Glossary of Concepts


Glossary included in the book "Theory of Economic Relativity". The new concepts this new theory presents with their definitions, as well as a list of those preexistent concepts subject to critique. 

New Concepts [ A - L ]

Accounting as the model for economics: a concept based on accounting being the true expression of the economic basic cell –the biunivocal relation “economic good-owner”- expressed in accounting with assets (= economic goods) and patrimony (owner); it allows us to study wealth, both in its static aspect as stock and it’s dynamic aspect as a flow (variations of stocks); its technique of accounting consolidation allows the study of micro and macro in economic. It allows us to study the composition of wealth and specifically the wealth arising from interpersonal exchange. Its statements present reliable information for studying the general, financial and economic situation of economic agents. Many other aspects of economic science can be studied with greater precision thanks to the technical, mathematical, and scientific rigor of accounting. We can say that accounting principles express the pure application of the postulates of economic theory. We can say accounting expresses economic theory in many aspects and that this was not recognized up to now because of the errors of current economic theory.

Accounting consolidation: consisting in a summation of all the quantities corresponding to the same titles and eliminating those arising from sales and purchases and reciprocal credits and debits among economic agents whose statements are being consolidated. With consolidation, we consider all the agents included, as in the case of society, as a new economic agent that owns all the existing wealth. Canceling out purchases and sales and credits and debits is what defines this situation. It also ratifies the concept of interpersonal exchange as an only event, eliminating the categories of purchase and sale. This reduces the situation to the extreme case of (intertemporal) intrapersonal exchange of an only economic agent. In short, accounting consolidation shows the economic activities of several agents as if they were one, since it cancels interpersonal exchanges among them.

Cash: interpersonal exchange of present economic goods.

Credit: interpersonal exchange of present for future economic goods. It is the interpersonal exchange of economic time.

Currency: exchange economic good that satisfies liquidity.

Direct appropriation of wealth: a mechanism by which there is final flexible materialization of wealth with the use of irregular credits.

Economic agent: a group of human beings with one or several common spatio-temporal needs related biunivocally with economic goods.

Economic calling: when each economic agent produces that in which he is relatively more efficient than other economic agents; similar to David Ricardo's comparative advantages, applied to individuals.

Economic causality: a set of economic terms ordered according to cause and effect.

Economic equation: see total wealth equation.

Economic good Future: an economic good that will be the property or possession of an economic agent in the future.

Economic good, Present: an economic good that is the present property or possession of an economic agent.

Economic good, Past: a past economic good is an economic good that was part of the patrimony of an economic agent in the past.

Economic good-owner: biunivocal relation expressing that there is no economic good without an owner or an owner without an economic good. It is the basic cell of economics. In set theory, this means an economic good implies the inevitable existence of an owner and vice versa.

Economic reductionism: epistemology that tries to explain all economic phenomenon by the behavior of one entity, generally money or, more generally, currency.

Economic time: scarce time; all human needs could be satisfied if time were not scarce.

Economics: science that studies the quality and quantity of economic goods and their exchanges.

Economy without money: refers to the relative loss of weight of money in developed economies compared with the use of credit as currency. Credit replaces money as a means of exchange as economies progress.

Eliminated economic good: an economic good that looses this condition in its last intervention in the biunivocal relation "economic good-owner", not deriving from interpersonal exchange, i.e. it does not disappear from the patrimony of an economic agent through sale.

Final credit materialization: an act finalizing a credit through delivery of present economic goods at maturity.

Gibson's paradox: a theory that cannot explain the correlation between prices and rates of interest, based on the theoretical error of assimilating money and credit, a concept that is related to Keynes' asymmetry and Keynes' paradox.

Incorporated economic good: an object that acquires the condition of economic good in the biunivocal relation "economic good-owner", not deriving from interpersonal exchange or purchase.

Indirect appropriation of wealth: a mechanism by which an economic agent, using irregular credit, loans present economic goods that belong to another economic agent as if they were his.

Initial credit materialization: an act that originates the loan of present economic goods.

Interest: It is the price of economic time that, when interpersonally exchanged becomes credit, confirming the popular saying that interest es the price of credit.

Interpersonal exchange: is the exchange of economic goods between different economic agents.

Intertemporal exchange: the exchange of present for future economic goods.

Intrapersonal exchange: is the intertemporal exchange of economic goods by an only agent.

Inverted Keynes' paradox: the pretension to solve Keynes' paradox replacing interest with prices in the Keynesian economic model.

Irregular credit: credit that lacks at least one of the characteristics of regular credit, i.e., it does not specify quality and/or quantity of the present economic goods with which the credit begins or must be cancelled and/or maturity and/or the economic agents involved.

Keynes' asymmetry: a concept with which Keynes explained the passage from an extremely high value (his "barbarous relic") to a zero or even "negative" value ("liquidity trap").

Keynes' paradox: a theory pretending to solve an inexistent problem: how can money, that becomes systematically relatively scarcer, become cheaper? We are in the same sphere as the concept of Keynes' asymmetry and Gibson's paradox (that Keynes pretended to solve); due to confusing money and credit.

Liquidity: the need for quick salability at an economic price (without a significant loss of value in the act of purchase or sale).

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