Attractor State of Productive Capacity is Shifting
What is an attractor state?
It is a state around which a dynamic system organizes itself.
“Self-organization is the spontaneous often seemingly purposeful formation of spatial, temporal, spatiotemporal structures or functions in systems composed of few or many components. In physics, chemistry and biology self-organization occurs in open systems driven away from thermal equilibrium. The process of self-organization can be found in many other fields also, such as economy, sociology, medicine, technology.
“Stable internal representations of the external world indicate the presence of attractors. Here, an attractor means one of the states of the system where the system settles after starting from a given initial condition. Self-organization needs these attractors to have a sufficient instability to be able to alter in order to adapt to the environment.” (Self-organization at scholarpedia.org)
The plot below will show how the economy settles into an attractor state for Productive Capacity. Then it breaks away from the attractor state to adapt to a new environment of economic growth for the next business cycle. The economy shows both stability and instability in the graph. That is the key to an attractor state of self-organization, adaptation and growth.
Here is the graph which plots Real GDP against the TFUR… (capacity utilization * (1 – unemployment rate). (TFUR is what I call Total Factor Utilization Rate.)
Productive capacity is found where the attractor lines cross a TFUR of 100%.
The pattern is normally for the plot to follow a line originating at the crossing of the x and y axes during the growth phase of a business cycle. This line represents an attractor state for the growth in a business cycle. Then the plot rises above the line and falls to the left into recession setting up the next business cycle at a higher attractor level of Productive Capacity and Real GDP.
The 1990s were an exception because the plot kept rising without the TFUR falling into a recession.
This updated graph shows that the economy has lifted off from the current attractor state and is heading toward the future projected attractor state.
How will we get there?
There are two possibilities…
- A recession
- The TFUR stays stable while Real GDP keeps rising. But the key is to have increasing productivity. This happened in the 1990s.
We do not see increasing productivity growth, so the most likely path will be through a recession.
Hi Mr. Lambert you always post the most interesting and revealing economic data articles that show startling economic data and future possible outcomes. I would like to add that as we all know and I believe the projection of a future recession strongly depends on who wins the election. Going back to you piece a few days ago about the neocon article was very point on but I think you need to parallel that article with the piece written by Paul Craig Roberts.org a few days ago on “Capitalism at the Looting Stage”. Both articles seem to go hand in hand and clearly show why major economic change and policy is so badly needed. We could most likely head off a recession if we could bring major economic changes about. The problem is HRC is not the person who will do this. Can America be saved economically? We must have better control of short term capital flows globally of the neocons for greater growth rather than greed with lower volatility and risk in the markets. To me having this greater economic agility is the counter weight to the uncertainty of the future and its rapid rate of change in wealth inequality and trade deficits…IMHO.