The main task of building internal relations in the Fransis Conglomerate is to create the most effective relations. For that purpose, we used the following principles to build a stable economic structure in order to achieve the Nash equilibrium.
The principle of trust
The first principle is based on the quantum analysis of the statistical assembly: each separate unit of the assembly underlies the quantum superposition of the socio-economic state. In other words, each individual participant of the free market has no confidence in the committed transaction until the moment of verification of the prepaid product. Due to this factor, there are many trust structures in the market that mediate producer-buyer interaction and regulate socio-economic relations. We are familiar with this kind of effect through the Consumer Rights Protection Law.
The principle of least action
The second principle is based on the law of least action in theoretical mechanics: to maximize the effective transition of a system from one state to another, it is necessary to expend the minimum necessary energy. In other words, the economic structure should minimize the capitalization of projects, in particular the expenses, in order to maximize profits. This principle underlies the condition of system’s stability — minimization of potential energy, which in our case describes the capitalization. If the system has excess capitalization, it causes the opposite reaction of the market, which can be observed in the mechanics of the actions of financial conduct authorities.
The equilibrium principle
The third principle logically follows the principle of least action, since it describes the Nash equilibrium from the Theory of Games. To ensure that the system is in a stable state at all times, all internal elements must be in statistical equilibrium with respect to each other. In other words, each participant should have the same options and conditions of functioning. This requirement is dictated by the fact that each participant has his/her own set of strategies, and if the system is not symmetrical with respect to the choice of strategies for the participants, this shifts the choice towards excess capacity. For example, we can consider the classic prisoner’s dilemma with the condition that one criminal has more authority than the other. In this case, the decision of authority will influence the choice of the weaker, and therefore they will not be able to reach an equilibrium solution. This principle is used to build the internal structure of companies, when each department has equal opportunities for strategic functioning within the company.
The isolation principle
This principle is based on the second law of thermodynamics, which describes closed systems from the point of changing their internal state: in closed systems, entropy (a function of internal energy) either remains unchanged, or increases. In other words, if the market is closed, then with the course of time the number of strategies either does not change, or increases, thereby complicating the calculation of the equilibrium over the Nash equilibrium. The effect of this principle can be observed in countries that actively regulate their internal market, when the influence on the market is limited by the government intervention. This seclusion leads to an increase in the number of possible strategies and, with the proper regulatory policy, allows you to choose the necessary set of strategies for economy stabilization. However, in the event of leaving a market unopened, it is most likely that there will be a gradual excessive increase in the set of strategies, which will ultimately lead the market to an absolute chaos and to the decline of the regulatory body, as it happened, for example, in the USSR.
Conclusions
Based on the formulation of these principles, one can single out a general strategy for constructing a closed system, which in turn can be brought to the Nash equilibrium by using physical and mathematical apparatuses. The principle of trust allows to establish the so-called “quantum confusion”, or in other words to build connection between the consumer and the producer through a fixed agreement upon the quality of the products being sold. At the time of the bargaining this will allow to determine whether the consumer is solvent on the basis of the “pre-order” principle, which will free the producer from monitoring the risks associated with sales, and the consumer from monitoring the difference between descriptive and real characteristics of the product.
The minimum necessary capitalization is calculated after fixing this link by the principle of least action, so that the system does not have excessive potentials and can easily identify the “leakage” of capitalization at any given moment. Also, thanks to this principle, it is possible to avoid the phenomenon of investment revaluation, when the capitalization significantly exceeds the project’s possibilities to return investments according to the business strategy and creates an internal collapse, after which the project is usually sold for an extremely low price or even closed.
Having a guaranteed sale agreement and minimum funds required for production, the economic structure can implement the production cycle with the maximum efficiency. At this point, we can apply the principle of equilibrium and obtain a uniform distribution of economic strategies among individual participants in the structure, where a single information space will allow us to find the optimal set of cooperation strategies, which will be the Nash equilibrium. This set of strategies will determine the direction of the economic activity of the structure, evenly distributing the benefits throughout the structure and preserving its stability.
Now we can apply the principle of isolation by organizing internal processes and increasing the range of possible strategies before the establishment of an equilibrium set for all system’s participants. However, at some point, the spectrum of strategies will begin to increase excessively, making the calculation of the equilibrium complicated. To get rid of this phenomenon, the system connects to an external market that has a capitalization far exceeding the capitalization of the structure, which in fact is an export market. Given such a market, the internal set of strategies will change the state of an external market, leaving the entire range of strategies in relative equilibrium, thereby maintaining the stability of the entire structure. It is the presence of external markets that positively affects economic growth — the main cause of modern geopolitics — and entirely confirms this principle.
As a result, we will have a closed system, where the elements are in a relatively stable equilibrium, and the result of their activities is send out to the external market. From this perspective, we can conclude that such an organized structure will have an internal mechanics described by a ‘non-zero sum’ game, in which all participants in the system win, and external mechanics that is described by a ‘zero-sum’ game that corresponds to the real economy.
