April 30, 2015

Essentials of Constructive Heterodoxy: institutions

Working paper at SSRN

Abstract  What do economists understand about the economy if they do not understand the profit phenomenon? Next to nothing. Therefore, the first task in theoretical economics is to clarify the difference between profit and wage income and their respective determinants. It was Ricardo who tackled the problem first, but neither Orthodoxy nor Heterodoxy solved it until this day. The need for a paradigm shift is indisputable. The structural axiomatic approach is more comprehensive as it embraces the consistent interaction of real and nominal variables of the monetary economy and the economic consequences of alternative variants of institutions, e.g. land ownership.

For the complete set of foundational equations — structural axioms and behavioral propensity function — see here