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An Inconsistency in Using Stock Flow Consistency in Modelling the Monetary Profit Paradox
- Source :
- Economics : the Open-Access, Open-Assessment e-Journal (2014)
- Publication Year :
- 2014
- Publisher :
- De Gruyter, 2014.
-
Abstract
- In order to understand from where the profits or monetary profits of capitalists and firms emerge the author examined the phrase of Marx, 'Die Gesamtklasse der Kapitalisten kann nichts aus der Zirkulation herausziehen, was nicht vorher hineingeworfen war.' (The class of capitalists cannot extract from the circulation, what has not previously been thrown in.) Also Keen studied the monetary paradox and contrary to circuitists he came to the conclusion that capitalists can make monetary profit with a possibility to earn enough to repay their debt and with positive balances for all actors. The author will prove that Keen made a fundamental mistake and is using the Stock Flow Consistency Principle in an inconsistent way by combining it with behavior equations in a dynamic model. So the solution presented here is not only showing that the numbers are incorrect but the method itself. This resolves a contraction between Keen and circuitists and implies that, in a Wicksellian pure credit economy, it remains impossible to gain a monetary profit for all actors. More precisely that the total sum of monetary profit over all actors is zero.
- Subjects :
- jel:C60
media_common.quotation_subject
Social Sciences
Mistake
jel:E44
Monetary profit paradox,stock flow consistency,circuit theory,endogenous money,Wicksellian pure credit economy
jel:E20
jel:E25
Profit (economics)
jel:G00
Microeconomics
C50
Debt
Economics
ddc:330
E11
E12
Monetary profit paradox
HB71-74
Stock (geology)
media_common
Endogenous money
Keynesian economics
jel:C50
Wicksellian pure credit economy
jel:E11
circuit theory
endogenous money
jel:E12
C60
stock flow consistency
monetary profit paradox,stock flow consistency,circuit theory,endogenous money,Wicksellian pure credit economy,social norms,cognitive costs,laboratory experiments
Economics as a science
E44
G00
E25
General Economics, Econometrics and Finance
E20
Subjects
Details
- Language :
- English
- Database :
- OpenAIRE
- Journal :
- Economics : the Open-Access, Open-Assessment e-Journal (2014)
- Accession number :
- edsair.doi.dedup.....692916ff76fce1a0494f2b94fe648e4d