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Do market relative prices reflect real scarcity of resources? If this were so, market prices would provide society with the correct signals about real scarcities. Economics--the science of scarcity-- has different answers to this question. Following the principles of current epistemology, the paper reviews three theories of markets: neoclassical, bio-economics, and unified theory, analyzing their assumptions, their derived empirical predictions about the relation between market prices and scarcity, and their validity when confronted against known basic facts. Clarifying misconceptions about the nature and the role of the market mechanism in the functioning of capitalism is the expected contribution of the paper. [ABSTRACT FROM AUTHOR]

The facts indicate that real wage rates tend to be homogenous within the First World, but they exhibit significant differences between the First World and the Third World. The standard neoclassical trade model predicts real wage equalization across countries. This prediction is consistent with the first fact, but is refuted by the second. On the other hand, the standard Ricardian model does not predict real wage equalization, so in principle these facts do not refute the model; however, it is unable to explain the wages-profits distribution. This paper proposes a generalized Ricardian trade model, which solves this theoretical difficulty. The generalized model is able to explain both facts about real wages and international trade. On epistemological grounds, the Ricardian theory proves to be superior to the neoclassical theory. [ABSTRACT FROM AUTHOR]

Economic elites have not received enough attention in the economic literature. The obvious reason is limited access to information. This paper seeks to contribute to contemporary knowledge on elites in two ways. First, it employs a new unique data set on the world economic elite covering 2002-2014 to develop a method of measuring the degree of elite circulation; second, it provides a theoretical explanation of the observed facts. The empirical finding is that the world economic elite is subject to a low degree of circulation. Despite increased globalization, liberalization, long-term economic growth, and the recent Great Recession, the core of the elite remains mostly unchanged. Our theory attempts to explain this fact by introducing the analytical distinction between market competition and elite competition, which is a kind of meta-competition. Thus, the following relationship is derived from the theory: The low level of elite circulation, that is, the low meta-competition, underlies the oligopolistic market structures that we observe in the real world. [ABSTRACT FROM AUTHOR]