Understanding Profit and the Markets: The Canonical Model

Abstract

Neither Walrasians nor Keynesians have a clear idea of the fundamental economic concepts income and profit, nor of the interdependence of qualitatively different markets. Critique of these approaches is necessary but not overly productive. A real breakthrough requires a new set of premises because no way leads from the accustomed behavioral assumptions to the understanding of how the economy works. More precisely, the hitherto accepted behavioral axioms have to be replaced by structural axioms. Starting from new formal foundations, this paper gives a comprehensive and consistent account of the objective interrelations of the monetary economy’s elementary building blocks.

Keywords: new framework of concepts, structure-centric, axiom set, income, profit, full employment, price stability, quantitative adaptation, harmonic structure, primary markets, secondary markets, financial markets

JEL Classification: B59, D00, E00