Amalfi IPSI Conference, March 2010

Concordian Economics

On the transformation of the ldquodismal sciencerdquo of economics

into

The Economics of JUBILATION

by Carmine Gorga

Keynesrsquo Model

Income = Consumption + Investment

Saving = Income ndash Consumption

Saving = Investment

Mainstream Economics

Does not respect principles of

IDENTITY NON-CONTRADICTIONEQUIVALENCE

Classical and Neoclassical Analysis

A BLACK BOX

D S

E

Price

Quantity

E = equilibrium and exchange

Pivoting Keynesrsquo Model

Y = C + I

S = Y - C

S = I

Flows Model

Income = Consumption + Saving (H)

Investment = Income ndash Saving (H)

Investment = Consumption

H = Hoarding

Parable of Talents

Investment equals

Income minus

Hoarding

Parable of Talents

0

Investment

100 Hoarding

More hoarding less growthMore hoarding more inflationMore hoarding more poverty

Investment = Consumption

Investment is only and always investment

Consumption is only and always consumption

Investment is production of real wealth

Consumption is expenditure of money

Investment is equivalent to Consumption

An Equivalence

The Economic System is observed from

Three Points of View

PRODUCTION or real wealth

DISTRIBUTION of ownership rights

CONSUMPTION of monetary wealth

Production Process

P = CG + KG + GH

KG = P ndash (GH + CG)

KG = OKG

P = Production of real wealth

CG = Consumer Goods

KG = Capital Goods

GH = Goods Hoarded

OKG = Ownership of capital goods

Distribution Process

D = OCG + OKG + OGHOKG = D ndash (OGH + OCG)

OKG = I

D = Distribution of ownership rightsOCG = Ownership of Consumer GoodsOKG = Ownership of Capital GoodsOGH = Ownership of Goods Hoarded

Consumption Process

C = Eh + E

I = C ndash EhI = E

Eh = money reserved for Hoarding-ExpenditureE = money reserved for Expenditure (on consumer

goods and capital goods)

General Synthetic Model

p = fp(pdc)d = fd(pdc)c = fc(pdc)

p = rate of change in total productiond = rate of change in distribution of

ownership rights c = rate of change in total expenditure

General Analytic Model

p = f(rdmec)d = f(YLrWR)

c = f(wdm)

r = rate of interest d = existing distributionmec = marginal efficiency of capital

YL = labor income rW = capital incomeR = rent w = real wealth

m = monetary wealth

Disaggregating AS

A Poincareacute section of production process

CG

KG

GH

CG = Consumer goods KG = Capital goods GH = Goods hoarded

Disaggregating ADO

A Poincareacute section of distribution process

owningmajority of assets

owningremainder of assets

owning only debt

Disaggregating AD

A Poincareacute section of consumption process

ECG

EKG

EGH

E = expenditure on consumer goods (CG) capital goods (KG) and goods hoarded (GH)

Flows of Values

Strange Attractor

The Bubble

MW = Monetary WealthRW = Real Wealth

DO = Pattern of Distribution of Ownership Rights

Theory ofEconomic Justice

Participative Justice

Commutative Justice

Distributive justice

Economic Rightsand Economic Responsibilities

Toward Common Goods

We all have the right of access to natural resourcesmdashand the responsibility to pay taxes for the exclusive use of those resources

We all have the right of access to national creditmdashand the responsibility to repay loans obtained on the basis of national credit

Economic Rightsand Economic Responsibilities

Toward Private Goods

We all have the right to the fruits of our labormdashand the responsibility to offer services equal to the value of our compensation

We all have the right to protect our wealthmdashand the responsibility to respect the wealth of others