InPut/OutPut Analysis


B2B Supply Chain Management

The other day, I wrote a commentary titled, 'Taking Back Our Country' the main idea of which was the theory that  Business-to-Business (B2B) Supply Chain Management systems that are being implemented in this country are violations of the Sherman Anti-Trust Act because the supply chain information systems are cross-corporation integrated systems for the management and control of production of the "partners".  The agreement to participate in a supply chain creates a cartel and that was the basis for my theory on Anti-Trust. 
One of my very knowledgeable and highly astute Internet friends, was slogging through the detail of the excerpts of the paper written by Richard M. Hoppe I'd selected to make my argument, when she had an 'ah ha' moment.  The following is her email to me:

My mind was a little boggled as I read the piece but I was muddling through it, half understanding it, until I came to the paragraph beginning:

"In order to understand the genesis..."
That really got my attention!  It sounded familiar to me.  As I read the scheme that was an agreement to control production and limit the amount of things produced all I could think of was Nobel winning economist Wassily (or Vassily) Leontioff's InPut/OutPut System.  As I understand it it was used in the Soviet Union so that the central communist government could totally control the amount of things manufactured and disseminated in the USSR.
...Put up a search on Leontioff and his input/output system and see if I'm crazy or does it describe "the gentlemen's agreement" to control production of goods that was in your piece.

[Note: I'm leaving out a little bit of history in the middle because it's a story that deserves more than a brief mention in an email.]

"InPut/OutPut System".   I didn't have to read much more than that because I am,  after all, a Systems Analyst - and computer systems are about nothing but InPuts and OutPuts  with some processing in the middle. 

Wassily Leontief

There are discrepancies in various sources on Leontief's early history.  I suspect that some people in this country would rather it not be known that the economic theories of a Russian who grew up under the communist system form the basis of U.S. economic policy and that the seeds of the cancer of Communism in America were nurtured and flourished at Harvard University. 

The following is a brief overview of Leontief's applied theory of InPut/OutPut from the Concise Encyclopedia of Economics:

  Input-output analysis shows the extensive process by which inputs in one industry produce outputs for consumption or for input into another industry. The matrix devised by Leontief is often used to show the effect of a change in production of a final good on the demand for inputs. Take, for example, a 10 percent increase in the production of shoes. With the input-output table, one can estimate how much additional leather, labor, machinery, and other inputs will be required to increase shoe production.

Most economists are cautious in using the table. The reason is that it assumes, to take the shoe example, that shoe production requires the inputs in the proportion they were used during the time period used to estimate the table. Therein lies the rub. Although the table is useful as a rough approximation of the inputs required, economists know from mountains of evidence that proportions are not fixed. Specifically, when the cost of one input rises, producers reduce their use of this input and substitute other inputs whose prices have not risen. If wage rates rise, for example, producers can substitute capital for labor and, by accepting more wasted materials, can even substitute raw materials for labor. That the input-output table is inflexible means that if used literally to make predictions, it will necessarily give wrong answers.

At the time of Leontief's first work with input-output analysis, all the required matrix algebra was done using, as inputs, hand-held calculators and sheer tenacity. Since then, computers have greatly simplified the process, and input-output analysis, now called "interindustry analysis," is widely used. Leontief's tables are commonly used by the World Bank, the United Nations, and the U.S. Department of Commerce.

Early on, input-output analysis was used to estimate the economy-wide impact of converting from war production to civilian production after World War II. It has also been used to understand the flow of trade between countries. Indeed, a 1954 article by Leontief showed, using input-output analysis, that U.S. exports were relatively labor-intensive compared to U.S. imports. This was the opposite of what economists expected at the time, given the high level of U.S. wages and the relatively high amount of capital per worker in the United States. Leontief's finding was termed the Leontief paradox. Since then, the paradox has been resolved. Economists have shown that in a country that produces more than two goods, the abundance of capital relative to labor does not imply that the capital intensity of its exports should exceed that of its imports.


Integrated networks across corporate boundaries solved Leontief's problem of stale data in the tables.  The supply chain management systems of corporations - linking the sales and production information of suppliers provides the information necessary for economic control for central planning that was Leontief's ultimate goal.   I believe this is probably the basis of supply-side economics.  The obvious flaw is that it puts corporations in control of the central planning and supply (as if corporate leaders aren't greedy, psychopathic bastards that will steal the last dime from a deaf, blind and elderly widow). 

This subject is too big to cover in a single commentary - and it is too important for people to pass up reading  because it's too long so I'm just going to lay this out as I see it. 

The propaganda language to cover the true nature of what they are doing came out of the Kennedy School of Government, Harvard University.  The title they chose to give it is, "market-based governance".  It's not clear whether the majority of members of Congress understood that they were abdicating the power of government to corporations but it's an absolute certainty that many did understand and they were complicit in the fundamental shift of American government to a fascist system of socialism. 

Every government policy being fought about (energy) and implemented (schools) today has it's foundational principles in the idea of "market-based governance".   Newt Gingrich, one of the "thought leaders" of this shift to fascist socialism has a group called American Solutions that he uses to facilitate (Delphi) the thinking for the agenda.  By way of background, it's useful to listen to one of the people who participates in the American Solutions group:  Elaine Karmarck, Ph.D, Harvard of course.  She gave a presentation on market-based governance that was put on video.  The title of her presentation is:  "End of Government As We Know It".  Note: as you listen to this woman speak, notice how she presumes to speak for all Americans when obviously, the vast majority of Americans have no idea about what they are doing, and if they did, they'd find the nearest hanging tree and have a party.

Solutions Day Workshop - “The End of Government. . . As We Know It” - Cambridge, MA, 9/29/07

Elaine Kamarck, PhD, Lecturer in Public Policy at Harvard University’s John F. Kennedy School of Government, examines how government bureaucracy can be updated to deal with the evolving demands of the 21st Century by using real-world examples to help us understand how new alternatives can be applied.

With the understanding that government abdicated it's responsibility to regulate commerce when it switched to supply side economics and the result has been fascism and the integrated corporate systems of supply chains, it's not too difficult to understand the so-called 'free-trade' agreements.  Since the multinational corporations use components produced by corporations in foreign countries, they needed to have legal protection for their intellectual property (information) that they would be sharing with these foreign corporations via the supply chain management systems.  And they were willing to sell their souls to the devil to get these agreements passed - obviously because the opportunity for global monopolies was something that no corporation would pass up.   Actually, they didn't sell their soul, they sold yours.   By the inclusion of "services" in these agreements - with services being defined as people and jobs, they were tossing the American people into the dustbin of history in exchange for the market access and intellectual property rights in the "free trade" agreements. 

It also gives a new depth of understanding as to why the U.S. Transportation system is being redesigned on a massive scale - far in excess of domestic requirements and economic realities on the ground.  The allegedly 21st Century transportation system is being designed for the importers that have grown fat and greedy in global market of producing at third world prices and importing to sell at first world prices.   In simple terms it's like buying a Rolls Royce to drive around in when you live in a shack in Appalachia.   The American people are being asked to pay for the Transportation System - but they will not benefit from it and in fact, it is one of the principal means of their coming enslavement as Jorge Gerdau revealed in a "Competitiveness Forum" last year when he said:

In the future, corporations will not compete with each other, rather it will be people within regions competing against people in other regions. 

Corporations won't be competing with each other because they are partners in the supply chain.  Think about that.    


Vicky Davis
August 6, 2008