Question

what is the economic analogy for :

1) Reproduction

2) ingestion

3) Biomass

Answer 1

There is an excellent co relation between high levels of economic performance and low rate of human reproduction and population growth. An Economic system is similar to biological system in exhibiting self organisation. For an economic system the analogues of cells are individuals, the specialised organs are firms or industries and the product of indutry are analogous to the minerals, amino acids, sugars and lipids as well as the more specialised vitamins that circulate through the organism and are metabolised for energy and incorporated in Biomass

1. The economic analog of asexual reproduction is the spinoff and the analog of sexual reproduction is the joint venture by two or more established firms. A spinoff is a startup by a person from an established firm. Of course many neew starts have no simple or well defined ancestry, so again the analogy with biological reproduction is weak. In economics one can make a strong case for spontaneous creation. Because firms do not reproduce themselves in the biological sense. Differentiation does occur, both through the adaptation of excisting firms and the creation of new ones by any one of several means.

2. For the economist the standard unit of analysis is the firm, a hypothetical organisation devoted strictly for production and profit making. Here the biological notions of metabolism and homeostasis are not particularly relevant to standard economic theory. In the real world each firm engaged in production must purchase material and energy, as well as labour, and these inputs are roughly analogus to the food, water and air ingested by a living organism.

3. The biological analogy is less useful with regard to output. The biological organism uses inputs of material and energy for three distinct purposes a, Metobolism in steady state. b, growth (addition of BIomass). c, production of scents, flowers, fruit, nuts or seeds to attract biological partners and ensure reproduction.

In contrast the firm uses materials and energy only for two purposes a, to provide internal services to operate facilities (metabolism). b, to provide external products and services that can be sold profitably (production). The firms Biomass corresponds to its Capital and its metabolic requirements corresponds to its fixed costs and Biomass growth being the result of accumulated profits. Looking at it another way the firm, unlike an organism, does not produce its own capital goods (Biomass).