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Meng yan: pass economy is digital economy the powerful tool of the second half

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The essence of pass economy is the digitization of factor market.

Article title: "some thoughts on the pass-through economy during the epidemic"
Thoughts on blockchain by meng yan

This article brings together some of my thoughts and media comments on the pass-through economy during the outbreak.

1. On the three pillars of the stock market economy

Our research on the pass-through economy has entered its third year, and our understanding of it has been constantly improved. Our team now calls the theory of the pass-through economy "iron triangle", which meansThe pass-through economy is made up of three pillars: digital assets, algorithmic incentives and open finance.

Digital assets are the concept of stock, that is, whether we are creating and applying a digital asset in this economic behavior or economic activity, and whether the behavior of the whole activity can make this digital asset accumulate and appreciate. This corresponds to the net asset portion of the traditional corporate balance sheet. In a sense, the purpose of business operation is to make the net assets in its balance sheet continue to increase, the reason is the same.

How can this digital asset grow? It actually requires a series of production collaborations among people to inject value flow into digital assets. People collaborate together fully, and digital assets grow with the scale and depth of collaboration. One of the core ways to promote full collaboration is to conduct algorithm incentive. We develop a set of rules that cannot be tampered with arbitrarily and are transparent and open. Then we measure the contribution of each person to this ecology in real time and issue the pass incentive as soon as possible.

Open finance is an indispensable part of the whole system. It is the catalyst, amplifier and accelerator, which enables users to trade and transfer the information they have obtained at a very low transaction cost.

Digital assets, algorithmic incentives, and digital finance must be integrated for the economy to be at its most powerful.

(the above is an excerpt from a speech made by Mr. Wang donglin when he and Mr. Wang participated in the "bull market sharing class".

2. The through economy is a tool

The pass-through economy is a fully digital, digital, mathematical and numerical control economy, in which each link takes the new digital object as the media, or directly in the digital system, or in the digital system to leave reliable data records. The entire system can be governed by either open and transparent algorithms or controlled by human beings. It can adapt to the market economy model or the planned economy model, run on the block chain or run in the centralized system. No matter which mode it ADAPTS, it will bring higher efficiency, lower transaction cost and lower verification cost.

Therefore, although it first appeared as a decentralized digital currency community, its essence has nothing to do with the generation and distribution of economic rights, but with the improvement of tools.

From the perspective of values, we are happy to see the combination of market spirit and general information, but we also realize that,In fact, it is a powerful tool for enterprises and economic managers.Due to all the elements, goods and services to access card to express, all transactions are in the economic and ecological registration and record in the system on the economy, so the economy of managers can be the first in the history of all transactions within the system real time control of the controller, the bilateral information completely, which can be applied to a variety of statistical analysis prediction method, mobilize various technical tools and economic resources, strategies and measures for the administration, in accordance with the stated goal of adjusting economy development.

soThe pass economy is a tool that represents stronger economic control, which can be controlled by the government, corporate managers or a set of block chain algorithm contracts issued by decentralized organizations.The logic of control can be predetermined, open and transparent rules that represent the consensus of the majority, or it can be at someone's behest. The result may be prosperity or accelerated decline. The pass economy just provides them with an arm-in-arm tool, with more complete information, higher efficiency, better real-time performance, faster response, finer management granularity, stronger system rigidity, and lower cost of verification, audit and evidence collection. That's all.

This is also the main way to understand central Banks' digital currencies. There is of course a monetary economics problem there, but that is a secondary problem, a short-term problem,In the medium and long term, the digital currency of the central bank is mainly a problem of the upgrading of national governance tools and international competition tools.Discussing central Banks' digital currencies in the light of monetary economics textbooks is like fighting a nuclear war with sun tzu's art of war.

In terms of values, our tendency towards idealism is obvious. But the development that promotes pass economy actually cannot depart from historical stage. In the foreseeable future, centralized economic organizations, including the government, enterprises and the Internet community, are the most urgent demanders and the most active promoters of the general economy. Of course, many of these organizations don't use the term "pass-economy" or admit it, but that's ok. They're helping the pass-economy take center stage every day.

3. Comprehensive marketization and digitalization of the factor market

We thinkThe essence of pass economy is the digitization of factor market.

A few days ago, the central government issued a notice, which probably means to accelerate the marketization of factors of production. Recently, I often talk about factors of production, so many people have sent me a message saying, "Lao meng, you have won again." In fact, this is not my bet, because at the end of last October, the fourth plenum of the central committee had a final decision on this issue. This is a very significant event for blockchain, especially for the pass-through economy.

Microeconomics has a very basic market model, and basically every introductory book on economics introduces this model in the first two chapters, and I call it the two-sector two-market model. This model assumes that, without government involvement, the social economy involves two sectors, one is the household sector, the other is the manufacturer sector or the enterprise sector, and the two sectors trade separately in two markets. One of these markets is called the product market, where the household sector pays the money and gets the products and services from the manufacturers, where we, the common people, are the buyers, buying food, buying cars, buying houses, topping up games, buying all kinds of services. This is a market that everyone is familiar with, where the household is the demand side and the enterprise is the supply side.

But there is actually another market that is equally or even more important, the factor market, which is the market in which the household sector provides the factors of production and sells them to businesses.

Many people do not understand the factor market, it is the opposite of the product market, enterprises in this market as buyers, we are the people are sellers. A lot of people get confused, what do we sell to businesses? We sell things called factors of production, which are our labor, land, capital, knowledge, and so on. Where do you get the money in your pocket? Work, you might say. But in economics, that's essentially what you're selling your labor in the factor market to the firm, and what the firm is paying you is actually what it's spending on the factor of production. In the factor market, the whole role of supply and demand is exactly reversed. In the factor market, enterprises use currency or other valuable notes to purchase factors of production, while the household sector is the provider of factors of production, that is, enterprises are the demand side and households are the supply side.

What are the factors of production? Now our official is divided into seven categories: labor, land, capital, knowledge, technology, management, and data, the data is just the end of October, 2019 was the fourth plenum of the 19th to add columns of a new production factor, I think the addition of data, and the development of the digital currency, digital assets, will result in a dramatic change of factor market.

It is now well documented that the central committee of the communist party of China (CPC) has added data to a new factor of production. In 2016, a statement was made at the g20 summit in hangzhou, referring to the need for the digital economy to turn data into a factor of production. But we are the first country to explicitly use data as a factor of production at the national strategic level, which is very important for all of us, especially in the IT industry.

What the enterprise pays for labor is called salary, what it pays for land is called land rent, what it pays for knowledge and technology management is also called salary, and the factor income that the entrepreneur obtains is profit, what it pays for capital is called interest. But it is not yet clear what companies will be paying for data in the future, and how the price will be calculated.

Now we don't know, we haven't found the noun, but according to our views, no matter what it's called, it will pay in the form of a predominantly digital money or assets to pay, then the digital currency or asset market becomes important, on the one hand, enterprises through the purchase of factors of production in this market to organize large-scale collaborative research and development, production and innovation, to create value; On the other hand, its importance is also reflected in the fact that every individual and family in our society, our income is determined by this market. In other words, how much money you can make in this market depends on what and how much you can provide in the factor market.

We think the digital economy is now at a critical juncture: according to Meituan CEO wang xing, who famously said that the Internet has an up and a down second half, by 2018 the Internet's first half is over, and he doesn't have a clear description of the second half. I have an opinion that the first half of the digital economy mainly took place in the commodity market, which digitized the product market. Typical representatives are e-commerce companies such as amazon, alibaba and jd.com. In other words, consumers we are familiar with purchase products and services on the Internet. Consumers buy things on WeChat, alipay, jingdong and taobao, which are mainly consumption scenes, including the news we browse on the Internet, which is also a transformation of the former media market digitalization. The development of the Internet has changed the product market dramatically. But looking back at the factor market, the change is actually not that big, we still go to work from 9 to 5 to a company, and then form a fixed labor contract relationship, even our whole society of a series of labor contracts, labor relations are based on such a relatively static relationship to create.

In the second half of the digital economy, I think it is mainly the marketization of elements and digitalization "two steps at the same time". Toutiao, Meituan and pinduoduo are the early representatives of this new type of enterprises.Through the economy is the essence of a company or an organization that unlike enterprises since the association by creating all kinds of card, and then use the card as a tool and means, to the Internet as a medium, no boundary from the broad masses of people hand exchange of factors of production, organize production, finally a process of creating value.This is actually a factor market digitization process, I believe that is the future all Internet enterprises and traditional enterprises in some form to digitization of factor market, through the economy is one of the powerful tool in this field, although it is still at a very early stage, there are few successful cases and or fair to say, you know, to realize much, but as long as you an imagination or thinking with logical thinking ability, it will know the factor market digital without such tools, I'm afraid. The more you can have a good general economic model, the more effectively you can purchase factors of production in the factor market. If you have a stronger ability to organize production, then you can create better products and services, so as to enhance your competitiveness, which is a positive feedback process. In theory, therefore, enterprises that use the general economy to organize production factors are more competitive and expand faster than those that do not.

I must remind you that there are many now have some successful Internet companies or the traditional company, seems to be with some innovative approaches of the traditional company, in fact they have been used for some of the economic thoughts, and even some of the tools used directly through the economy, typically spell and more headlines, you can go to study, I am not here.

(the above excerpt from the digital asset research institute, hengqin intelligent finance research institute and yiyi finance & economics think tank jointly held the closed-door online seminar and speech on "the impact and prospect of digital currency on the macro economy" on March 27th, which has been revised from time to time)

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