Division Of Labor, Money And Inflation

This paper start our analysis from the individual's economic decisions and these decision-making process's interactions in a labor-division network, under the existing of transaction(exchange) costs and information costs. Then we use this analysis to explore the economic laws behind the economic phenomena. Basing on the analysis of the connections among the various specialized departments within the division network, we defined the currency as an information medium, whose exist is to coordinate the productions and traditions among the various specialized departments in the division network. From this analysis, we come to the conclusion that the stock of money is determined by the economic movement itself. Government's operation on the monopoly money (currency that government controlled) will disrupt the money's information transfer function in the division network's, all of this would causing the economic disorder. During the dynamic adjustment process of the division of labor, the specialized individual's professional decision-making will constraint by the professional choice made before, and this is the result that the society's labor division net has a structural rigidity, which could distort the market's relative prices and cause an inconsistent in the structural adjustment of the specialized departments within the network compared to the structural adjustment guiding by the actual transaction and information efficiency. By discussing the nature and the stock's change of the money, we point out that inflation is a result of the total purchasing power over the productive of the division net, which caused by the government's monetary policy, and this phenomena would coexist with the structural surplus. Therefore, the monetary impact on the economic system is non-neutral, government's operation on the currency government controlled (a part of the total money stock) is a main result caused the network's structural adjustment (economic fluctuations). Since this article mainly related to the evolution of the network division and the dynamic adjustment of the division of structural, so inframarginal analysis, dynamic analysis and structural analysis are used in this paper. Because of these analysis methods have a close-knit to ours conclusions, which differ with the mainstream methods, we conducted several major analytical method briefly discussed. This article's conclusions have great practical significance. Firstly, the government should not monopolize the currency, but let the money stock determined by the market; Secondly, the industrial structure's adjustment is a spontaneous evolution process, and then the monetary policy should adapt to it.