November 16, 2013

The Ideal Economy: A Prototype {46}

Standard economics starts with behavioral assumptions that are formally expressed as axioms. This approach met with little scientific success but still enjoys some popularity for lack of a convincing alternative. To replace the subjective formal foundations with objective structural axioms is the first task of this paper. To give a correct account of how the monetary economy works is the second. This entails an explanation of the continuous clearing of both the product and the labor market in the random consumption economy, that is, of how the economy could establish ongoing full employment and price stability in principle.