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The 0th Law of
Microeconomics
and Macroeconomics
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The 0th Law of
Macroeconomics and Microeconomics is as follows :
Any
Microeconomic or Macroeconomic theory, principal or conjecture is
explicitly forbidden from ignoring the principals and practices of
accounting.
Any separation of "accounting practice" from "economic theory" will
completely and totally void the economic theory, as any and all economic theory 'is
based on the observation of the average and typical behaviors of masses
of individual accounting decisions'.
All Microeconomic or Macroeconomic
theories, principals or conjectures can only follow after the 0th Law.
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The fundamental arguments
that makes the 0th Law true
- All thermodynamic systems, in order to be compared to
each other [or to otherwise function properly] must do so within the
reference frame of Absolute Temperature.
- Although finance systems have many thermodynamic
behaviors, finance systems are by nature not thermodynamic systems in
any way shape form or manner.
- All finance systems are bound by bookkeeping rules for
Debt and Equity, the fundamental units and reference points of finance
systems.
- Personal and Household Debt (as well as
Equity) are the fundamental units by which all economic theories,
systems and ideas must characterize or pay attention to.
- Household bookkeeping problems and success make or
ruin economies and companies or their governmental equivalents.
- All finance systems scale to greater levels of
complexity (personal accounts, household account, firm, city, province,
nation state) but are all uniformly bound by the inherent economic
properties of Debt and Equity at its lowest functioning level in an
economic system.
- Debt and Absolute Prices deeply matter in all economic
systems, and both originate from accounting systems.
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Implications of the 0th Law
- All Debt at any and all points must be fully accounted
for (including Interest
related to Debt).
- Absolute Prices at any and all points in an economic
system must be accounted for.
- The properties of Relative Prices in an economic
system can be ignored as Absolute Prices principally dictate economic
system behavior -- Relative Prices are only an effect of Absolute
Prices.
- Historical precedents that have accounting
and economic system implications must not
be ignored.
- The impacts of foreign exchange and trade patterns
that affect Debt and Prices existent in an economy or system of
economic theory
must be considered beyond the standard accounting window of 7 years.
- Observational windows of 21 years (3 accounting
cycles) for Microeconomics to 70 years (10 cycles) for Macroeconomics
should be the temporal windows for all intellectual consideration and
computation.
- General Unemployment and long term Structural
Unemployment must be fully accounted for as it affects Debt and Prices.
- Conceptual economic systems must exist in the Debt and
Equity domains, as accounting systems function perfectly without any
Debt.
- Any economic system that functions only in the debt
domain cannot be valid.
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Initial concept based on
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The Steve Keen's ABC Radio
(abc.net.au) lecture on the program "Big Ideas" transmitted (29 March
2009, 20090329).
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Historical scientific precedents
for this nomenclature
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References
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People whose theories and ideas
don't go aginst the 0th law
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Cultural odds and sods somehow
related
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Author
Max Power |
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Initial Idea:
12 February 2009 |
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Created:
09 September 2009 |
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Last revised
19 September 2009 |
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