Subjective and Solidarity Economic Theory (SSET)

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ABSTRACT

SUBJECTIVE and SOLIDARITY ECONOMIC THEORY (SSET)

Common sense, and economic theory, considers that:

• Two bills of the same denomination are the same:

$100 = $100

• A $100 bill in hands of Pedro has a different relative value than in hands of Ricardo:

$100P ≠ $100R

• If Pedro possesses 1.000 $ bill 100, the first one possesses major relative value than the thousandth one:

$^1°100P ˃ $^1000°100 P

• A $100 bill in power of Pedro Poor person possesses major relative value than the same bill of $100 in hands of Ricardo Rich:

$100PP ˃ $100RR

This way, the task consists of resolving:

Economic dilemma: equalize the different

The dilemma is solved by relative values (theory of subjective value of Menger), not by price (classical-neoclassical theory of objective value). This is so insofar as equality is only seen in the equation where is no human presence ($100 = $100), unlike the three inequalities, which originate precisely the human presence: P and R.

Solving the dilemma will allow us to understand the efficient an equitable economic evolution of a society ―the underlying idea in “invisible hand” of Adam Smith ― as well as to demonstrate that value is measurable, and the neutrality of the economic unit of measure, not of the currency.

The theories presented here can be interpreted as a continuation of those presented by Carl Menger in his famous work Principles of Political Economy, of the late nineteenth century, without theoretical scales proposed in the twentieth century.

As a synthesis of the economic theory that we present, we say that: using only the available quantities (q_t) and exchanged (q_i) of economic goods ―whose behaviors are subject to the validity of the laws of decreasing marginal utility of wealth, and the law of relative marginal of exchange ―, it is sufficient to understand the economic evolution and its degrees of efficiency and equity. We will also understand that currency is equivalent to a mere technological advance, as such enhances economic evolution. Not having been theorized in this way has been the origin of the harmful currency-financial institutions in force, which are the cause of the recurrent crises, of inefficiency and inequality in economic evolution, essentially those operated from the twenty century.

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