Definition of Subjective and Solidarity Econmic Theory


Having defined economic science and presented the Introduction to Subjective and Solidarity Economic Theory (SSET 02), we now preceded to define the latter as:

Economic theory, deductive logic, which allows to understand the economic phenomena in terms of the quantities of economic goods (total and exchanged), according to their behavior governed by the natural laws of: decreasing marginal utility of wealth (subjective) and relative marginal utility of exchange (solidarity) .

The relevant considerations, of this proposal defining are: 

  • Refers to an economic theory, that is, theory that allows understand the value.
  • It is logical deductive theory, which implies Popper´s epistemology.
  • It is based on the theory of subjective value, and its utility dimension.
  • The subjective value (utility) is analyzed through its marginal behavior ―which includes time as variable dependent on value,1 where the changes that merit all behavioral economic studies are produced.
  • Only the entity uses economic goods (total and exchanged) and the two laws that govern its behavior.2
  • Does not appeal to theories or laws such as: objective value, prices (supply and demand), interest, currency, Gresham, cycles, quantitative theory, costs, distribution of wealth according to prices, relation of exchange of Jevons, regression theorems, …

It is feasible to notice that this new economic theory presents new scenarios, terms, questions, answers,… (paradigms?),3  that we synthesize like this:

  • The value is measurable, according its dimension utility. Task that the Subjective and Solidarity Economic Theory (SSET) makes through its proposal of general value equation.4
  • The marginal utilities of wealth are transitive, in the sense that they allow their different manifestations to be compared ―essence of Menger´s “table”.5
  • The relative values6  allow us to make use of the transitive character of the utilities.
  • The relative values are those that guide the distribution of wealth. Process that involves the human actions: generate, conserve, exchange, and destroy wealth.
  • The efficient and equitable distribution of wealth7  is determined by adecreasing marginal order of the utility it provides, togenerate and conserve it, and increasing to destroy and exchange it.
  • From the foregoing it can be deduced that exchanges (like the other three human actions) arise from relative values. Then, from the exchanges, arise the amounts that allow using the relative prices technical coefficient.
  • The economic calculation, which arises from the transitive character of the utility dimension, induces the human being to find auniversal unit of measurement of value (utility). A theory of the economic unit of measurement arises, independent of the “theory” of the currency (technological advance) and of the “theory” of the prices (analytical coefficient).

We can synthesize the difference of the new Subjective and Solidarity Economic Theory (SSETwith the other known theories, in which its constructive foundation is the theory of subjective value (utilities), unlike the known ones that are sustained, or are contaminated,8  in the theory of objective value. That is, while one based on values, the others pretend to do so through quantities (prices).

Then, given that the current economic institutions emerged under the theory of objective value, is that the economic objective value, is that the economic necessities “require” the calculation of officials to regulate quantities-prices (currency-interest, etc.).9  The SSET makes clear the reason, and the consequences, of such interventions, which undermine the natural laws of the economy:

Reasons: the alteration of the causal order that goes from the value to the prices (v → P), by the factual order that goes from the prices to the value ( P → v). 10  

Consequences: results far from of the evolutionary optimum, which implies lower efficiency and equity in the economic necessities.

All this new Subjective and Solidarity Economic Theory is elaborated from economic goods and the two natural laws that govern their behavior.

Carlos A. Bondone

[1] The same evolutionary process of physics: from the absolute time of Newton to the relative of Einstein.

[2] This is de the goal that S. Jevons could not reach.

[3] According to Popper, it is a characteristic of any new theory ―a challenge for scientists and academics.

[4] It is defined in the Subjective and Solidarity Economic Theory (SSET) as a general equation of the marginal utility of wealth.

[5] See Chapter X in Subjective and Solidarity Economic Theory (SSET) .

[6] It is defined by the Subjective and Solidarity Economic Theory (SSET).

[7] Which defines the optimal evolutionary of economic state.

[8] This is the case of the Austrian current of thought, which did not understand the essence of Menger´s marginal subjective value, which led them to discuss in the field of prices.  They were not conclusive ―for ignoring the essence of marginal subjective value ― in discarding: the supply and demand curves, the theory of interest –the temporal preference denies value to time―, the theory of currency, the theory of distribution, etc…. etc. I humbly estimate that it was because they  has not noticed the presence of relative values, an essential tool for understanding in its full dimension the theory of subjective value ― ¿for lack of the use of mathematics?

[9] The legislative, executive and judicial task must ensure the freedom of the individual, not hinder their calculations.

[10] The factual order refers to the calculation of values, which is made from the observed prices. The economists-officials, entertained with the calculation, they believe are making economic life efficient and equitable, because they have been trained in these theories.

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