the war. This model of debt- driven consumption continued after 1945, ending approximately in the stock market crash of Oct.1987. There Federal Reserve chairman Alan Greenspan began guiding the economy out of the labor theory of value, towards some new amorphous model. As Internet usage began accelerating in the early 1990s, the outline of a post-labor economy began coming into focus. The conclusion of this lesson unit seeks to show you how the information-knowledge revolution over the Internet is finishing off the Roosevelt-Keynesian solution [war] to the1930s stagnation, probably eroding the labor theory of value permanently and thus destabilizing allprevious explanations for capitalist development. Each of the four economists wrote in different partsof the world and in very different economic times, with little intellectual overlap during their respectiveworking periods. Capitalism was an evolving phenomena, which each economist described to the bestof their abilities during their lifetimes. Each economists interpretation was influenced by the channel ofinformation, which was then available, and by the relative development of capitalism itself.In the classical era of the late 1700s, Adam Smith believed that by way of the price system aninvisible hand kept production and consumption together. Human labor provided both the productionas well as monetary value necessary for consuming the output of others in the village. This labortheory of value as described by Smith and later by David Ricardo, simply stated that the number ofhours of human labor involved in the production of an article largely determined it’s market price.Sixty years later Karl Marx, using this same labor theory of value, claimed that capitalism wasinherently incapable of providing enough total buying power to keep production recycling intoconsumption. He believed that not enough monetary value was being transferred to the working classto maintain the long-term balance between production and consumption. He believed that productionwould ultimately so outstrip consumption that the resulting instability would lead to a revolution by theworking class in the advanced industrial countries. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 37. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsWriting during the 1930s, the economist John Maynard Keynes believed that overinvestment couldlead to excessive productive capacity and that the national inventory (= unsold goods stored) could getahead of total consumption power. The whole economy could almost stop, as was the case during the Great Depression. However, Keynes believed that the solution for such a period of stagnation was for the federal government to run deficits, stimulate consumption and restart production. The seeming contradictions between Smith, Marx and Keynes can be resolved however by reference to another less well known idea, the long wave theory associated with Nicholai Kondratiev. This idea can be compared with an elongated business cycle, but thiswas not Kondratievs intent. Kondratiev was writing in Russia before World War l and around 1915was publishing his theories. These forty to fifty year long waves represented the rise and fall of theoverall capitalist system. He was somewhat unclear as to the exact cause of the long waves andbelieved that starting around 1790 capitalism had had two complete waves of economic growth anddecline, with a third wave rising in the early 1900s. (See this chart ⇒) Joseph Schumpeter believedthat each of these waves had been associated with a substantially new labor-based innovation, whichhad in turn increased employment.Later during the 1930s, Schumpeter revised Kondratievs theory such a way that the capitalistentrepreneur was responsible for particular labor-based innovations, which then precipitated the longwaves. The long wave collapses have occurred the way Karl Marx described. However, so long asnew labor-based innovations have developed, capitalism has rebuilt itself each time from eachcollapse. The concept of a long wave theory or a business cycle theory could not have perceived priorto the existence of more than one such long wave or cycle and the development of sufficiently strongdatabases to supply the evidence for such a theory. The economic data which has existed for much ofthe twentieth century and which formed the basis for the long wave theory of Kondratiev, did not existduring either Smiths or Marxs era. Thus Adam Smith could scarcely have imagined any type ofcyclical theory, based in modern economics. Marx lived and wrote during the long wave down turn ofcotton-based manufacturing and the upturn of the steel-based railroad long wave. Yet, an economicdatabase to explain either long wave did not exist. All Marx had to consider was his theory of capitalistdevelopment, the labor theory of value, the 1840-1850s economic problems and whatever anecdotaleconomic evidence he could find in the newspapers of his era.Adam Smith wrote the first major description of village-level capitalism in 1776, The Wealth of Nations,the same year as the start of the American Revolution. In it, he described how an invisible handseemed to balance out the productive capacity of the village with its consumptive needs. The clearimplication was that production and consumption would at large stay in balance, again with guidance Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 38. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsof the invisible hand. His interpretation of economics was colored by the fact that modern capitalismhad just begun, and the invisible hand did indeed function at least somewhat as he described it.However, the first long wave economic boom was not even on the horizon. When Smith wrote,knowledge was hardly a factor in economy, his invisible hand idea implied that knowledge creationwith the result of renewing quality really matter.Karl Marx was writing by 1850 and died in 1883. He lived most of his life during the first long wavebased upon cotton manufacturing. He saw an entirely different industrial capitalism, than the village-based capitalism of Smith. His life did not end during the first long wave, but his theoretical views wereformed by it. He was unable to see beyond the general tendency of capitalism to eliminate humanlabor and increase machine-based debt in the production process. Thus he believed that theequivalent of a single long wave would rise, crest and fall, dragging capitalism down with it. Marx livedto see the first long wave fall and the revolutions of the 1850s, but could not understand how a secondlabor-based wave might get started and restabilize capitalism. Marx was still alive as the second longwave based upon railroads and steel started, but died before it had crested and fallen.Kondratiev was writing near the start of the 1900s and his major theory was published in the UnitedStates around 1926. He lived after the two long waves of the 1800s had risen and fallen. Thus thecotton manufacturing era and the railroad era had come and gone by the time Kondratieff was forminghis economic views. And a third long wave was making serious progress, that of automobiles,highways and electricity. Kondratiev contradicted Marx, in that he claimed that capitalism was in factregenerating itself through periodic waves of upward movement after periods of downward movement.What defined these upward movements was an internal ability of capitalism to develop newinnovations, which then pulled labor back into the production process after a long wave crash. Thereseems to be an implicit acceptance of Marxs analysis of the internal workings of capitalism, but arevision of Marx concerning periodic new labor-based innovations and upwards swings in theeconomy. Kondratiev did not set forth a theory for the long wave, although he did note that innovationsdeveloped during the down side of one long wave were often later used the next upswing.Keynes had had the benefit of both Marx and Kondratievs theories as he wrote during the late 1920sand early 1930s. However, Keynes clearly was trying to counteract a serious business cycle problemduring the 1930s, at least as he saw it. Keynes did not have a full-fledged theory of the business cycle,although he believed that cycles were largely the result of instability in private investment. In a bookpublished not long after Keynes death, Lloyd A. Metzler described Keynes views on business cycles:“The pure theory of business cycles was never one of Keynes primary interests. In this field, as inother branches of economics, he found the practical problems of the day more absorbing thandiscussions of theory for its own sake... Likewise in depressions, the causes of a cumulative Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 39. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsdownward spiral, and the economic forces which govern the length of this downward movement, werehis main concern... He continued to believe that the fluctuations of economic activity occur with someregularity, and that this regularity can be explained on economic grounds.”14What in fact J.M. Keynes was trying to remedy was thecrash of the third long wave of automobiles and electricity.Unfortunately no new labor-based innovation was ready torestart employment. Moreover, something unique tocapitalist development had occurred on the assembly linesduring the early 1920s, a technique which permitted outputto increase even with a declining number of workers. Athen mainstream economist, Irving Fisher,15 described the 1920s-1930s situation, but a fully satisfyingexplanation could not yet be retrieved. Between 1899 and 1921, manufacturing output rose incongruence with increases in both horsepower and workers, but after 1923, output rose even with agradual decline in the workforce. Thus for the first time in the history of modern capitalism, aninnovation was put into the system which permitted rapid increases in productivity and totalmanufacturing output—simultaneous with declines in the number of workers providing the labor.This was an extremely radical event. At first it drove up the price of stock—since above average profitswere possible from companies employing the new technology. But after the collapse of 1929, the newtechnology permitted the monopoly manufacturing companies to gradually decrease their worker leveland yet maintain roughly the same or perhaps higher output. Even in a situation where production wasdeclining, these techniques would allow the necessary labor to drop even more rapidly than the levelof production, thus allowing the companies a chance to keep profits from collapsing completely.This combined with the lack of a new labor-based innovation was a major reason why the economydid not begin to improve after the initial shock of the stock market crash began to wear off after severalmonths during 1930. During previous eras of capitalism, it had never been possible to have suchincreases in output or the maintenance of a stable level of output, while simultaneously being able tocut the total system-wide number of workers. Thus if the number of people with wages was dropping,even as the nation-wide output was stable or dropping slower than the rate of employee layoffs and ifthose companies were able to keep their prices at roughly the same level—the system was incapableof clearing the aggregate output with the available aggregate wage income. This was and remains agood formula for creating a stagnating economy.14 Lloyd A. Metzler "Keynes and the Theory of Business Cycles", 1947, in Harris, editor, New Economics15 Irving Fisher, an american economist. See I. Fisher “The Stock Market Crash and After”. 1930. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 40. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsA shift in the use of electricity on the assembly line was one of the prime causes of this 1920sradical shift.16 Electricity moved from being a consumer invention for lighting and other householduses, or used in the factories for powering the long, belt-driven assembly lines, into powering a completely new point-of-production assembly line system.This new point-of-production assembly line system was the reason for the radical shift in the ratiobetween labor usage and power increases in the manufacturing sector. This process drove totalmanufacturing output well beyond total consumption power in the US. Thus Keynes faced two seriousproblems as he began trying to restart the capitalist system during the 1930s; •the lack of a new labor-using innovation and •the existing application of an innovation drastically lowering the labor needed in the existing sectors.According to economists, and politicians around Roosevelt only war would begin to bring consumptionand production back into balance. Here John Maynard Keynes had—reasoning in merely economicterms and perhaps unaware of all the consequences—provided the democracies with an economicidea sufficient to finance the war: massive federal deficit spending.Keynes accepted the reality that production could greatly exceed consumption, but he believed thatthe federal government could rebalance such gaps. Keynes believed that overinvestment could leadto a situation where too much productive capacity or aggregate supply would exist for the existingwage-base or aggregate demand to be able to purchase it. In such a situation, as the inventorybuildup gradually forced business to layoff more and more workers, the federal government couldrebalance production and consumption through deficit or counter-cyclical spending. The federalgovernment had the legal ability to run deficits, and according to Keynes, had the responsibility to doso when unemployment became a serious drag on the general economy.In Keynes model, as business inventory was purchased by the federal government, business wouldagain begin rehiring unemployed labor. Federal deficits would increase the monetary velocity andeach dollar of federal spending might account for several more dollars of private spending. That is, thenewly hired labor would again begin making purchases and shortly, the production and consumptionwould again be in rough balance. At that point, ideally the federal government could begin to run asurplus and pay off the debt of the previous downturn.16 Other causes can be seen as the occurrence of prosperity itself or by a big trough caused by the downgrade of all threediscovered business cycle waves.This was the opinion of J. Schumpeter. A cause could have been as well the rising insecurityby the excess of credits pumped into the economy by the Federal Reserve – i.e. the belatedly sop up of this excess and/ortransition of the securities (gold) from out of the UK by depositors. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 41. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsPossibly the overlap between the currently powerful monetarists running the American, European andJapanese central banks; and Keynes lies in the question of monetary velocity, more precisely how toimprove the speed of money turnover during a downturn. For the monetarists, improving interest ratesshould usually resolve the problem. However, Keynes was sure that some economic crises were toodeep to be resolved by simply lowering interest rates and required direct federal intervention in theeconomy. Keynes was not convinced that interest rate policy was any more important to investors thantheir belief that a given level of investment would return a particular level of profit. Keynes emphasizedeffective demand in a complete system: •household demand for consumer •business demand for investment goods •government demand for public goodsHousehold consumption was relatively stable, largely determined by income itself, but businessinvestment was the weak link. Interest rates as well as profit expectations determined the rate ofinvestment. Investors compare known interest rates with expected profit rates to decide how much orhow little to invest.For Keynes, the key to understanding lay in that household consumption would almost always remainclose to the levels of household income, it was almost a constant. The problem, was that investmentdepended upon the perception of the capitalist owners-investors, that more profits could be derived byfurther investment. Thus investment was not a constant, at least not private investment. High levels ofprivate savings would not necessarily lead to equivalent levels of private investment. When forwhatever reason, private investment lagged to the point where employment was in trouble, the federalgovernment was obligated to make up for the investment slowdown. Under ideal circumstances, thefederal government could provide enough economic lift to being private investment back into themarket. The problem with the monetary revision of Keynes theory is that monetary policy and interestrates alone do not determine the decision to invest by the private sector. Low interest rates will notencourage scared investors, if they do not see profits arising from investment. Thus the Japanesecentral bank has had its discount interest rate at one-half of one percent for many months and theJapanese economy is still sitting dead in the water, stagnating—except for its increasing exports to theUnited States. And on the other hand high interest rates will not necessarily prevent investment fromoccurring, if investors believe that profits can be derived above the costs of borrowing.Naturally, low interest rates are generally preferable all around, but interest rates were not the crucialelement for investment. Monetarists seem to believe that the leveraging of interest rates and themoney supply are the crucial elements for keeping production and consumption together. The ideathat interest rates might drop too low to be a factor in corporate investment decisions, the liquidity Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 42. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionssqueeze or liquidity trap, is not generally a part of the monetarist formula of economics. Keynes diedin 1946, not long after the end of World War ll. The British and Americans had run the war underKeynes guidance and he died as the western allies were attempting to rebuild the economicfoundations of capitalism.After World War ll., there was a breakdown of both Keynes and Kondratievs theories. First, thecapitalist system did not return to the Great Depression after the end of wartime deficit spending, aswas feared by many Keynesian economists. And in contradiction to Kondratiev, the capitalist systemtook off on another twenty-year boom, without another major labor-based innovation. What probablyoccurred, is that deficit spending simply shifted from the federal government to the business andhousehold sectors and these new deficits or debts drove economic growth after the war.Thus a new type of long wave developed out of the application of Keynes theories to the GreatDepression—a debt long wave, It was the rapid increase in federal debt from 1939 until 1945, whichrestarted the American economy, and it was the replacement of this federal debt with business andhousehold debt from 1945 until about 1966, which kept the economy booming. Thus two debt waveshave moved through the American economy since the Great Depression to uphold the status quo.Growth have never been automatic, but has come and gone in fairly coherent forty-year waves. Thecrashes of first two waves were resolved though internal innovations, the rise of railroads in the 1850sand rise of automobiles and electricity in the early 1900s. The third crash in 1929 was resolved aboutten years after it started and only through massive federal deficits funding a massive war. The fourthcrash or more accurately, the slow-down in western economic growth which started around 1970; wasalso resolved about ten years after its start, again by a massive rise in the federal deficit starting in1981-1982.Let’s put things together:— The common feature of the crashes of the first four long waves was thatthe crashes were resolved by something which put the unemployed back to work, by stimulatinginvestment. The crucial ingredient to the resolution of all four previous crises has been that paid wageemployment was rapidly increased by something. The initial long wave was probably caused by theevolution of the labor theory of value, along side the creation of clothing manufacturing, themselvesmade possible by the invention of the cotton. Put into rough Marxist nomenclature, each of the firstfour long wave crashes were resolved as the labor theory of value was restored, for another period oftime. Another way of looking at matters, is that this something stimulated investment again, which inturn caused industry to need more human labor, which in turn allowed private consumption to grow.The first two long wave crashes were resolved by increased private investment stimulated first by thebuilding of the railroad grid starting in the 1840s, then later by the building of the highway andelectrical grids starting in the late 1890s. The crash of the third long wave did not have an innovation, Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 43. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionswhich encouraged direct private investment, and the only stimulus was that provided by war later. Inthe 1850s, this something was the railroads, in the 1890s, this something was automobiles andelectricity. In the 1930s, this something was war, funded by American federal debt. In the 1980s, thissomething was the second cold war, funded again by federal debt. Thus the first two downswingswere resolved by labor-based innovations from the private sector, while downswings three and fourwere resolved by the public sector, with large-scale fiscal deficits funding large military buildups.These last two downswings were resolved within a Keynesian model of fiscal intervention by thefederal government. So to summarize we see that in the US it was the creation of massive publicdebts—spendings on the public industry like defense and related public institutes with their largeresearch and development sectors—as an answer to solve the last downswings and adverting fromthe thread of an upcoming global recession and stagnation (crisis).⇐ As an assesment first the quiz comes. Results to be forwarded by email as usual: ⇒ Appearantly public deficits and economic prosperity are variables of just one equation used to perpetuate and defend an existing economic situation. Why? On what field or fields seems the something called ‘public deficits’ not quite convincing? For the feedback part, build a team and give your points of view on the contents of this unit and make a joint abstract from them. The discussion needs resources backboning the individual opinions. Bare in mind that the unit is focussed on development not on politics. As a project draw mindmaps of the contents (discussion issues incl.). Each of you will reflect a specific part of it by either a virtual or an in class presentation. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 44. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsA 5. ⇐ Internet—Final Stages into the Infinitesimal and the Upcoming Jump. I n t e r n e t - Ma r k e t s : Huge Trade and Transitions Possibilities : Welcome Windows to the World Karl Marx originally described a system-wide falling rate of profit crisis as part of his analysis of advanced capitalism.In Marxs model, the increasing use of machinery with a decreased use of human labor wouldultimately so increase total production, that total consumption power would be too low to keepproduction recycling back into consumption. A great inventory bulge would lead businesses to lay offexcess workers and the downward spiral of laid-off workers and decreasing sales would so affectsales, the profits would fall.Today, the Internet threatens to bring about another type of falling rate of profit crisis.An article in The Wall Street Journal described how the Internet is allowing consumers to comparenational prices on given articles, particularly automobiles and to obtain the lower prices: "There is nothing more terrifying than a consumer who knows everything about the pricing of your product,"says Kenneth Orton, president and chief executive of Preview Travel Inc., an on-line travel agencybased in San Francisco. It’s services include a web-based "bargain finder" that scans for cheap airfares. About $3.3 billion in consumer business will be conducted by electronic commerce in 2006. Thistype of falling rate crisis is also indirectly related to Marxs belief of problems related to the use ofautomation to decrease employment. Consumers armed with close to actual cost data for variousitems are a real threat to the profit margins for retailers, and ultimately to the manufacturing sectoritself. As consumers develop the ability to use the Internet to obtain the lowest prices, the retailbusinesses will continue to use the Internet to cut their labor costs: Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 45. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions “But as merchants figure out how to cut transaction costs, eliminating salespeople, middlemen, delivery charges, and processing costs, they may wind up slashing prices, but maintaining or even increasing profit margins. Believers in the "new economy" of the Information Age ascribe huge importance to this possibility.”17In some ways, this possible merchant response resembles what happened more generally during the1930s. Then businesses responded to the Great Depression by continuing the trend set during the1920s, by cutting jobs each year through efficiency increases, at least within the monopoly sectors.Thus instead of a falling rate of profit crisis for the monopoly business sectors, a falling rate ofemployment hit the working population. And a falling rate of pay crisis probably extended across theentire American working class, exacerbating the effects of rising unemployment rates. Both of thesetrends temporarily helped business to maintain profits, but also depressed total consuming powerwithin the country, making future job losses necessary for private business.Private business use of the Internet by just three companies totalled about $3 billion already in 1997according an April report by the US Commerce Department. These same three companies could seetheir Internet commerce approach $17 billion in three to five years, with total business-to-businessInternet commerce approaching $300 billion in the same time span. Almost all of this Internetcommerce will likely result in cost savings (i.e., job decreases) to the companies, not to total increasedemployment.The Wall Street Journals writer tried to find a silver lining in his article: “Some market analysts doubt that the Internet will always be a price destroyer.Over time, though, the Internet may turn out to be more of a price leveler than a price cutter. To economic theorists, perfect market information tends to make prices converge.”Of course, since the market has never known perfect information or anything close to it, theseeconomic theorists could well just be blue-skying. It just as possible that the achievement of perfectinformation will simply drop retail prices to a level, that many brick-and-mortor retail stores can nolonger remain in business, putting tremendous pressure upon the manufacturers to lower their ownwholesale prices further as well. In this view, the Internet is simply another means for achieving afalling rate of profit crisis; one which private business grabbed as a means for increasing profits, butwhich so drastically decreased human labor, that a huge economic and political crisis will result—onepotentially worse than the Great Depression, where at least federal intervention and war resolvedmatters. But the post-1945 economy is coming to an end. We are about to return to the 1930sproblem, without the capacity to reemploy the Keynesian solution.17 Bernard Wysocki Jr., Internet is Opening Up A New Era of Pricing, The Wall Street Journal, June 8, 1998, p. A1. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 46. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions •First, the federal debt-to-GDP ratio is likely to begin dropping around 2005, all other things being equal. •Second, shortly the Internet is going to begin to create service sector efficiency which may approximate efficiency increases in US manufacturing and agriculture during the 1920s. Efficiency accelerated then largely because of electricity, and factory and farm automation. In theoretical terms, we now seemingly have reached a development stage beyond Smith, Marx and Keynes and at the moment political economy is floating in hyper space.The most reasonable thing to do is to keep the market alive until the majority of the infrastructure necessary for a full input- output model is in place. Software components of the new input-output model are being developed by private companies now, although their purpose is to sell the software for profits. At whatever point that realization occurs, the market could take a sharp tumble. Then business will even more rapidly begin to use the Internet to increase efficiency, as will all levels of public government, compelled by dropping tax revenue from a deflating economy. Increasing efficiency is just another term for cutting the work force. Another downward spiral of private investment for cutting labor and decreasing national income will have begun. Stagnation as Keynes described it will have returned yet without the possibility of another Keynesian debt-surge to resolve the crisis. Could be that this time stagnation will not hold the US economy together long enough for something to revive it.18 ⇐ As an assessment please answer the questions from hotpot and send them to me: ⇒ Build teams and come up with causes that would lead to a global change in the economic infrastructure through the use of internet. Each of you is asked to interview a CEO or other manager in some firms: Put questions concerning internet and how it changes their firm. Focus on a SWOT analysis, i.e. Strengths, Weaknesses, Opportunities and Threads with respect to internet versus firm.18 A lot of additional background information—partly written by R L Norman, Jr. Ph.D.— can be found on this webpage: - though most issues are archiv. For additionalinformation see as well Global Research articles: Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 47. Module BMS—D1a Business Management SystemsIntroduction to Development - Its Terms and Conditions Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 48. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsB. The Theory and Model of DevelopmentB.1 ⇐ Terms and Conditions for DevelopmentNow that we gave you a historical review and focussed on some upcoming economic blips, w’ll returnnow to development basics.In the year 1932 the mathematician and polymath John von Neumann put a peculiar question: “What kind of mathematical presumptions are required to prove the law of equilibrium between supply and demand by the pricing system?”In this course there is no agenda to pick up the Neuman ‘32 discussion indeep. However if a replywould give some relieve, we would state, that presumptions to prove would indeed have a basicallymathematical impact. A successful quest for the key solution would probably start with an awarenessof the meaning and implications of the harmonic division for development as introduced in one of theforegoing chapters.To make this clear it is necessary to realize, that the harmonic division does not restrict it’s equation tothe beginning of development’s process which we presumed starting in the non-material cube as oneof the platonic solids, but can be traced and-—based on mathematical principles—demonstrated atdevelopment’s end in the irrational world of the regular dodekaeder as well were the principle of the“golden ratio” or √ is resident. In crystallography we do find principles all based on rationality. Theseprinciples are basic to the creation of physical matter displaying a series of pythagorian triples. In facta simple drawing of a square divided by just a few lines shows us the deep mathematical relationshipbetween the square and the pythagorean triangle. And if a pythegorean triangle occurs we shouldknow by now that such an appearance is in all cases the result of the harmonic division ⇒ Howeverwe will not find any traces from principles with reference to matter in nature that would demonstrate amaterialization of √ — being basic to the regular dodecahedron. This is a most extraordinary fact, inthat the harmonic division is not only a characteristic within the rational world of the square but withinthe irrational world of the regular pentagram as well. Thus the harmonic division does not materializeall which is subject to it. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 49. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsIs this important? Yes, it is indeed. Because, assuming the start of development related to the cubeand the end of development being related to the dodecahedron, we would be capable to trace anddemonstrate the harmonic division to encompass development from its start to the very end just by themeans of mathematics. We would have all in hands! We will show that the three means; the am, hm,and gm are part of the harmonic division. We can trace them from the pythagorean triangle as well asin the ratio of the regular pentagram. They—and with them the harmonic division itself—are the bridgeconnecting start and end of development.Till now there was evidence for the existence of harmonics and rationality in primordial matter likesolids, but there was no such evidence that could show the existence of the golden ratio or √ in nature.Butt this evidence will never be found. If smart people come and show some quasicrystalls or specificforms of virusses in those cases there existence is an ultimate exception on the rule. And should theyexist ánd created by nature, they will cause disorder and diseases in nature’s realms. It are not regularappearances. So the only way to approach development—encompassing the total model—in a morescientific way is by using the logic of mathematics.Summarizing the idea: We tried to explain in a first scetch, that, for scientific approach, development isa process highly based on the creation of opposites, on the encounter of these opposites and onmathematical principles and not just some plan being executed. Thus describing development to makeit a credible thesis, we use mathematics be it not in the way used by operational research. We need ofcourse a bit philosophy, but the final tool we use, is mathematics. The harmonic devision can bedemonstrated being basic for the creation of atoms, molecules like H d , H, and of all more complexorganized molecular matter, hence of all material. We can research things like matter: We can count,measure and weigh physical material. The harmonic division can also be traced and evendemonstrated mathematically in realms where all matter is completely dematerialized. In a situation oftotal entropy where kinetic energy has vanished. It is clear that it’s counterpart—potential energy—must be the sole energy in the end.Therefore it is a most interesting feature, that development as an ungoing process kick-started in ourknown earthern world, but leading towards that unsensed realm of the regular dodekahedron. Thisway is disrupted by nodes of critical situations in which we can see the repeated occurrences ofinitially opposed forces called harmony. Nearing the end these opposed forces gradually converge byemitting their potential resources of kinetic energy, leading the development into a final state of totalentropy. We can trace this process from the beginning right to the end through the three means theam, hm, and gm embedded in the framework of the harmonic division. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 50. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions As an assesment go to the hotpot quiz and answer the questions. Please send the answers to my emailaddress again: ⇒ Build a team and discuss development not as introduced in this course, but as you always used to see it. Map the answer and let one of you bring them forth in classroom. No projects.⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 51. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsB.2 ⇐ Mathematical Approach: The Three means at Start and EndBy kick-starting development, three forces are activated that lead through all development stages fromstart till end. The three means: am, hm, and gm are a mathematical expression for these three forces.We already mentioned the fact, that two of the three forces can be seen as the cause for the amplitudeof the waves and are responsible for the expanding and contracting trajectory of development during agrowth—and decline—period. During these periods data change and in terms of utility are subject togradually diminishing steps—in economics called the diminishing rate of return. However the effect ofthis changing of data can be controlled by rational reasoning (logical thinking). The third force howeveris released as soon as the trajectory of growth contracts again to form a node defining the (first)period’s end. This third force is basic to all the jumping, which Joseph Schumpeter once defined asbeing development’s actual process. But it can be called the continuum force as well, because theleaping is always into the continuum. It jumps from the point of start (we presume this start being in thecentre of the cube) to a first node on the ‘rod’ of development’s way and out of the cube, enabling anext and higher level of growth or quality. As soon as this second period comes to an end again itjumps from this level of growth to a third one and so on. Now the energy of this jumping is subject toentropy smoothing out differences existing in the system and so not only the steps within the growthperiods, but these jumps as well gradually decrease. Forces do converge. So entropy does not restrictitself to abiotic levels. If the energy to jump has decreased to such an extend that no other jumps arepossible, then development can’t recover from overwhelming entropy and has reached it’s final level ortarget. Every time a jump occurs there is a shift of all previously fixed variables of the databases. Forpeople most of the time this jumping is experienced as having an extremely negative impact on theirlive, causing highly critical situations. The main reason for this is a still covered knowledge, that therealm of the regular dodecahedron with it’s irrational principles meets the realm of the cube with it’srational principles on development’s cross roads in all the occurring nodes by the principle of thisinterwining of the harmonic division already explained. Look again at this graph to see what we try toexplain: ⇒ We assume that development is rhythmically pushing away from the point of start, but onthe other hand equaly sucking into the centre of development end, from the cube to thedodecahedron. Hydrogen fission based propulsion systems (gm jumps) are developed on this principle(USA’ “black projects” on UFO vessels).And here comes the trunk of philosophical language we promised you to use: Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 52. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsThe greek Archytas of Tarentum was a mathematician, statesman, and philosopher of Magna Graecia(now Italy) and died about 530 BC. He was one of the few ancient philosophers informing us about thethree means.The means are basic to the harmonic division as well as to the pythagorean triple 3 : 4 : 5. We know,that Babylonians in the third millenium BC were known with these principles already. Here is aArchytas quotation (fragment B2). Let’s see how he thinks about the three means: “…There are three means; the first is the arithmetical mean, the second is the geometrical, the third is the reciprocal, which is called harmonic. As an example: The mean is arithmetical, when the three terms are in a relation of arithmetic mean analogical excess, that is to say, when the difference between the 6 : 9 : 12 harmonic mean first and second is the same as between the second and third; in this 6 : 8 : 12 geometric mean proportion, the relation of the greater terms is smaller [9 : 12 = 3 : 4] 1:2:4 and the relation of the smaller is greater [6 : 9 = 2: 3]. The geometric mean exist when the first term is to the second, as the second is to the third; here the relation of the greater is identical with the relation of the smaller. [1 : 2 = 1 : 2], [2 : 4 = 1 : 2] The reciprocal mean, which we call harmonic, exists when the first term exceeds the second by a fraction of itself, identically with the fraction by which the second exceeds the third; in this proportion, the relation of the greatest term is greater and that of the smaller, smaller.” [8 :12 = 2 : 3], [6 : 8 = 3 : 4] (Brackets supplied.)Having explained, that these means are expressions of the three not yet denominated developmentforces, we have to uncover the existence of the three means at the start, during the nodes and at theend of development. For the start this is already done by showing how the three means are embeddedby the mathematical principles of the pythagorean triangle and the harmonic division. The Balmerformula —in it’s basic shown by the first spectral lines signature of Lyman—showed you how thecreation of all nature (i.e. all matter) is a result of the coming into existence of opposed forces, linkedby the harmonic division. From this the periodic system of all elements can be derived.It is our task now to show you how the harmonic division and the three means are part of the otherside of development—it’s end—as well; i.e. in the regular (mind the adjective) dodecahedron.Though the following could get a bit complicated, but just try to stay on track. In the end we hope it willconvince you of the context in which development is embedded; how it looks like—at least in theory, inwhat way it works encompassing main conditions discussed before. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 53. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsWith respect to the three means entering the dodecahedron two additional mathematical conditionsare to be introduced to you in order to be compatible with the principles of the regular dodecaeder. Wegive theme here: •The greatest term of the triple is the sum of the two smaller terms (Compare that this is not valid in the rational context at development’s start.) •The greatest term of the triple represents an entirety (= one) on each of the three levels: number, measure, and potency. (Tracing the different entirety’s we can distinction between the means in the regular pentagram.)This is rather abstract, so let’s look at what these alterations with respect to the regular dodecahedronmean. As an example we take the tetraktys quadruple 6 : 8 : 9 : 12 depicting the three means in therational world presented by the solid of the cube. The harmonic mean: 6 : 8 : 12Where the difference between the first and the second term ( 6 : 8) and between the second and thethird term (8 : 12) is in both cases the quotient ⅓. (⅓ of 6 = 2, ⅓ of 12 = 4) The arithmetic mean: 6 : 9 : 12Where the difference between all three terms is the integer 3 (or 3/1) The geometric mean: 6 : 12 : ? or ? : 6 : 12.It is clear, that the geometric mean lacks the third term. It needs to be completed to appear as a triple.At first, to derive the three means from the tetraktys we split the quadruple up into two parts: 6 : 8 : 9 : 12 6 : 8 : 12 6 : 9 : 12 (hm) (am) 6 : 8 = 9 : 12 (gm)As you can see the second term of the geometric mean is not an integer, but an equation 8 : 9 with aninherent difference of one integer (entirety). The geometric mean can only complete itself temporarilyduring activation: It adds the lacking third term only during the act of jumping into the realm of the‘continuum’. After the excitement, it falls back into the discrete equation as shown above. However byjumping, the geometric mean already anticipates the end of all trajectory’s in the final stage ofdevelopment’s process. In this final stage it doesn’t need to complete itself by a third term anymore—consequently further jumps become obsolete. Now, characterizing the three means in general we can say that: Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 54. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsNumber as an entirety —being nominator of quotient (1/1)—is represented by the arithmetic mean.Measure as an entirety—being denominator of quotient (1/1)—is represented by the harmonic mean,Potency as an entirety—being a root or log of quotient (12/1), (1/12)—is represented by the geometricmean.At the start of development the first of it’s three forces is represented by the arithmetic mean and theentity is number starting all further progression with the smallest entity possible, the quotient 1/1 (goingup to 2/1, 3/1 and so on) as it’s least common multiplier.The second of it’s three forces is representedby the harmonic mean and the entity is measure starting all further progression with the greatest entitypossible, quotient 1/1 (going down to 1/2, 1/3 and so on) as it’s greatest common divisor. The third ofit’s three forces is represented by the geometric mean and the entity is potency starting all furtherprogression with the smallest root or greatest log entity possible, quotient 11/1 (going up to 12/1 13/1etc.) or quotient 1/11 (going down to 1/12 1/13 etc.) given by any exponent or any logarithmic.It is obvious that any potency’s or logarithmic’s progressing can’t come into appearance since they arebounded by a single arithmetic entirety, number one. To appear, the nominator or denominator needsa change into number two or any other subsequent number. We at first need splitting of the entirety ofnominator or denominator of the quotient to get the third or geometric mean activated. So to enabledevelopment start we need to get out of the entirety one. We need division. As soon as nominator’s ordenominator’s number is splitted (multiplied) potency i.e. logarithmic forces are empowered to appearin development. In order to induce this division, sufficient excitement of the forces is needed for theleap or the jump out of the entirety one.In the course of development’s process this ‘inflammation’ of energies and subsequent diverging offorces is gradually—during each crisis—made ineffective, forces converge again untill all three reachthe status depicted in the regular dodecahedron or pentagram. Here, all three means are represented.Though in this endstage they do not oppose anymore. All together they perform an ongoing chain ofaccumulating series. Have a look at this graph. ⇒ It shows the appearance of the three means andthe harmonic division in this final stage of the dodecahedron (shown as a regular pentagram): If in thepentagram linesegment M = number 1, than linesegment m = 0,618 being the golden ratio. And soWe can derive from this the arithmetic mean; (M-m) : m : M = 0,382 : 0,618 : 1. (The greatest term is an entirety represented by number 1).We can derive from this the harmonic mean; m : M : (M+m) = 0,618 : 1 : 1,618. (The greatest term (M+m or 1,618…) is an entirety represented by measure 1).We can derive from this the geometric mean: (M-m) : m : M : (M+m) etc. = 0,382 : 0,618 : 1 : 1,618 etc. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 55. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions (All terms are an entirety represented by either potency’s 1 or logarithmics 1) 1/√5 — 1/√4 — 1/√3 — 1/√2 — √ — √2/1 — √3/1 — √4/1 — √5/1A close look at the last series will bring us to a stunning discovery: All division is transformed back intoone sole and single entirety in process: The chain of gradually accumulating quotients of potency’s (orthe inverse logarithmics). Obviously, in the pentagram development has completed all possible levels,and at the end has reached it’s envisioned target—set out even before the kicking off at start.⇐ As an assessment please take the quiz and return your answers to me: ⇒ This time we only have the project for you. We would like you to memorize the main contents of this unit—such a way, that you will be able to give a speech about it. The speech should take about 5 to 10 minutes. All others are requested to grade this performance on a scale 1 – 10 (where 10 is excellent, 1 is hopeless) mentioning any gaps of main info not referred to. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 56. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsB.3 ⇐ Development’s Start and End and Some Striking ConsequencesWe should realize that today people are not yet capable to manage development conditions in order toachieve targets while harmonizing their periodical nodes—or crises—properly. More or less stumblingthrough the critical stages of their development men seem unadaptable to the gradual changingenvironment for development. They are hardly able to handle any subsequent levels accordingly. As aresult people often get disappointed with respect to their expectations and policymakers finally try toviolate all development conditions to push their aims forward—despite the damage and the harm.What can be the reason? A main reason could be the fact, that we don’t sufficiently realize conditionsgradually changing towards development end. One such condition is, that, once approaching the finalstages of development, society seem to gain decisive influence for last stages of any development inorder to let such development procede. However this increasing exogen power is just an illusion, not areal fact. Due to the law of entropy it is not society’s energy that is increasing, but the individual’s i.e.the firm’s kinetic energy that is decreasing. People call it ‘system fatigue’.These circumstances implythat, if any individudal—say an enterpriser—wishes to procede with development, he is forced to takeinto account society’s interest and influence for his individual development in order for him and his firmto let development procede. In terms of thermodynamics we use to speak of entropy for final stages.On higher levels of development where the species men is the hub we can not speak of entropy, butthat decreased dependency towards society’s interests should get his full attention. In the end stage ofa development started by human beings, instead of the word entropy we should speak of enhancedenvironmental sensibility and dependency.Development is an individual as well as a social phenomenon. As such it is highly connected with thecoming into prominence of economy in society. In the past three centuries it were entrepreneurs that,in the field of business, gradually liberated the resources they needed to develop their firm graduallychanging the infrastructure of culture and nation. What do we mean by ‘liberating’ the resources? Byliberalization we mean that input i.e. factors of production like soil, labor, capital, information, were putsubject to a process of freeing or of democratization on a local, national and international scale.Products and services (tangible and intangible goods) can have an intrinsic and extrinsic value. Theproduct can have a very high intrinsic value (high cost); still for society value it can turn out to be verylow. In such cases it has a low extrinsic value and will not be purchased. This does not only hold truefor the firm’s products but for the firm itself as well. Input can only be transferred to outputeconomically by way of effectiviness. Yet if—due to entropy—throughput gets ‘fatigue’ and doesn’t runas it should then ineffectiviness is an increasing part of the game, and a big problem for firms to reach Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 57. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsfinish and to survive at the same time. In the SME19 sector only a proper distinction between youngfirms that still have a relative long way to run and developed firms that experience innate fatigue ofweaked throughput can give clearance. Grown up firms—situated in the SME sector—of age say 10 to20 years need not necessarily be large seized, but in this sector there are many of them.They stayrelative small, focussed on their own high quality products. Especially the government shouldappreciate the value of these grown firms of the small and middle class with respect to the extrinsicvalue of labor force employed. Therefore—again within the SME sector—extrinsic value addedpolicies are to be kept up at the center of the focus for grown firms to survive, continuing theirproduction by keeping up their quality of output. For grown firms business strategies towards extremeproduction effectiviness with efforts to uphold ‘vital throughput’ should be regarded as a merelymanagerial luxus and actually society (i.e. government) should protect them for the stress as long asextrinsic value is maintained. By their proven ability to provide jobs, to take care for rents and to paytaxes developed firms have contributed to stability and therefore created an extrinsic value to society.By not reducing their labor force to the most effective production level any such grown firm canaccumulate extrinsic value significantly if they get support by government. On the other hand for startup firms following strategies for a production effectiviness mainly with a core strategy on quantity i.e.production effectiviness is the most senseful strategy to follow. So, we can argue that, speaken interms of development: - High quality products, or products demanding a highly complex productionprocess—like cars—is not the output portfolio of start-up firms for generating a satisfying ROI. And, bythe same rule of development: - High quality products, or products demanding a highly complexproduction process are the ideal output portfolio of grown firms generating a satisfying individual aswell as a social or environmental ROI.And the same is true for all services, be it, that these intangible products are at any development stagestrongly linked to quality providing human resources. Regarded as a next factor of production onlyhuman resources can generate quality (capacities, skills) and consequently can bring firms to the endof their development. But this ‘factor of production’ may not be classified as a firms input. This woulddepreciate the value of human resources. In fact man can be used as but actually is not a producer.With respect to man—i.e. to human resources—we should speak of quality generators and classifylabor force as throughput. All other factors of production can be handled with machines and the like.However, in realworld practice of grown firms business strategy is often not in line to the principlesmentioned above. In practice every firm—no matter what age—is f.i. doomed to benchmark with allothers. Here lays a task for government. By inducing appropriate policy, government can giveincentives for small and medium sized firms not to lay off employed labor force for reasons ofproduction effectiviness which means for reasons of competivity. Society should see the high value of19 SME= Small and medium-sized Enterprise. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 58. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsgrown firms correspondingly. Gaining intrinsic value is a feature for young firms to serve the interestsof private owners and CEO’s to power growth. Maintaining extrinsic value is a feature for grown firmsto survive serving the meritorious interests of society. However at the moment we experience thatmainly for political reasons this outweighing of intrinsic and extrinsic values of firms itself with respectto a firms ‘age’ in the process of development is not well embedded in society. On the contrary, vitalproducts in primary industries like crude are not regarded being in the field of SME enterprising, butare a sole matter of interest for governments flanked by big and complex industries—and their lobbies.Spoken in political terms this of course is a logical thought due to the vital national interests.Yet on these levels of political in consequence of military reasoning freemarket principles are violatedseverely. We for example can look at specific harming policy by abandoning the capitalistic right onindividual property, i.e. the right for any nation to dispose of it’s own vital resources like crude oil, woodor other natural products. There are not yet such rights to stop severe restrictions on national freedomand selfdetermination. We have international agreements and trade treatises as a result of diplomacy.Through policy’s induced by corrupt and selfcentered governments development can be cut off fromit’s natural stem of life. In all situations that set off development—seen in addition with the deregulatinginfluence of blown up and crashing financial markets, often linked to that weird handling of derivates—conflicting interests often soar up enormously and aims go far beyond the ‘cap’ of any level achievablewithin boundaries of a sound economic development.20 This, of course, creates war. By inducing war, economic development itself comes at an abrupt and not intended end.We can learn from this, that development is not a matter of just materializing any individual target.Individuals can be human beings, but individuals can ‘blow up’ themself arguing in a just personal wayeven at governmental level. In all those cases governments behave and perform like powerful andmighty individuals. But consider that governments are only institutions led by individuals but are notindividual entirety’s. Development again is never just a matter of an all regulating society or institution.If an individual appears being the represententative by grant of the whole institution, nation, or societyhe often will be empowered with an all overruling power and regulations of these high situatedindividuals can sincerely restrict other enterprising activities, block off a sound development mostly tothe advantage of some industrial lobbies and there special interests.A sound development is always somewhat ambigious in value. It is ambivalent and—admittedly—noteasy to comprehend. Another condition for development at the very end is that it reacts increasinglyelastic to moral or immoral individual capacities and behaviour as is the case at the start. We will haveto stress again that governments are but regulating institutions—not individuals—and, by definition,institutions can never be subject to any moral behaviour, unless of course individual representatives of20 In modern society the balance between interests of individuals, individual operating governments, institutions, lobbies andother groups on one hand and society’s interests as a whole on the other hand is at the moment, as you will certainly know, notin equilibrium at all. It can’t be an issue to discuss this problem in this course, but as a topic it is to be explored mainly in thefield of political economics. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 59. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionssuch institutions or governments behave like an individualization of their institution, nation or society. Ifa government’s representative has individual aspirations while representing the institution, anyperformance on the scale between immorality and morality can easily lie in wait, because of theindividual character involved. So at that last development’s stage there is a grown parergon in the fieldof ethics i.e. morality with respect to quality. Put it more pointedly: Not governmental institutiuons areimportant, but the prosperity of the society they represent, and, again not society is important, but anyindividual embedded therein. We stated already in other words that only individuals can materializetheir aims with respect to integrity and morality if they transfer their acquired quality into the output tomake it absolutely unique—and therefore profitable—in a even global environment. IT-possibilities, likedatabases and their systems, milliards of pc’s, global spread LAN and WAN networks and the like docan provide in an increase in quantity and they are ancillaries for striving productivity effectinivess, butthey can not provide in an increase in quality. Due to the uniqueness of the species—and as a globalconglomerate of milliards of individual beings—only mankind can provide in the creation of i.e. anincrease in quality. In germ and principle every single individual is made absolutely unique – and, ifhandled properly by way of development, so will his product be at development’s end. Thereforerestricting ourselves to sole development with it’s terms and conditions we can conclude that:The final aim of all development is to transfer the innate unique range of qualities of individual beingsinto their products, regarded as a propriate supply for growing global demand for quality.In principle this aim is realized at the end of any development upstarted by entities like individuals. Allsurvival in development rest upon the pillars of the creation of quality and—much more important—upon the innate individual capacity of transforming quantity into quality for a particular development aswell as for upcoming developments by way of creation of germs – as an innate fertility.In this concept money of course is an ancillary, but never a development’s aim, because money cansubstitute the value of quantity and quality of products, but it can not create quality.If money shouldcreate any value in quantity then it behaves like a virtual resource or a piggyback.Though, for starters, liquidity and increasing capital assets remain a core target for all enterprising.Formatured enterprisers liquidity and capital assets are but a medium enabling the transformation ofquantity into quality and to perform fertility through endogen innovation capacity creating new firms.Merger & acquisitions and other similar activities do not necessarily involve or imply such creation.Individual beings inducing development are at start confronted with terms and conditions of all kinds oftransparency: i.e. of a demand for rationalized and straight out and long term planning, for logicalreasoning, of adaptations to the customer to define output kind and specific quantity Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 60. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsIndividual beings experienced in grown development are towards development’s end confronted withan increasing demand for quality. In the course of development they experience an increasedinfluence in the field of ethic, of increased moral sensibility and they should feel responsible. Becausethese capacities are bridges enabling the transferral of unique quality into their corrsponding output.This small exploration may be unusual and perhaps even difficult to perceive, yet it is a concept for theupstart of a development after the jump into the continuum as an issue on our current agenda. At leastwe have to have a fundamental look at what can be sound for development being successfull in orderto make a first distinction, discerning it from the global entrepreneurial, economic disruptions of today. As an assessment I would like you to give answers to the following questions. Send your answers up to my address by email (Please write your name - specify the unit): - What is the ratio of the SME sector and the big sized industries in your country ? (Look for statistics and create a diagram like a pie chart.) - What is the ratio of employment apportioned to the above section in your country ? (statistics and diagram) Make a mindmap of the contence of this unit, including the additionals, and discuss the items together. Make an evaluation of main or most striking opinions and/or different perspectives and deliver it to your lecturer for group grading. No multiple choice or other projects this time.⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 61. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsB.4 ⇐ The Harmonic Division Bridging Development’s OppositesWe will call the harmonic division which can be find in the rational realm the static harmonic divisionor SHD and the harmonic division to be find in the regular pentagram the dynamic harmonic divisionor DHD. We enclosed a short *.swf film to show you the difference of the SHD and DHD. At first thefile shows the SHD. We already showed you that this the result of a ratio of the inner and outer sectionof a linesegment. The SHD is basic to every start of development and in nature fundamental in thecrystalline realm. Next, the file shows you the DHD through the socalled golden ratio visible in theregular pentagram or dodecahedron. This DHD is basic to development’s end. The outbalancingprocess between SHD for the start and DHD for the end we call the way of development. It is the wayall living creatures go starting from SHD and striving for DHD as an ideal situation to achieve.Take alook at the film. ⇒ With your mouse you can rightclick to control the film or you can hoover a bottomscreen button in this movie to pause or continue. In the film as a measure rod or unit we used theancient cubit for reasons that do not matter yet in this context. Zoom to full screen ctrl + f; press esc onyour keyboard to return.What this film showed you near the end—you got the opportunity to repeat the motion by clicking abutton—was a smooth transition between the pythagorean and the golden triangle or between SHDand DHD. However it didn’t show you next striking feature; namely the appearing of a cleft on themiddle axis. Let us explain this: If two triangles like the golden and the pythagoren triangle have thesame right angle (90°degrees), but their sides nevertheless have different lenghts, then of course theirhypotenuses are not parallel to each other. Let’s see how we can make this clear:We first draw a pentagram √5 in a circle connecting three points to build the shape of triangle21, such away that the hypothenuse is vertical and thus equal to the middle axis. If we next draw a pythagoreantriangle within the surface and using the sides of the golden triangle then the hypothenuse of thatpythagorean triangle is not equal to the middle axis, because the pythagorean triangle has slightlydifferent lengths compared with the sides lengths of the golden triangle. Look at this *.pdf to see whatwe mean22: ⇒ The cleft is a result of the difference between the pythegorean triangle build accordingto the SHD and the golden triangle (basic to √5and therefore not with sides 3 : 4 : 5) build according tothe DHD In the pdf we constructed a double dome according to the DHD using √5. As you can clearlysee development’s process will transform the rational SHD into the irrational DHD. This transformation21 If you draw a circle with diameter 40 cubits (1 cubit = 52,5cm) the pentagram—drawn in this circle—will show lines with alength of 20 meter each. The ratio 1 : 1,05 between a pentagramline and the diameter of the circle enclosing the pentagram inmetrical units is proven to be correct. So if we take the royal cubit measuring 52,5cm for the larger length of the diameter we getthe ratio 1 : 2. You can construct a regular pentagram using a few lines as shown in many contributions on basic geometry, butactually just a close look at the pdf file ⇒ or this one ⇒ (which shows the front of the ancient jewish temple where thediameter of the circle is 34 cubits and pentagramlines 17 mtr) will do fine for a first comprehension.22 If you have Adobe Reader Version 10 or later, you will be able to color the background to read and look with more ease. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 62. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionswill nevertheless tear apart the pythagorean structure because of the basic principle of irrationality ofdevelopment at the end.Bear in mind therefore: Irrational and rational realms are opposed to each other. They are not basedon the same principle. Now imagine, if there only would be a sudden change and no real way betweenstart and end of development then in that case no living creature would survive the appearance of thiscleft. It would be absolutely letal and would not allow healthy processing.HealthBasic to development is the fact that it procedes.The cleft is a result of the appearance of the regularpentagram. The transformation’s process by way of the coming into appearance of the dynamic lawsof √5 (DHD) gradual superseeding the SHD is fundamental to all healing and recovering processes ashas always been the doctrine of the ancient pythagoreans and others. All living creatures start withinthe SHD, but immediately try to achieve this perfect state of the pentagram with it’s DHD on their questof live to find the perfect state as a final target at development’s end.Therefore to achieve a sound processing untill appearance of the cleft, the tearing apart can not be asole and sudden occurrence, but is apportioned, spread out and emerging in small healthy thoughcritical portions. These portions of small changes turn up during the subsequent development nodes.Each time a crisis in development appears, a small change of basic and for the period fixed variablesemerges towards the dodecahedron realm and away from the cube realm. This is the final backgroundfor the emergence of what we call crises.Crises versus AccidentsSo please bear in mind that crises are not accidents. Crises make sense. Accidents should always beavoided. Avoidance however may not be targeted when crises show up. Crises are to be meet withpositive feelings towards the upcoming of a new quality or state of living. Unfortunately people alwaysmix up the appearances of crises and accidents. We however should discern between them properly.Accidents are a negative aspect of live and always destroy main aspects of quality without givinginnate opportunity for further enrichment of live or enriched development chances. A war f.i. has to beregarded as a clash (a kind of induced accident) between conflicting national or individual interestsand results are at all times deadly destroying, but an individual or national crisis—caused or notcaused by some exogen reason like a war or other accident—is definitely not negative. It only destroysold structures to give opportunity for new ones. So, to put it pointedly: A crisis is a main fundamental to development, an accident is the denial of it.So, what do we do, when we say: in development, crises are a fundamental part of it and will alwaysappear in regular paces during development process? We are not prophesizing bad things to come.We read the differing conditions of development start and end, we recognize the appearance of a cleft Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 63. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsbetween start and end, knowing that the impact is spread out and apportioned into several smallerpaces or development nodes during process is on his way to finish.Because development occurs in a biotic environment it is not possible to materialize the appearance ofthe harmonic division in these recurring crises in a scientific manner. But we can look back and canpoint to already materialized output like the periodic systems of chemical elements. Each element is aresult of a jump into a continuum towards a new, more enriched quality. In theory, for each element wecan assume a corresponding development period as is done the astronomy to calculate the age of thestars. Nature however can materialize any development only in living creatures or environments. Soactually, the chemical elements we know of are to be regarded as a materialized ‘fall out’ or a periodicoutput like prints of forgone development crises in former living environment of earth.And the spectral analysis coming into prominence in the first decades of the 20 th century is the firstscientific approach of output of this cosmic historical process. We can compare the development ofhuman beings with such a process of gradually enrichment and materializing elements in nature, if westay flexible and not try to make this mirroring fix and literally. Human beings will certainly notmaterialize ‘output’ in elements like the chemical elements Hα, Hβ, Hγ but the method i.e. the way toprocede in order to enable such an enrichment—achieving such an end—is the same. And so are theterms and conditions for any development within a biotic realm.Stress and other EffectsOf course problems are created as soon as this pure biotic level is being superseded. This is the casewhen entities with a higher sensening as given in the pure biotic realm are piggybacking their targetson natural development process while simply disregarding development’s underlying conditions out ofunawareness. In such a case causes for stress, failors and other dysfunctioning elements can arise.Our brain f.i. has three levels of consciousness. Stressing the upper level while disregarding one of theunderlying levels with their innate though unconsciouss reaction systems can easily cause variouspsychological and physiological hindrances.With regard to development we have to do with the same situation: People—like CEO’s—failing tomaster their crisis—i.e. a firms crisis—are just the victim of their unawareness of sound bioticconditions for development. People can be almost blind with respect to development.They often try allkind of technical solutions playing around with rational or other methods, but in fact can never escapethe principles of nature and natural development. One of the principles on the level of senseningentities like human beings is to take sociability/morality—being inextricable linked to quality—as amain development’s conditon towards the end. In the end, decisions—especially those made duringcritical situations—are not provisional or everlasting subject to alteration, but are basic for the level ofquality of output. To master crises properly is a first condition to achieve quality of outcome. Not toaccept the link between morality—or even immorality—and quality (whatever the kind) is like not toaccept the possibility to go along with development basic conditions towards end. People’s products Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 64. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsand quality is a result of the level of ethics they were able to achieve for themselves. This link might beunusual. In order to induce a sound development we should get used to that still covert relationship between quality and morality (or ethics) soon. Just one look at the scale honesty versus corruption with respect to individuals acting for or representing their institutions like firms, larger industrial or social corporations, or even governments do show that such a relationship can hardly be denied as not being a intrinsic component of development. Take the crossword for your pleasure. Let’s see if you can stay in time ⇒ Project: Write a small contribution answering the following question: Under what circumstances can a firm’s individual culture and / or management have a positive impact on their output quality? Interview a few CEO’s on the topic mentioned above. During interview focus on wether or not they are aware of the fact, that their own individual handling or individual standard of ethics is a main factor and crucial for the quality they try to achieve for their ouput. Do not mention your focus to the CEO directly so that you may get unbiased results. The CEO should use phrases like: “I always told the board that …“, “I know topmanagement picked up tips from labour force to…” etc. to stress any personal involvement in the quality of output. Discuss all individual results of the interviews within your team. •The team should come to one final conclusion of all results. •It should as well formulate their own opinion about the topic of the unit. This is written down in a small report. Send this final report to my email address. Thank you.⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 65. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsC. Application of the Model in Business PracticeC.1 ⇐ Development, Corporate Governance, and Ethical IssuesBecause of the fact, that development involves main interests of individuals as well as of society andits institutions a sound development is not possible focussing on business profits while violating moral,and/or ethical principles. This is because the natural range of interests of all participants of a firm is aconflicting one in various ways. The outweighing (i.e. the harmonizing) of these interests is a coretarget of socalled Corporate Governance policy dealing with moral and fairness issues on multi-faceted levels. Ethical issues for instance can arise when firms must comply with multiple andsometimes conflicting legal or cultural standards in international trade. Employers need above alllateral thinkers using their imagination and capacities seeíng through to help solving the problems. But let’s first take this out of practice example with respect to fairness or equity: Question: Is it really fair from the Egyptian Government to charge everyone coming from high industrialized areas like Europe, or America with a fee of Eg £ 50.00 while charging own civilians only Eg £ 1.00 up to 3.00 if they want to enter the National Museum in Cairo? Answer: Of course this is fair, because of the significant difference of ratio in income, between most foreigners and Egyptians, which is mostly 1 : 15. When we look at the exchance rate while using the theory of the p.p.p. = purchase power parity, value of European/American and Egyptian economy doesn’t show such a big gap anymore.Being fair means, charging all visitors of the National Museum the like, i.e. with nearly the same valueand therefore in the consequence with different prices. Don’t you agree this is fair?Corporate Governance however is a more complex topic. What is Corporate Governance?In short: — Corporate Governance is the set of processes, customs, policies, laws and institutionsaffecting the way in which a corporation is directed, administered or controlled. Corporate governancealso includes the relationships among the many players involved (the socalled stakeholders) and thegoals for which the corporation is governed. The principal players are the shareholders,management and the board of directors. Other stakeholders include employees, suppliers, customers,banks, and other donors, management staff, the environment and the community at large. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 66. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsSo actually Corporate Governance is a multi-faceted subject. An important theme of corporategovernance deals with issues of accountability and fiduciary duty (which is a moral duty to responsiblebehaviour, correctness and to trusteeship), essentially advocating the implementation of guidelinesand mechanisms to ensure good behaviour and protect shareholders through a savvy, objective andinteger management.Another key focus is the economic efficiency view, through which the Corporate Governance systemshould aim to optimize economic results, with a strong emphasis on shareholders welfare. There areyet other aspects to the Corporate Governance subject, such as the stakeholder view, which calls formore attention and accountability to players other than the shareholders (e.g.: the stakeholders—f.i.employees and their families—or the environment).Board members and those with a responsibility for Corporate Governance are increasingly using theservices of external providers to conduct anti-corruption auditing (clear and correct financial reporting),due diligence (carefull management) and training.The term corporate governance has come to mean two things: •the processes by which companies are directed and controlled. •a field in economics, which studies the many issues arising from the separation of ownership and control.Relevant rules include applicable laws of the land as well as internal rules of a corporation.Relationships include those between all related parties, the most important of which are the owners,managers, directors of the board, regulatory authorities and to a lesser extent employees and thecommunity at large. Systems and processes deal with matters such as delegation of authority.Corporate Governance is used to monitor whether outcomes are in accordance with plans and tomotivate the organization to be more fully informed in order to maintain or alter organizational activity.Corporate Governance is the mechanism by which individuals are motivated to align their actualbehaviors with the overall participants.Sound Corporate Governance is reliant on external marketplace commitment and legislation, plus ahealthy board culture which safeguards policies and processes.Gabrielle ODonovan—a business author—says that the perceived quality of a companys CorporateGovernance can influence its share price as well as the cost of raising capital. Quality (i.e. the asset ofintrinsic as well as extrinsic values seen as capital) is determined by the financial markets, legislationand other external market forces plus the international organisational environment; how policies andprocesses are implemented and how people are led. External forces are, to a large extent [and this is Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 67. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionsimportant for our development theory] outside the circle of control of any board. The internalenvironment is quite a different matter, and offers companies the opportunity to differentiate fromcompetitors through their board culture. To date, too much of Corporate Governance debate hascentred on legislative policy, to deter fraudulent activities and transparency policy which misleadsexecutives to treat the symptoms and not the cause.’23Key elements of good Corporate Governance principles include honesty, trust, integrity, openness,performance orientation, responsibility, accountability, mutual respect, as well as commitment to theorganisation.Of importance is how directors and management develop a model of Governance that aligns thevalues of the Corporate participants and then evaluate this model periodically for its effectiveness. Inparticular, senior executives should conduct themselves honestly and ethically, especially concerningactual or apparent conflicts of interest, and disclosure in financial reports.Commonly accepted principles of Corporate Governance include: •Rights and equitable treatment of shareholders: Organisations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by effectively communicating information that is understandable and accessible and encouraging shareholders to participate in general meetings. •Interests of other stakeholders: Organisations should recognise that they have legal and other obligations to all legitimate stakeholders. •Role and responsibilities of the board: The board needs a range of skills and understanding to be able to deal with various business issues and have the ability to review and challenge management performance. It needs to be of sufficient size and have an appropriate level of commitment to fulfill its responsibilities and duties. There are issues about the appropriate mix of executive and non-executive directors. The key roles of chairperson and CEO should not be held by the same person. •Integrity and ethical behaviour: Organisations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. It is important to understand, though, that systemic reliance on integrity and ethics is bound to eventual failure. Because of this, many organizations establish Compliance and Ethics Programs to minimize the risk that the firm steps outside of ethical and legal boundaries.23 Corporate Governance International Journal, "A Board Culture of Corporate Governance, Vol 6 Issue 3 (2003) Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 68. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditions •Disclosure and transparency: Organisations should clarify and make publicly known the roles and responsibilities of board and management to provide shareholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the companys financial reporting. Disclosure of material matters concerning the organisation should be timely and balanced to ensure that all investors have access to clear, factual information.Ethical issues and approachesPhilosophers and others disagree about the purpose of a business in society. For example, somesuggest that the principal purpose of a business is to maximize returns to its owners, or in the case ofa publicly-traded concern, its shareholders. Thus, under this view, only those activities that increaseprofitability and shareholder value should be encouraged. Some believe that the only companies thatare likely to survive in a competitive marketplace are those that place profit maximization aboveeverything else. However, some point out that self interest would still require a business to obey thelaw and adhere to basic moral rules, because the consequences of failing to do so could be verycostly in fines, loss of licensure, or company reputation.Theorists contend that a business has moral duties that extend well beyond serving the interests of itsowners or stockholders, and that these duties consist of more than simply obeying the law. Theybelieve a business has moral responsibilities to so-called stakeholders like employees and customers,who have an interest in the conduct of the business. Stakeholders might include vendors, the localcommunity, or even society as a whole. They would say that stakeholders have certain rights withregard to how the business operates, and some would even suggest that this even includes rights ofGovernance.Other theorists have adapted social contract theory to business, whereby companies become quasi-democratic associations, and employees and other stakeholders are given voice over a companysoperations. This approach has become especially popular subsequent to the revival of contract theoryin political philosophy, which is largely due to John Rawls A Theory of Justice, and the advent of theconsensus-oriented approach to solving business problems, an aspect of the "quality movement" thatemerged in the 1980s. Professors Thomas Donaldson and Thomas Dunfee proposed a version ofcontract theory for business, which they call Integrative Social Contracts Theory. They posit thatconflicting interests are best resolved by formulating a "fair agreement" between the parties, using acombination of i) macro-principles that all rational people would agree upon as universal principles,and, ii) micro-principles formulated by actual agreements among the interested parties. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 69. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsCritics say the proponents of contract theories miss a central point, namely, that a business issomeones property and not a mini-state or a means of distributing social justice. You see from thiscritic remarks, that people do not differ between a firm at start and end of development. But if it weretrue, that firms are not a mean of distributing social justice, what would those same critics say, whensomeone’s own property (a firm) is claiming society’s property—like tax exemption advantages for bigindustries—to gain industrial benefits or to avoid upcoming risks? It is that simple, to exclude firmsfrom Corporate Governance duties while taking advantage of society on business level?As already stated: Ethical issues can arise when companies must comply with multiple and sometimesconflicting legal or cultural standards, as in the case of multinational companies that operate incountries with varying practices. The question arises, for example, ought a company to obey the lawsof it’s home country, or should it follow the less stringent laws of the developing country in which itdoes business? To give an example here: US law forbids companies from paying bribes eitherdomestically or overseas; however, in other parts of the world, bribery is a customary, accepted way ofdoing business. Similar problems can occur with regard to child labor, employee safety, work hours,wages, discrimination, and environmental protection laws.It is sometimes claimed that a Greshams law24 of ethics applies in which bad ethical practices driveout good ethical practices. It is claimed that in a competitive business environment, those companiesthat survive are the ones that recognize that their only role is to maximize profits. On this view, thecompetitive system fosters a downward ethical spiral. And it is for this reason, that development termsand conditions should be understood in an all encompassing way. A firms role is always to maximizeprofits, of course, but any restricting to this principle in terms of quantity instead of value disregardingthe stage of development will in the end rule out a firm completely from market as well as from society.The cause of many diffused entrepreneurial problems in management with respect to society can beseen as a result of their biasing of principles gradually increasing valid towards the end of their firmsdevelopment. Therefore sayings like: “The firm is not a mini-state …”, or “A firm is not a means ofdistributing some social justice” are to be seen as solid though selfconcerned interests, alwaysexcluding other entitled opinions, that om turn do not hold to the flux of reality and demand. It is notonly what critics of this kind posit in seemingly logic arguments, but with what a-ethical individualattitude these arguments are brought for, that provides the key for their final substantiality andcorrectness.24 Gresham’s law says that: any circulating currency (so originally not any circulating ethic principle) consisting of both "good"and "bad" money —both forms required to be accepted at equal value under legal tender law—quickly becomes dominated bythe "bad" money. This is because people spending money will hand over the "bad" coins rather than the "good" ones, keepingthe "good" ones for themselves. Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 70. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsIt is possible to train the senses and to discern between genuous totally different points of view, whichin certain cases can be brought for with exactly the same words. This important skill is usually called:occult discrimination, which is a silent method of judging the value of various opinions with respectto a sound development. Mostly, unexpressed targets or covert aims can be discerned clearly inthoses spaces b e t w e e n spoken words. This analytical capacity will be increasingly important infuture. As an assessment, please write down various views in any field of your choice, that, to your opinion, are to be regarded as open or restrictive, sound or not sound for further development. You can use magazins, newspapers, internet and so on. Issues can be very responsive (insulting) to anyone’s personal feelings—as you will certainly agree. So please avoid the following fields: Religion, politics, as well as individual rights based on race, sex, or status. Teamwork: Humor is a special skill f.i. to amuse relatives, friends or even yourself and—more important— to overcome critical or desastrous situations. Please discuss with each other the value of humor to people. What is humor for? Where can we find it? What is the impact of humor? As a team make a cartoon and write a report. Send the report to my address for final grading. You will bring the cartoon(s) to the classroom. We, of course, do not weigh the opinions but the effort the team made on this topic. Thank you.⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 71. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsModule BMS—D1a:Business Management Systems : Business Development—Terms and ConditionsC.2 ⇐ Sustainable Development and Success StoriesTo introduce to you sustainable development linked to success stories it is affordable to first informabout development eventually sustaining as well, but from which we may assume that it will turn out togenerate unsuccessful stories. Though there are more definitions of sustainable development we firstgive you a definition of sustainable development as first appeared in the year 1987. Obviously it wasnot submitted for the attention of main industrial countries: "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs." — from the World Commission on Environment and Development’s (the Brundtland Commission) report Our Common Future (Oxford: Oxford University Press, 1987)25Before starting this unit we would like to inform you about the opinion of an informed americaneconomist; Dr. Michael Hudson. 26 Please play this mp3 file. It discusses the following topics: •The US balance of payments trade deficit which creates US credit to finance the US national debt and war abroad; •Russian economic shock therapy as the final stage of the cold war; •the real estate bubble; •permanent war and the inevitable collapse of the current US dominated global economic system.While listening please jot down any important remarks done by Dr. Hudson from which you think are important.Press the play button: ⇒We have no attention to value policies of strong industrial countries as this is not the place for it. However strivingfor a sustainable, and sound development is by no means easy—taking into account the dependency on givenpossibilities on macroeconomic field – as we showed you by way of an interview with Dr. Michael Hudson.Success in the sense of success in development—according to the model introduced here—is not justa superficial story of aimed activities being worked out. Success in our context means, people were25 Dr. Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends, a Wall Street FinancialAnalyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of "Super-Imperialism: The Economic Strategy of American Empire". You can get a copy here: ⇒ (335 pp.) Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 72. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and Conditionscapable to understand the underlying, during process changing, terms and conditions and materializedtheir targets according to this principle.Seting up a firm, the first thing you do is having awareness of a niche for long turn customer demandin future. Above all you need transparency with respect to what reason the consumer would buy fromyou and why not from any of your competitors. Future customer demand relies on two importantvariables:1. Your uniqueness in terms of a product or service (idea).2. Your ability to convince customers and all other shareholders, that your product, service or packageof goods and services is—and will stay—always applicable to the volatile everchanging situations ofdemand and therefore unique in the long run.Now, only a unique idea—together with its businessplan—showing transparency as well as strength toevolve on all development levels can be incorporated into a dynamic environment with a chance forsurvival a certain time. We don’t convey an indeep theory for setting up a firm. By way of this examplewe only provide basic terms and conditions for any development to start. All sound development willdemand these terms and conditions for a first start: 1. Uniqueness, 2. Transparency (or Rationality), and 3. Strength (or Courage) through 4. Flexibility.All four conditions clearly distinguished and with no assumptions, above all mainly selfsustaining thuswith no great financial reliances on any donors.The main reason for this is to correspond with the environment where all development starts: the cube,with its inherent principles initiating all development (life). In fact, there should not occur any slips orfailures if we keep to these conditions, because on the other hand society is by all means dependenton any upcoming development impulses and is interested therefore by its nature in new inducements.Society—like nature—can only maintain existence if it relies on individual dynamics, on massive smallchanges, that is on development. However if an individual impulse should show innate weaknessesfrom the start, it has to be killed off. This, of course, can be seen as “the law of the jungle”, but it’ssimply a general law and it always works, for reasons of health and life should work – with noexceptions. Showing weakness means: having no long run plan, trying to start something what othersalready do, relying on others, showing no courage, getting into panic easily and so on.⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 73. Module BMS—D1a Business Management SystemsIntroduction to Development - Its Terms and Conditions Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 74. Module BMS—D1a Business Management Systems Introduction to Development - Its Terms and ConditionsEndnotes⇐ Module BMS—D1a Albert Bernard Jansen, eMBA—ITAC Canada
  • 75. i ⇐ On internet java applets are available that show this fact clearly. ( Here is an ‘applets.exe’ ⇒(Allow ActiveX. Java runtime version 1,4,2 from Sun Microsystems is required. Go sure and quickly check for viruses first): Scroll downtill heading: “Oscillation and Waves” and choose f.i. applet: “beats”. ⇐ As an example to comprehend we can look f.i. at planets with regard to earth: Sometimes they rotade in prograd sometimes iniiretrograd motion. Planets do not only delay or even “stop” moving at their apogeum. After apogeum planets make a small retrogradelooping before resuming their direct motion. Yet in reality this is an illusion. ⇐ The greek philosopher and writer Platon mentiones the five solids in his written down discussion: “Timaios”. For this see: TimaiosiiiChapter Platon: Sämtliche Werke VIII Insel Verlag Frankfurt a.M. 1991, p.313ff. ⇐ As already stated, It is important to realise, that—especially in business—a sound start of development is never a matter of justivhaving a nice idea, going to a donor to get the necessary resources for practical materializing. Development needs a clear view of theterms and conditions and an awareness of opposed intertwined entities that define all development from start to end. A sounddevelopment’s strategy is in the first place concerned about the life, the desires and the fears of the customer and what the producercan do about that … for the moment.