Mathematical Proof of the Breakdown of Capitalism

Abstract

The existence proof of general equilibrium, which is based on subjective-behavioral axioms, is replaced by the existence proof of a final turning point, which is based on objective-structural axioms. The final turning point is characterized by an irreversible switch from profits to losses for the business sector as a whole and marks the beginning of the breakdown of the monetary economy. This has nothing to do with any market failures or irrationalities. The final turning point can be preceded by an arbitrary number of temporary profit/loss reversals and is in full accordance with the households’ optimal intertemporal consumption plans.

Keywords: new framework of concepts, structure-centric, axiom set, consumption economy, Profit Law, simulation, market clearing, budget balancing, final turning point, existence proof

JEL Classification: B59, D90, E19