June 18, 2014

Towards full employment through applied algebra and counter-intuitive behavior {58}

Working paper at SSRN

Abstract  It is common knowledge that neither Walrasians nor Keynesians nor Marxians nor Institutionalists nor Austrians nor Sraffaians came to grips with profit. The reason is a defective formal basis. In the present paper, the formal foundations are first renewed. When the profit theory is false the rest of an approach is questionable. What is reexamined next because of its vital practical implications is the theory of employment. One remarkable result is that the popular recipe to eliminate unemployment, viz. downward wage rate flexibility, is self-defeating because it does not take the objective systemic properties of the monetary economy into account.

For the correct foundational equations — structural axioms, definitions, and behavioral propensity function — see Wikimedia AXEC61.