AXEC: New Foundations of Economics: Distribution

Showing posts with label Distribution. Show all posts

October 8, 2026

Occasional X: Clueless economists / Distribution, Inequality (XXIII)

“People ask me what is my aim when I write on inequality (pre-order my book btw). Some expect me to answer that its because I want to show some people (like Zucman, Piketty and Saez) are wrong. They are wrong to think that. My objective is to speak to those who are interested in listening — whether they agree with me or not already. In fact, any true social scientist should think that way: the next margin of convincing people that your results are correct.” (Vincent Geloso) To think that he is a 'true social scientist' is the economist's methodological ur-mistake. Vincent Geloso never understood profit and, by consequence, how the economic system works. Because his Profit Theory is wrong, his Distribution Theory is wrong. The free-market economy runs on profit. Macroeconomic profit is given by the axiomatically correct Profit Law Qm:=(I−Sm)+(G−T)+(X−M)+Yd. The Profit Law implies PublicDeficit=PrivateProfit Qm:=(G−T)>0, i.e., macroeconomic profit is (co-)produced by deficit-spending/money-creation, i.e., the growth of public debt. In free-market economies, public debt has increased with minor interruptions for over 200 years. Therefore, Qm:=(G−T)>0 has been a critical factor for Capitalism's survival. The free-market economy is continuously saved from breakdown by the deficit-spending/money-creating duo of treasury/central bank, i.e., the State. This means that the premise of legacy economics, i.e., that the unfettered free-market economy is a self-adjusting, self-stabilizing, and self-optimizing system, is axiomatically false. This means that economics is failed/fake science. Economists are not scientists. They are mostly silly wafflers for a low-IQ audience. Vincent Geloso is living proof. The free-market polity is an Oligarchy with parliament / treasury / central bank / capital markets / big business / three-letter agencies as integral parts. With the other determinants excluded for the moment, private financial wealth grows with public debt. Eventually, WeTheOligarchy owns the financial assets, and WeThePeople owe the public debt and are taxed for interest on government bonds as long as the debt is rolled over. Interest payments on the debt reduce their disposable income for an indefinite time. The government taxes WeThePeople on behalf of WeTheOligarchy. This profit/interest/tax triple-whopper produces wealth for WeTheOligarchy and debt and real-income reductions for WeThePeople. In addition, by reshuffling debt, resetting interest rates, and taking losses, the central bank acts as a direct profit pump. Its losses reappear mainly as profits of the business sector, particularly the banking sub-sector. In addition to legitimate monetary operations, the Fed is well-positioned to carry out or support illicit operations that are economically equivalent to putting counterfeit money into circulation. The volume of illicit deficit-spending and money-creation, as well as the quantity of Dark Money in circulation, is not publicly known. Therefore, Distribution Theory has no empirical leg to stand on. The financial sub-sector, big business, and billionaires recycle some of their profits and financial wealth to control major public, private, and political institutions. Thus, they corrupt the polity. In essence, this is how the self-alimentation and self-preservation of WeTheOligarchy work and how 'The Great Enrichment' comes about.
— AXEC (@EgmontHandtke) October 8, 2026

August 29, 2026

Occasional X: Clueless economists / Profit (CLXIII)

“One of the best books I've read recently on rent (rent). It historically debunks the dichotomy created by techno-feudal and rentier theorists.” (Ali Alemdar, referring to Matthew Costa)

Yes, David Ricardo asked the right question: “To determine the laws which regulate this… pic.twitter.com/LbFCY9zITI
— AXEC (@EgmontHandtke) August 29, 2026

August 26, 2026

Occasional X: How it works (DXII)

“U.S. Wages have plunged to just 43% of national income, the lowest level since the Great Depression.” (Barchard)

Economists in general, and Barchard in particular, do not know how macroeconomic profit is causally/ formally determined. This is self-disqualifying.

The Palgrave… pic.twitter.com/bGKr8SE6r4
— AXEC (@EgmontHandtke) August 26, 2026

August 20, 2026

Occasional X: Clueless economists / Distribution, Inequality (XXII)

“No, Productivity Does Not Explain Income. The marginal productivity theory of income distribution was born a little over a century ago. Its principle creator, John Bates Clark, was explicit that his theory was about ideology and not science.” (Blair Fix)

The foundational…
— AXEC (@EgmontHandtke) August 20, 2026

August 17, 2026

Occasional X: How it works (DIII)

“Marx explained the basic contradiction over 150 years ago. Competition compels each capitalist to raise productivity and cheapen commodities because doing so increases relative surplus-value and gives them an advantage over competitors.” (Dohaciel Ygzgzot)

This is the problem… pic.twitter.com/pRePIrVMRd
— AXEC (@EgmontHandtke) August 17, 2026

August 13, 2026

Occasional X: Clueless economists / Distribution, Inequality (XXI)

“NEW: income inequality in US & UK is so wide that while the richest are very well off, the poorest have a worse standard of living than the poorest in countries like Slovenia. Essentially, US & UK are poor societies with some very rich people.” (John Burn-Murdoch)

The…
— AXEC (@EgmontHandtke) August 13, 2026

August 12, 2026

Occasional X: Clueless economists / Profit (CLIX)

“Javier Milei names his favorite economists Murray Rothbard, Ludwig von Mises, Friedrich von Hayek, Henry Hazlitt, Gary Becker, Milton Friedman, etc.” (Hayek Quotes)

Murray Rothbard never understood profit. Consequently, he never understood how the economic system works. The… pic.twitter.com/sCcXwS0MnX
— AXEC (@EgmontHandtke) August 12, 2026

July 14, 2026

Occasional X: Clueless economists / Profit (CLIV)

“It is a common complaint that many years ago Marx identified: all capitalists want that workers of other capitalists be paid higher wages so that they can become their customers, but they want their own workers to be paid as little as possible. This is exactly what the West is… pic.twitter.com/oh2xX3JcTp
— AXEC (@EgmontHandtke) July 14, 2026

June 15, 2026

Occasional X: Clueless economists / Distribution, Inequality (XX)

“Its a simple pitch: markets are egalitarian forces that improve living standards really fast. Markets minimize the need for the state to do things, complement some of its (the state) good things, and can offset some of the bad things it does.

The proof is the extended gilded…
— AXEC (@EgmontHandtke) June 15, 2026

June 9, 2026

Occasional X: Clueless economists / Distribution, Inequality (XIX)

“In 1879, JP Morgan paid a man to invent the lie that is the foundation of modern economics. A billionaire [Nick Hanauer],who helped start Amazon just exposed the whole thing on Diary of a CEO, and once you hear it you will never look at paychecks the same way again …So JP… pic.twitter.com/Bh7xeO5sRm
— AXEC (@EgmontHandtke) June 9, 2026

June 7, 2026

Occasional X: How it works (CDLXXXII)

“Billionaires increased most in the two places where the economy grew and poverty drastically went down: South Asia and East Asia. The best solution to poverty is a freer, growing, dynamic economy.” (Luis Garicano)

Luis Garicano never understood profit and, by consequence, how…
— AXEC (@EgmontHandtke) June 7, 2026

June 5, 2026

Occasional X: How it works (CDLXXXI)

“… but saying Thomas Piketty is economically incompetent is not serious. ” (Hervé Joly)

No, Thomas Piketty is not the incompetent exception but the rule. The history of economic thought provides proof that the representative economist is NOT, and never has been, a competent…
— AXEC (@EgmontHandtke) June 5, 2026

May 10, 2026

Occasional X: How it works (CDLXXVI)

“The immense power of the new plutocracy: How billionaires like Musk, Bezos and Zuckerberg shape our lives and our democracies.” (Branko Milanovic)

Billionaires are not independent and innovative entrepreneurs who risk their own money to create progress for humanity, but…
— AXEC (@EgmontHandtke) May 10, 2026

April 23, 2026

Occasional X: The futile attempt to recycle MMT (CXCIV)

“The UK Government HAS to run a public deficit for the private sector to be able to net save financial assets. (D Laws)

Correct accounting says Qm≡−Sm+(G−T), i.e., the balance of the business sector, a.k.a. profit Qm, is equal to the negative balances of the household sector… pic.twitter.com/vwrbhvrtA9
— AXEC (@EgmontHandtke) April 23, 2026

“The sectoral analysis described is provided for clarity and for illustrative purposes to show that sectoral balances add to zero (no matter how many sectors you wish to divide the economy into)”. (D Laws)

Yes, dear MMT fraudster, this is long known to people who can do math. ⇓ pic.twitter.com/6orgoDH351
— AXEC (@EgmontHandtke) April 23, 2026

March 3, 2026

Occasional X: How it works (CDLX)

“Economists are gradually realizing that the issuance of Treasury bonds is part of monetary policy and not a financing operation.” (?whispers?)

Whispers does not understand profit and, as a logical consequence, how the economic system works. This is self-disqualifying. People… pic.twitter.com/oTXj32kXGR
— AXEC (@EgmontHandtke) March 3, 2026

February 19, 2026

Occasional X: How it works (CDLIV)

“A WORLD WITHOUT BILLIONAIRES IS NOT A WORLD WHERE EVERYONE ELSE SHARES THE WEALTH BILLIONAIRES CREATED. IT'S A WORLD WITHOUT THE WEALTH, INNOVATION AND PROGRESS BILLIONAIRES CREATED.” (Meme, Michael Arouet)

Billionaires do not create wealth. Money-printers create billionaires.…
— AXEC (@EgmontHandtke) February 19, 2026

Twitter/X Mar 18, 2026 The association capitalism ↔ innovation is just a sales proposition

February 18, 2026

Occasional X: How it works (CDLIII)

“The problem is that the benefits of running surpluses are longer term and require long term thinking.” (Liam Hehir)

Liam Hehir has no idea how Capitalism works. This is self-disqualifying.

An important distinction is that government spending can be consumptive or investive.…
— AXEC (@EgmontHandtke) February 18, 2026

February 11, 2026

Occasional X: How it works (CDL)

“According to Greg Ip, in the US economy today, 'rewards are going disproportionately toward capital instead of labor. Profits have soared since the pandemic. The result: Capital is triumphant, while the average worker ekes out marginal gains.'” (Michael Pettis)

Michael Pettis… pic.twitter.com/flPU2mXmsG
— AXEC (@EgmontHandtke) February 11, 2026

February 8, 2026

Occasional X: Clueless economists / Tax (VI)

#Economics #AllYouNeedToKnow

“The government doesn’t have any money. Only people have money.” (Milton Friedman)

“People don’t have any money. Only people who work for the Oligarchy get money.” (AXEC)

Milton Friedman never understood profit and, by consequence, how the economic… pic.twitter.com/nUNsgFv4gn
— AXEC (@EgmontHandtke) February 8, 2026

Also at Thomas Sowell Quotes

January 29, 2026

Occasional X: How it works (CDXLVI)

#Economics #AllYouNeedToKnow

“Europe will never have massive tech companies because they fear success.” (Peter Thiel, quoted by Yawwwn)

U.S. economic development in general and entrepreneurship, in particular, is mainly nominal.

The U.S. economy runs on profit. Macroeconomic…
— AXEC (@EgmontHandtke) January 29, 2026

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Knowledge only — no opinion

Science does not explain everything, but non-science explains nothing.

Neither orthodox nor heterodox economics satisfies the scientific criteria of material and formal consistency.

Economists cannot explain how the economy works. The Profit Theory is false since Adam Smith. There is much opinion and little knowledge.

Opinion is the realm of political economics, knowledge is the realm of theoretical economics.

Political economics is scientifically worthless.

Theoretical economics is built upon clearly stated premises, i.e., upon a set of axioms.

Orthodoxy got the axiomatic foundations wrong and Heterodoxy has none at all.

Economics is a failed science. Economists are incompetent scientists.

Profit

Neither Classicals, nor Walrasians, nor Marshallians, nor Marxians, nor Keynesians, nor Institutionialists, nor Monetary Economists, nor MMTers, nor Austrians, nor Sraffaians, nor Evolutionists, nor Game theorists, nor EconoPhysicists, nor RBCers, nor New Keynesians, nor New Classicals ever came to grips with profit. Hence, they all fail to capture the essence of the market economy.

Because of this, economists have nothing to offer in the way of a scientifically founded economic policy guidance.

The hybrid science

As a first approximation, one can agree on the general characteristic that the economy is a complex system.

However, with the term system one usually associates a structure with components that are non-human. In order to stress the obvious fact that humans are an essential component of the economic system the market economy should be characterized more precisely as a complex hybrid human/system entity.

The scientific method is straightforwardly applicable to the sys-component but not to the hum-component. While it is clear that the economy always has to be treated as an indivisible whole, for good methodological reasons the analysis has to start with the objective system-component.

In gestalt-psychological terms the economic system is the foreground, individual behavior the background. Common sense wrongly insists that the hum-component must always be in the foreground. This fallacy compares to geo-centrism. The economic system has its own logic which is different from the behavioral logic of humans. The systemic logic is what Adam Smith called the Invisible Hand.

There are systemic laws but no behavioral laws. Systemic laws have the same methodological status as physical laws.

Neither Orthodoxy nor Heterodoxy can tell what the systemic laws of the actual monetary economy are.

Whether the outcome of the human/system-interaction is good or bad is a politcal question that lies outside of theoretical economics. Theoretical economics explains how the actual economy works - no less, no more.

Narrative vs.Theory

Psychological, sociological or behavioral assumptionism cannot yield anything other than a gossip model of the world. Second-guessing the agents is not economic analysis.

Science deals exclusively with propositions that can in principle be decided by objective means. The rest is opinion, faith, phantasy, motive speculation, allegation, hallucination, myth, paranoia, ink-blot association, psychology, philosophy, in one word: storytelling.

Storytelling is the original mode of communication in the social realm — except science.

Political economics is storytelling and, by default, the natural habitat of confused confusers. Walrasianism, Keynesianism, Marxianism, Austrianism are social narratives and not scientifically valid representations of reality.

"The truth is, most persons, not excepting professional economists, are satisfied with very hazy notions." (Fisher)

In marked contrast, theoretical economics lives up to the standards of material and formal consistency. A scientific theory is the best mental representation of reality that is humanly possible.

Theory starts with a set of objective and consistent axioms.

Paradigm Shift

"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)

"As will become evident, there is more agreement on the defects of orthodox theory than there is on what theory is to replace it: but all agreed that the point of the criticism is to clear the ground for construction." (Nell)

"The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory." (Blaug)

"Is it not a fact, which stares at us from the histories of all sciences, that it is much more difficult for the human mind to forge the most elementary conceptual schemes than it is to elaborate the most complicated superstructure when those elements are well in hand?" (Schumpeter)

"The task of producing knowledge against the grain requires imagination." (Mirowski)

"A new idea is extremely difficult to think of. It takes a fantastic imagination." (Feynman)

"The scientific imagination dreams of explanations and laws." (Peirce)

"It is brilliance of imagination which makes the glory of science." (Evans)

"... we know little more now about ‘how the economy works,’ ... than we knew in 1790, after Adam Smith completed the last revision of The Wealth of Nations." (Clower)

Selftest and to watch for

You apply one of these items

• supply-demand-equilibrium,

• general equilibrium,

• marginal utility,

• well-behaved production functions,

• total income = value of output,

• total income = wages + profits,

• I=S,

• wage rate down - employment up,

• behavioral axioms?

Then you are out of science because of unnoticed material or formal inconsistency.

Every economist who uses the concept of equilibrium is scientifically incompetent because she/he failed to notice that equilibrium is an economic nonentity.

Practically this means: as soon as the word equilibrium appears in an economic text it can be thrown into the waste basket. The same holds for all other nonentities.

The vast majority of economists deals mainly with nonentities. This is why Walrasianism, Keynesianism, Marxianism, Austrianism is scientifically worthless.

Since Adam Smith, economic policy guidance has no sound scientific foundations.

To be replaced (1)

The core premises of Orthodoxy are uncertain and false and this fully explains the failure of the research program.

“As with any Lakatosian research program, the neo-Walrasian program is characterized by its hard core, heuristics, and protective belts. Without asserting that the following characterization is definitive, I have argued that the program is organized around the following propositions: HC1 economic agents have preferences over outcomes; HC2 agents individually optimize subject to constraints; HC3 agent choice is manifest in interrelated markets; HC4 agents have full relevant knowledge; HC5 observable outcomes are coordinated, and must be discussed with reference to equilibrium states.” (Weintraub)

The inescapable Paradigm Shift consists of the move from this obsolete hard core to the superior set of structural axioms.

To be replaced (2)

The fundamental equations of macroeconomics have been formulated by Keynes in two lines.

"Income = value of output = consumption + investment. Saving = income - consumption. Therefore saving = investment."

This elementary syllogism is demonstrably false. The demonstration consists in the proof that Keynes could not solve the Profit Puzzle. Neither did Post-Neo-New-Keynesians.

In the most general terms, the economics Paradigm Shift consists in switching from the behavior-centric bottom-up approach to the structure-centric top-down approach. This is comparable to the Copernican turn from geo-centrism to helio-centrism.

Consensus

Economics is a science without scientists. Because they are ignorant of the elementary difference between profit and income, the present generation of economists has not made and cannot make a significant contribution to the discussion about how the actual economy works.

Every orthodox or heterodox economist can convince himself/herself that their profit theory is defective.

Every non-economist can — by applying elementary logic — convince himself that conventional profit theories are false. See 'How the intelligent non-economist can refute every economist hands down'.

Because the profit theory is false the whole of conventional economic theory has to be rejected.

"What is now taught as standard economic theory will eventually disappear, no trace of it will remain in the universities or boardrooms because it simply doesn’t work: were it engineering, the bridge would collapse." (McCauley)

No scientist will ever accept Walrasianism, Keynesianism, Marxianism, or Austrianism. These approaches are logically and/or empirically refuted. This is the actual methodological state-of-art. Walrasians, Keynesians, Marxians, or Austrians are still at the proto-scientific stage. These approaches cannot be improved, only abandoned.

Economists are a public nuisance because they have an opinion on everything but knowledge of nothing.

About me

“Bottom line is that your profit law is just a definition you made up nobody else agrees with, nobody. You are all alone with your precious tautology.” Barkley Rosser

“In any event, your entire theory is based on you doing macro accounting in wacky fashion that nobody agrees with.” Brian Romanchuk

"Your stuff is at least original: it's quite cool after a couple of decades at this to see a fresh Economics. But real promises are not advanced: they were around for millennia until the Greeks obscured them with Metaphysics." Chris Cook

"No mate, they're you-blockers. You have all the personality traits of a crank, and the rest of them have tired of you. You could be 100% right, and you'd still die as your only follower." Steve Keen

"What you are doing fills is all with joy, your constructive critique is most welcome!"

Achim Truger,

German Council of Economic Experts,

in a failed attempt to be ironic

"200+ years of thought and yet you are the only one who gets it—or even understands your argument. Thank god we have you, pseudonymous Twitter user. Otherwise no one would know."

William Luther

Assistant Professor of Economics

in a failed attempt to be funny

"Egmonts profit law is the perfect equation that demonstrates this in action. Put the equation into a spreadsheet and then add government spending and watch how it flows into profits. Enter in some debt (-Sm) and watch too how that flows into profits. It can't go anywhere else."

Dean

About the rest of economics

Walrasianism, Keynesianism, Marxianism, Austrianism, MMT, Pluralism are mutually contradictory, axiomatically false, materially/ formally inconsistent. Economics is a failed science.

“There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” Leonardo da Vinci

In economics, the overwhelming majority belongs to Class III. This explains why economics is after 200+ years still at the proto-scientific level.

The obvious task for every economist is to advance from cargo cult science and political agenda-pushing to science. This is absolutely beyond the means of Class III people.

For 200+ years now, economists are not scientists but agenda pushers, useful idiots, clowns in the political Circus Maximus.

Nopopop

This blog does not add to any popular/un- popular opinion.

This blog does not hand out advice about how to avoid taxes, to get rich on the stock market, to be successful in business, to increase the wealth of nations, to run an economy, to maximize welfare, to prevent national/global bankruptcy, to improve the institutional setup of society, to get out of national/global depression, nor about how to save humankind or any subgroup thereof.

This blog is about the true theory of the actual monetary economy.

"In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion." (Stigum)

Focus

Science is of primary interest and importance. Scientists are of secondary interest.

With regard to science, most people lose focus easily because of a natural preference for anecdotes and gossip over facts or subjectivity over objectivity.

Hence, Schumpeter once considered it necessary to remind his habitually disoriented fellow economists: “Remember: occasionally, it may be an interesting question to ask why a man says what he says; but whatever the answer, it does not tell us anything about whether what he says is true or false.”

Science is about true/false and nothing else.

Disclaimer

Missing Blog-Reference links: AXEC does not guarantee that their comments can at any time be recovered from where they have been posted intitially because the availability depends on the publication policy of the blog owner which is implicitly accepted on entering a debate. See also: 'Economists: Incompetent? Stupid? Corrupt?'

Texts: Parts of arbitrary length of any of the author's texts is and will be used again by the author in papers, books, websites, blogs, and other media without explicit reference. The right to make corrections or minor textual improvements on reutilization is reserved. Therefore, it is always a good idea to double-check for the latest version.

Caution: Do not expect a corroboration of your political view. Neither a refutation. Political economics has been scientifically worthless since Adam Smith. Politics has to be separated from economics because it is categorically different from science. The best science can do and has always done is to prove beyond reasonable doubt that you have been objectively wrong or ignorant until now. Science goes beyond the naive common sense of today and becomes the sophisticated common sense of tomorrow.

See also Terms of Use and Legal at www.AXEC.org

Outlook

To recall, while political economics is storytelling, theoretical economics adheres to scientific standards.

The first task of theoretical economics is to get the axiomatic foundations right. This is what J. S. Mill called the opus magnum. Neither Orthodoxy nor Heterodoxy came up with a reasonable solution to this day. This explains the secular stagnation of economics.

There is no serious alternative to structural axiomatic economics. This is not a matter of opinion but of proof. The sole criteria are material and formal consistency.

All of economics has to be reconstructed from the ground up.

Major economic policy implication

The price mechanism does not work as standard economics hypothesizes. The axiom-based Employment Law states that overall employment increases if the average wage rate increases relative to average price and productivity. This gives one the lever to improve the employment situation all over the world and to fend off deflation without rising debt and without artificial capacity growth. To increase the average price relative to the average wage rate and productivity increases unemployment.

Right policy depends on true theory.

“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Lacking the true theory, economists promote for more than 200 years opinion instead of knowledge.