New Keynesian, stickiness and QM Theory

New Kenynesians have a name for some they cannot explain, they call it wage stickiness. In QM Theory we call it coherence.

In QM Theory, the economy is cognizant of the cost of restructuring and gains from economies of scale. We have a bias toward maintaining the current set of production equilibriums until the gains from restructuring exceed the bankruptcy cost of removing the old system. The firm has implicit accounting for the bankruptcy process as the economy nears a transitional phase.

Nominal wages insure a match between the production of consumer goods and the consumption. Aside from Brownian motion about the equilibrium, wages remain relatively stable. Technology shock generally causes the asymmetric bankruptcy and rebuilding process, but the point of transition is chosen, collectively, by aggregate management of inventory via the yield curve. Since a reorganization of the equilibrium points must occur collectively, the whole production networks must be redefined; it is to our economic advantage that all sectors synchronize reorganization. It is how we gain from asymmetry.

We operate in a finite dimensional production system because we have a biological bias toward economies of scale. By minimizing the number of production stages, we deliberately run the risk of bubbles in favor of the gains from reduced transaction counts. Hence we are deliberately asymmetric and deliberately create quantum mechanical inventory queues.

So we can answer the central question discussed in a Thoma post regarding Darwin and Smith. When does the relative incentive of the individual concflict with the group demand for minimal transaction counts? When the individul incentives leave the production queues with unsustainable shortages. At that point, our biologically inate ability to communicate collective certainy triggers a restructuring. The individual, upon entering the grocery store, observes a collective imbalance by observing inappropriate elasticities in the store shelves, a signal to the individual's sense of collective certainty, a force of coherence.