Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/79486
Authors: 
Kakarot-Handtke, Egmont
Year of Publication: 
2012
Series/Report no.: 
Working Paper, Levy Economics Institute 741
Abstract: 
The analytical starting point determines the course of a theoretical investigation and, ultimately, the productiveness of an approach. The classics took production and accumulation as their point of departure; the neoclassics, exchange. Exchange implies behavioral assumptions and notions like rationality, optimization, and equilibrium. It is widely recognized that this approach has led into a cul-de-sac. To change a theory means to change its premises; or, in Keynes's words, to throw over the axioms. The present paper swaps the standard behavioral axioms for structural axioms and applies the latter to the analysis of the emergence of secondary markets from the flow part of the economy. Real and nominal residuals at first give rise to the accumulation of the stock of money and the stock of commodities. These stocks constitute the demand-and-supply side of secondary markets. The pricing in these markets is different from the pricing in the primary markets. Realized appreciation in the secondary markets is different from income or profit. To treat primary and secondary markets alike is therefore a category mistake. Vice versa, to take a set of objective propositions as the analytical starting point yields a comprehensive and consistent theory of market exchange and valuation.
Subjects: 
new framework of concepts
structure-centric
axiom set
residuals
real and monetary stocks
money
credit
financial saving
nonfinancial saving
net worth
financial profit
nonfinancial profit
retained profit
appreciation
wealth
JEL: 
D40
D50
Document Type: 
Working Paper

Files in This Item:
File
Size
348.81 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.