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INTRODUCTION

The Subjective and Solidarity Economic Theory (SSET), as well as theTheory of Economic Time (TET) and Theory of Economic Relativity (TER), here exposed, are based on the theory of subjective value.

From the following definition of the Subjective and Solidarity Economic Theory (SSET):

 

Deductive logical theory that allows to understand 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).


Where you can only appreciate the presence of two economic entities governed by two natural laws, regardless of: theory of interest, theory of currency (money), theory of prices,… we show:

  • The economy deals with subjective values, whose dimension is utility.
  • Values determine prices – not objectivism present in supply and demand.
  • The subjective value is measurable – the monetary calculation is feasible without the concurrence of monetary prices.
  • The cross-correlation of the exchange, between relative values and exchanged quantities, explains the failure of the relation of exchange of Jevons, foundation of all economic theory that we know.
  • The theory of economic unit of measure (neutral economic entity) is independent of the theory of currency (non-neutral economic entity).
  • The distribution of wealth is explained according to the theory of subjective value, not of prices, which imply objective value.
  • The TET and TER are ratified, while the economic time is the only economic good that participates in this circumstance:v = P = 1, besides corroborating that i$ = / ≡ P$.
  • Evolutionary Optimal (EO), replacing the inconsistent Pareto Optimal. “Theoretical justification of constant monetary expansion of 2 %?
  • And much more: quantitative theory reduced to coefficient of rotation; unnecessary Gresham´s Law; unnecessary theory of monetary cycles (reduced to price control); Positive Phillips Curve (from theory); theoretical failure of welfare theory (Pigou);…

Thus, J.S. Mill was correct that a theory of adequate value is the essential basis for building an economic theory, but he did so from his vantage point of the theory of objective value from which he assimilated value to price. So convinced was he ventured to say:

“Fortunately, there is nothing left to clarify in the laws of value, neither for the present writers nor for the future: the theory is complete.”

He quotes that Marshall, in the same way ratified:

“Thus, this book is not descriptive, does not deal constructively with real problems, but establishes the theoretical foundation of our knowledge of the causes that govern value ...”

We can say that economics is the science of the study of relative values . From them we can understand the fundamentals of anEfficient and Equitable Economic Evolution ( E4) of a society, where each and all is better. Unlike the current state, characterized by inefficient and inequitable distribution of wealth, with recurrent (and necessary) crises, that is a consequence of the existing institutions, arising under the theory of objective value: prices-prices.

The greatest backwardness of human knowledge is in the social sciences. Among them, the one of greater influence is the economy. In this paper the fatal error of the economic theory that we know, that of pretending to explain in terms of prices-costs, is amended.

Thus, the failures of economic-social institutions recognize their origin in the failure of the theories that gave rise to them. The economic theory was not consistent.

As in many aspects of humanity, the advancement of science has enabled us to find solutions to problems that were considered as preponderant springs of politics, ethics, morals and/or religion. I believe that the SSET will be able to collaborate on the economic necessities.

The SSET is guiding us and reversing the relative backwardness of economic and social institutions, facing a new world of vertiginous and constant technological changes ―an explosive mix that explains the prevailing political-social bewilderment.

The SSET, through relative values, allow us to understand and measure “the invisible hand” of Adam Smith.

  

 

SUBJECTIVE AND SOLIDARITY
ECONOMIC THEORY (SSET)

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