Standard economics starts with behavioral axioms and arrives at conclusions about the equilibrium properties of the economy as a whole at point t. The present paper employs objective structural axioms and random changes in order to determine the conditions for market-clearing and budget-balancing in the pure consumption economy until the limit t → ∞. From the conditions of stochastic supersymmetry, six simple behavioral rules are derived that guarantee the desired outcome. These rules contrast with actual behavior and this explains why the plans and expectations of economic man are many times frustrated.
June 14, 2011
June 6, 2011
The coherency of money, profit, price, and distribution {07}
Working paper at SSRN
Working paper at ARCHIVE
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.
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.
June 2, 2011
Beginning, crises, and end of the money economy {06}
Working paper at SSRN
Working paper at ARCHIVE
Abstract A crisis is but a crisis when the long-run outlook is definitively positive. Then a lower turning point must exist. This implicates a vision or, in the ideal case, a formalized theory of the money economy's possible end states. This theory has to provide an endogenous explanation of end states and crises. The equilibrium approach excludes endogenous causes in principle. Thus disturbances can only be explained by exogenous random shocks. The structural axiomatic approach, which is applied in the following, consistently defines the potential systemic crisis point and the conditions of an economic happy end.
Abstract A crisis is but a crisis when the long-run outlook is definitively positive. Then a lower turning point must exist. This implicates a vision or, in the ideal case, a formalized theory of the money economy's possible end states. This theory has to provide an endogenous explanation of end states and crises. The equilibrium approach excludes endogenous causes in principle. Thus disturbances can only be explained by exogenous random shocks. The structural axiomatic approach, which is applied in the following, consistently defines the potential systemic crisis point and the conditions of an economic happy end.
May 23, 2011
What is wrong with heterodox economics? Kalecki's profit theory as an example {05}
Working paper at SSRN
Working paper at ARCHIVE
Abstract Kalecki’s profit theory has always been popular among heterodox economists as an alternative approach to solve the paradox of monetary profits. In the present paper, his formula ‘The workers spend what they get, the capitalists get what they spend’ is scrutinized for its logical and factual implications. The analysis shows that Kalecki’s alternative approach points in the right direction but unfortunately shares a crucial conceptual error with standard economics.
Working paper at ARCHIVE
Abstract Kalecki’s profit theory has always been popular among heterodox economists as an alternative approach to solve the paradox of monetary profits. In the present paper, his formula ‘The workers spend what they get, the capitalists get what they spend’ is scrutinized for its logical and factual implications. The analysis shows that Kalecki’s alternative approach points in the right direction but unfortunately shares a crucial conceptual error with standard economics.
May 22, 2011
Schumpeter and the essence of profit {04}
Working paper at SSRN
Working paper at ARCHIVE
Abstract Schumpeter had a clear vision of the developing economy, but he did not formalize it. The quest for a germane formal basis is in the following guided by the general question: what is the minimum set of foundational propositions for a consistent reconstruction of the evolving money economy? We start with three structural axioms. The claim of generality entails that it should be possible to free Schumpeter's approach from its irksome Walrasian legacy and to give a consistent formal account of the elementary circular flow that served him as a backdrop for the analysis of the entrepreneur-driven market system.
Abstract Schumpeter had a clear vision of the developing economy, but he did not formalize it. The quest for a germane formal basis is in the following guided by the general question: what is the minimum set of foundational propositions for a consistent reconstruction of the evolving money economy? We start with three structural axioms. The claim of generality entails that it should be possible to free Schumpeter's approach from its irksome Walrasian legacy and to give a consistent formal account of the elementary circular flow that served him as a backdrop for the analysis of the entrepreneur-driven market system.
May 19, 2011
The Pure Logic of Value, Profit, Interest {03}
Abstract Standard economic models are based on axioms that epitomize the fundamental behavioral assumptions. This approach is trapped in a blind alley. The suggested change of perspective is guided by the question: what is the minimum set of nonbehavioral propositions for the consistent reconstruction of the evolving monetary economy? We start with three structural axioms and determine their real-world implications. The differentiation of the axiom set leads to the structural value theorem. For the limiting case of the harmonic structure a formal link to the classical and neoclassical value theories can be established.
May 15, 2011
Keynes’s missing axioms {02}
Working paper at SSRN
Working paper at ARCHIVE
Abstract Between Keynes’s verbalized theory and its formal basis persist a lacuna. The conceptual groundwork is too small and not general. The quest for a comprehensive formal basis is guided by the question: what is the minimum set of foundational propositions for a consistent reconstruction of the monetary economy? We start with three structural axioms. The claim of generality entails that it should be possible to prove that Keynes’s formalism is a subset of the structural axiom set. The axioms are applied to a central part of the General Theory in order to achieve consistency and generality.
Abstract Between Keynes’s verbalized theory and its formal basis persist a lacuna. The conceptual groundwork is too small and not general. The quest for a comprehensive formal basis is guided by the question: what is the minimum set of foundational propositions for a consistent reconstruction of the monetary economy? We start with three structural axioms. The claim of generality entails that it should be possible to prove that Keynes’s formalism is a subset of the structural axiom set. The axioms are applied to a central part of the General Theory in order to achieve consistency and generality.
Subscribe to:
Posts (Atom)