Occasional X: How it works (DXLII)

“Capitalist production is not merely the production of commodities, but essentially the production of surplus value. The worker produces not for himself, but for capital. For this reason, it is no longer sufficient for him to produce in general. He must produce surplus value.” (Evald Ilyenkov) Marx never understood how surplus value comes about. Consequently, he never understood how Capitalism works. All price and profit theories up to the present are provably false. In particular, Supply-Demand-Equilibrium has never been more than proto-scientific garbage. The same holds for Marx's Value Theory. However: “The problem is not just to say that something might be wrong, but to replace it by something ― and that is not so easy.” (Feynman) Macroeconomics has always been axiomatically false. It has to be rectified first. This requires a Paradigm Shift. In the following, the economic system is reduced to the bare bones. The new axiom set for an elementary production-consumption economy is given in lines 1-3 as shown in the table AXEC226f ⇓ . For the elementary production-consumption economy, this yields the price under the condition of market-clearing, i.e., P=:ρEc*W/R in line 7. And under the additional condition of budget-balancing, i.e., Ec=Yw that is ρEc=1, it yields P=:W/R in line 5. The subjective element vanishes completely if the expenditure ratio ρEc is 1. Price and profit become purely systemic. In the most elementary case, the market-clearing price P moves with unit wage costs W/R. The workers always get the whole product O. Their real wage is equal to the productivity, i.e., W/P=R. General wage increases are pointless. The worker's living standard depends alone on the productivity R. The profit Qm for the business sector is zero in line 11. Price increases can come only from wage rate increases or from productivity decreases. The quantity of money is not a price determinant. Now, the budget-balancing condition, i.e., Ec=Yw, that is ρEc=1, is lifted. If ρEc>1, the household sector dissaves in line 12, the market-clearing price increases in line 7, and the business sector makes a profit in line 11. If ρEc<1, the household sector saves and the business sector makes a loss. Dissaving, i.e., ρEc>1, means that the household sector takes a credit from the Central Bank. The Central Bank stands here for the banking system. Dissaving also means that the business sector makes a profit and accordingly has additional demand deposits at the Central Bank. The household sector as a whole still gets the whole output O. The business sector ends up with an increase of money in the bank. It seems that the workers have produced 'surplus value'. Actually, the surplus value, a.k.a. profit Qm, does not come from production but from deficit spending. Obviously, the household sector cannot sustain deficit-spending for an indefinite time. Fortunately, there are other profit sources. The generalization yields Qm:=(I−Sm)+(G−T)+(X−M)+Yd. In any case, 'surplus value' has nothing to do with labor time or psychological concepts like alienation. It has more to do with the principle: From nothing comes nothing. In economic terms: the sectoral balances add up to zero. What appears as an increase of 'value' in the business sector is equal to an increase in the household sector's debt. If the debt is eventually repaid, this causes losses and eventually a systemic breakdown. Capitalism requires profit, and profit requires the growth of private/public debt.

— AXEC (@EgmontHandtke) November 13, 2026