June 6, 2011

The coherency of money, profit, price, and distribution {07}

Working paper at SSRN

Abstract  When anything goes and nothing fits together this can be euphemized as pluralism. Lacking a common point of reference, discussions between various schools of economic thought proceed in the ‘hyperspace of assumptions’ (McCloskey). The incoherency of perspectives is due to self-chosen foundational assumptions. The present paper submits three structural axioms as formal core that is neutral with regard to assumptions about behavior. The objective is to clarify the interrelation of four elementary concepts and to eliminate some logical inconsistencies. Neither neoclassicals nor Keynesians came to grips with the relationship between profit and the distribution of the real product.