The Nature of Capital and the Money-Goods Economy in a Contemporary Energetics Approach
General Accounting Theory Working Paper No. 68/KR/1/2004/S/178
34 Pages Posted: 31 Mar 2006
Date Written: January 12, 2004
At the beginning of time, Prime Energy began Her labour creating Universes - matters and spirits and laws of their evolution towards societies of human beings. Therefore all creatures are energetic by nature and must maintain an adequate level of energy's concentration to continue their life in their existing shape. In economic language, economic power is called capital, although academics have not been fully aware of this connection. Much trouble with real economies, and economic theories as well, has its roots in the lack of reconciliation of energy concept with physics and economics. Capital, in its sense of being used to "do something", is analogous to a property in physical science that is labelled as "energy". Energy is often defined as "the capacity to do work". And thermodynamics is the field in which the applications of energy and heat are thoroughly studied. Thermodynamics provides us with a useful analogy for understanding capital. The second law of thermodynamics is a key to understanding the properties of energy and is used as a prime analogy for understanding capital and its theories. This approach to capital and value sheds new light on such economics and accounting topics as human capital, labour cost, the nature of the money unit, interest rates and discount rates. Finally, as the result of this new approach, some new ideas about how to reduce taxes emerge from the inner quality of the money-goods economy. This paper includes an outlook of the main ideas of the money-goods economy as seen from the capital point of view.
Keywords: nature, capital, nature of capital, money-goods economy, energetics approach, risk premium
JEL Classification: M40, M41, M49
Suggested Citation: Suggested Citation
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By Shyam Sunder