# Egmont Kakarot-HandtkeUniversität Stuttgart · Institute of Economics and Law

Egmont Kakarot-Handtke

## About

66

Publications

1,413

Reads

**How we measure 'reads'**

A 'read' is counted each time someone views a publication summary (such as the title, abstract, and list of authors), clicks on a figure, or views or downloads the full-text. Learn more

123

Citations

## Publications

Publications (66)

In his recent article, Keen resumes the debate with Krugman about the effects of debt upon the economy. It is hard to see how the question can be settled as long as all participants apply their idiosyncratic models. Hence the issue boils down, as Krugman rightly put it, to the deeper question: “how should one do economics.” Sketched with a broad br...

The existence proof of general equilibrium, which is based on subjective-behavioral axioms, is replaced by the existence proof of a final turning point, which is based on objective-structural axioms. The final turning point is characterized by an irreversible switch from profits to losses for the business sector as a whole and marks the beginning o...

There is not much use to attack standard economics because deep in his heart the representative economist long knows that he is tied to a degenerating research program. The problem is, rather, that it seems to be exceedingly difficult to build up a convincing alternative. Keynes, for one, tried and was successful – albeit not fully. Unfortunately,...

It is common knowledge that neither Walrasians nor Keynesians nor Marxians nor Institutionialists nor Austrians nor Sraffaians came to grips with proﬁt. The reason is a defective formal basis. In the present paper the formal foundations are ﬁrst renewed. When the proﬁt theory is false the rest of an approach is questionable. What is reexamined next...

It is clear by now that pure exchange models are useless. For two reasons. First, because exchange is the other side of specialization in production, and, second, because a direct exchange of goods does not take place in the monetary economy. The decisive drawback of conventional exchange models, though, is that they cannot explain profit. Standard...

Krugman has recently revitalized IS-LM with a number of succinct analytical pieces on his blog. The reverberations were remarkable. Economists, however, are known often not grasp the full content of their own and, a fortiori, of others’ models. This happened to Keynes in the days of high theory and to Krugman in these days. Keynes applied a defect...

This non-technical contribution to the RWER-Blog deals with the interrelations of market clearing, efficient information processing through the price system, and distribution. The point of entry is a transparent example of Pareto-efficiency taken from the popular book How Markets Fail.

Jevons composed his value theory of nonenties. These creatures are elusive. Subsequent formal refinements did not eliminate the fundamental flaw but made it only harder to detect. A vacuous formal structure is one that cannot be interpreted in some domain. For want of any correspondence in the monetary economy Jevons’s approach could not produce vi...

Marxian economics and standard economics are widely different yet they share a central weakness: the respective proﬁt theories are demonstrably false – each one in its own characteristic way. Roughly speaking, Marx tried to explain proﬁt by objective factors while standard economics cites subjective factors. For different reasons, neither route led...

Economists have the habit of solving the wrong problem. They speculate circumstantially about the behavior of agents and do not come to grips with the behavior of the monetary economy. This is the consequence of the methodological imperative that all explanations must run in terms of the actions and reactions of individuals. The critical point is t...

Axiomatization is the prime task of theoretical economics. Without correct axioms, no correct theory. Without correct theory, no understanding of how the economy works. Without empirically corroborated understanding, no useful economic policy advice. Yet, much more important than any political reputation of economics is indeed: without correct axio...

This paper provides a substantial reconceptualization of the serial clearing of the product market on the basis of structural axioms. The change of premises is required simply because from the accustomed premises only the accustomed conclusions can be derived and these are known to be inapplicable in the real world. This holds in particular for the...

Economists are fond of the physicists’ powerful tools. As a popular mindset Toolism is as old as economics but the transplants failed to produce the same successes as in their aboriginal environment. Economists therefore looked more and more to the math department for inspiration. Now the tide turns again. The ongoing crisis discredits standard eco...

The formal foundations of theoretical economics must be nonbehavioral and epitomize the interdependence of real and nominal variables that constitutes the monetary economy. This is a cogent conclusion from the persistent collapse of behavioral and real models. Conceptual rigor demands, first, to take objective-structural axioms as a formal point of...

From the set of the first three structural axioms follows the - economic - triangle theorem. It asserts that the product of the three key ratios, which characterize the firm, the market outcome, and the income distribution, is always equal to unity. The theorem contains only unit-free variables, is testable in principle, and involves no behavioral...

There is no way around it: each theory rests on a tiny set of foundational propositions. Standard economics rests on behavioral axioms. After a long intellectual detour it should be clear by now that behavioral axioms are the wrong formal departure point. Being beyond repair, they have to be replaced by objective structural axioms. This paper deals...

The present paper takes it as an indisputable fact that subjective-behavioral thinking leads, for deeper methodological reasons, with inner necessity to inconclusive filibustering about the agents’ economic conduct and therefore has to be replaced by something fundamentally different. The key argument runs as follows: (a) the subjective-behavioral...

Standard economics rests on behavioral assumptions that are formally expressed as axioms. With the help of additional assumptions like perfect competition and equilibrium a price vector is established that displays a host of desired properties. This approach is tightly stuck in a cul-de-sac. Conceptual rigor demands to discard the subjective-behavi...

Steve Keen has debunked a good part of standard economics. However, he has left standing the theory of profit. This is unfortunate, because the theory of profit is the pivot of all of theoretical economics. This tightly focused paper clarifies the factual relation of profit and income, which should be helpful to put Keen’s alternative to the standa...

Standard economics starts with behavioral assumptions that are formally expressed as axioms. This approach met with little scientific success but still enjoys some popularity for lack of a convincing alternative. To replace the subjective formal foundations by objective structural axioms is the first task of this paper. To give a correct account of...

According to prevailing methodological criteria, standard economics is definitively refuted. Joan Robinson’s wake-up call “Scrap the lot and start again” has therefore lost nothing of its original freshness and urgency. Yet, how can the restart succeed? This inquiry builds on structural axioms. First, conceptual consistency is assured and the confu...

Say’s Law has passed through various conceptual frameworks. As the next logical step, this paper provides a rigorous restatement in structural axiomatic terms. The main reason is that previous attempts have been methodologically unsatisfactory. Standard economics rests on behavioral assumptions that are expressed as axioms. Axioms are indispensable...

Neither Walrasians nor Keynesians have a clear idea of the fundamental economic concepts income and profit, nor of the interdependence of qualitatively different markets. Critique of these approaches is necessary but not overly productive. A real breakthrough requires a new set of premises because no way leads from the accustomed behavioral assumpt...

There is no such thing as a real economy. The task, therefore, is to consistently reconstruct the fluctuations of employment and output from the interactions of real and nominal variables. The present paper does exactly this. No nonempirical concepts like utility, equilibrium, rationality, decreasing returns or perfect competition are applied. The...

Standard economics is known to be incapable of integrating the real and the monetary sphere. The ultimate reason is that the whole theoretical edifice is built upon a set of behavioral axioms. Therefore, the formal starting point is moved to structural axioms. This makes it possible to formally track the complete process of value creation and destr...

This paper takes the explanatory superiority of the integrated monetary approach for granted. It will be demonstrated that the accounting approach could do even better, provided it frees itself from theoretically ill-founded notions like GDP and other artifacts of the equilibrium approach. National accounting as such does not provide a model of the...

Keynes had many plausible things to say about unemployment and its causes. His ‘mercurial mind’, though, relied on intuition which means that he could not strictly prove his hypotheses. This explains why Keynes’s ideas immediately invited bastardizations. One of them, the Phillips curve synthesis, turned out to be fatal. This paper identifies Keyne...

A comprehensive dynamic model of the monetary economy that produces the key characteristics of a debt deflation has been presented recently by Steve Keen as an alternative to conventional approaches. His model is based on a double-entry bookkeeping methodology but lacks an acceptable profit theory. In this respect it is not different from familiar...

Whether justified by the concrete circumstances or not, an economic crisis is, by simple association, taken as an implicit refutation of the invisible hand vision and the underlying theory. The fundamental heterodox critique locates the source of apparent theoretical difficulties at the level of methodology. Although acceptable in principle, this b...

Behavioral assumptions are not solid enough to be eligible as first principles of theoretical economics. Hence all endeavors to lay the formal foundation on a new site and at a deeper level actually need no further vindication. Part (I) of the structural axiomatic analysis submits three nonbehavioral axioms as groundwork and applies them to the sim...

All are agreed that orthodox economics is unsatisfactory but there is wide disagreement, especially among heterodox critics, whether the problems lie at the level of substantive theory or at the level of methodology. This paper gives first an overview of the methodological questions at issue. The frame of reference includes J. S. Mill, Jevons, Popp...

This contribution to the Festschrift in memoriam of Karl Brandt and Alfred E. Ott establishes the axiomatic unity of circuit, money, price and distribution theory. From the history of economic methodology and from actual practice follows: one cannot not axiomatize. The crucial question is not axiomatization per se but the real world content of axio...

This paper clarifies first the nature and significance of financial profit by applying the structural axiom set as consistent point of departure. As a crucial result the fundamental theorem of income distribution emerges. It states: profit is no factor income. Since the individual firm is blind to this structural fact it subjectively interprets pro...

Standard economics is regarded as the theory of the market system. Profit is the pivotal phenomenon of this system. Contrary to expectations, though, profit is neither well defined not fully understood. The frailty of the theoretical core is passed on to the subfields. This paper provides a consistent definition of profit and applies it to the anal...

Efficient progress of the monetary theory of production (MTP) is hampered by an unsatisfactory account of how profit and interest emerge in the monetary circuit. As matter of fact this question puzzled already the Classics. It seems evident that it cannot be answered by applying the usual tools. The purpose of the present paper is to overcome the o...

The classical case of comparative advantage is put into a new formal framework, that is, the behavioral axioms of standard economics are replaced by a set of structural axioms. This enables a comprehensive analysis that takes the effects on income and profit explicitly into account. The axioms in combination with the conditions of market clearing,...

In a programmatic article Alfred Eichner explained, from a Post Keynesian perspective, why neoclassical economics is not yet a science. This was some time ago and one would expect that Post Keynesianism, with a heightened awareness of scientific standards, has done much better than alternative approaches in the meantime. There is wide agreement tha...

Taking the water–diamond paradox as a time-honored challenge, at first the structural value theorem is derived from the set of structural axioms. This enables a reevaluation of classical and neoclassical conceptions. Ricardo realized that there are two entirely different kinds of markets but excluded the secondary markets by defining commodity in a...

Tastes and technology are the ultimate givens of standard economics. Their interaction is mediated by the marginal principle. This approach is unsuitable to explain the nature and magnitude of overall profit and its distribution within the business sector. The present paper therefore takes a quite different analytical route. The standard behavioral...

The present paper demonstrates how the interaction of the structural axiomatic core and the behavioral propensity function produces dynamically stable outcomes in the product market. The propensity function is a compact formal expression of random, semi-random, and deterministic behavioral assumptions. Its two components are direction and magnitude...

Any serious alternative to the standard approach requires a distinct axiomatic foundation. The crucial point is not axiomatization per se but the real world content of axioms. The purpose of the present paper is to make the implications of the objective structural axiom set concerning the relation of profit, money, the nominal/real rate of interest...

According to Ricardo the principal problem in Political Economy is to determine the laws which regulate the distribution of profits, rents, and wages. Ricardo determined the respective shares in real terms and to this end invented an engine of analysis that became paradigmatic. The present paper applies a consistent real and monetary analysis, whic...

Behavioral assumptions are not solid enough to be eligible as first principles of theoretical economics. Hence all endeavors to lay the formal foundation on a new site and at a deeper level actually need no further vindication. Part (I) of the structural axiomatic analysis submits three nonbehavioral axioms as groundwork and applies them to the sim...

Increasing returns are an incontrovertible fact since Adam Smith hailed them as the very originators of wealth, yet they play havoc with general equilibrium. They fit, in marked contrast, nicely into the structural axiomatic framework. This indicates that it is worthwhile to replace the behavioral axioms of standard economics by objective structura...

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. This stocks constitute the demand and suppl...

The present paper replaces the standard behavioral axioms by structural axioms and applies these to the analysis of the accumulation and decumulation of capital. This yields a coherent view of the interrelations of real and nominal saving–investment, of profit–loss, of money–credit, and of internal–external financing. The main result is that asymme...

The equalization of profit rates as the outcome of free competition is one of the oldest tenets in theoretical economics. Being intuitively convincing its premises and implications, though, are not well defined. As Walras put it: ‘To state a theory is one thing; to prove it is another.’ First of all a consistent concept of profit is required. In th...

Part I and II of the present paper reconstruct the quantity theory from structural axiomatic foundations. This yields a coherent view of the interrelations of quantity of money, transaction money, saving–dissaving, liquidity–illiquidity, rates of interest, leverage, allocation of labor, prices, profits and employment. Part II focuses on the symmetr...

The quantity theory is disjunct to the hard core of general equilibrium theory. It does not relate to the formal foundations of standard economics and, vice versa, from the behavioral axioms of standard economics a rationale for using money cannot be derived. The present paper leaves the standard axioms aside and reconstructs the quantity theory fr...

Unemployment is usually explained with reference to the equilibrium of supply and demand in the labour market. This approach rests on specific behavioral assumptions that are formally expressed as axioms. The standard set of axioms is replaced in the present paper by a set of structural axioms. This approach yields the objective determinants of emp...

The present paper scrutinizes the logical foundation of Marx’s dialectic analysis of the evolving money economy. The minimalistic frame of reference is thereby given with the set of structural axioms. It turns out, first, that the commonplace notion of exploitation has to be replaced by crossover exploitation among capitalists and workers; second,...

Standard economics starts with behavioral axioms and arrives at conclusions about the equilibrium properties of the economy as a whole at point t. The present paper employs objective structural axioms and random changes in order to determine the conditions for market clearing and budget balancing in the pure consumption economy until the limit t →...

When anything goes and nothing fits together this can be euphemized as pluralism. Lacking a common point of reference, discussions between various schools of economic thought proceed in the ‘hyperspace of assumptions’ (Mc Closkey). The incoherency of perspectives is due to self-chosen foundational assumptions. The present paper submits three struct...

A crisis is but a crisis when the long run outlook is definitively positive. Then a lower turning point must exist. This implicates a vision or, in the ideal case, a formalized theory of the money economy's possible end states. This theory has to provide an endogenous explanation of end states and crises. The equilibrium approach excludes endogenou...

Schumpeter had a clear vision of the developing economy, but he did not formalize it. The quest for a germane formal basis is in the following guided by the general question: what is the minimum set of foundational propositions for a consistent reconstruction of the evolving money economy? We start with three structural axioms. The claim of general...

Kalecki’s profit theory has always been popular among heterodox economist as an alternative approach to solve the paradox of monetary profits. In the present paper his formula ‘The workers spend what they get, the capitalists get what they spend’ is scrutinized for its logical and factual implications. The analysis shows that Kalecki’s alternative...

Between Keynes’s verbalized theory and its formal basis persists a lacuna. The conceptual groundwork is too small and not general. The quest for a comprehensive formal basis is guided by the question: what is the minimum set of foundational propositions for a consistent reconstruction of the money economy? We start with three structural axioms. The...

Standard economic models are based on axioms that epitomize the fundamental behavioral assumptions. This approach is trapped in a blind alley. The suggested change of perspective is guided by the question: what is the minimum set of nonbehavioral propositions for the consistent reconstruction of the evolving monetary economy? We start with three st...

In the wake of the recent financial crisis heterodox economists have taken up a time-honored refrain and proposed to abandon the axiomatic method. The present paper argues that this proposal is self-defeating

Standard economic models are based on axioms that epitomize the fundamental behavioral assumptions. This approach is not conductive to convincing results. The suggested change of perspective is guided by the question: what is the minimum set of propositions for the consistent reconstruction of the evolving money economy? We start with three non-beh...

Standard economic models are based on axioms that epitomize the fundamental behavioral assumptions. This approach is not conductive to convincing results. The suggested change of perspective is guided by the question: what is the minimum set of foundational propositions for a consistent reconstruction of the evolving money economy? We start with th...

Standard economic models are based on an axiom set that epitomizes the fundamental behavioral assumptions. The present treatise moves these assumptions from the foreground to the background. The suggested change of perspective is guided by the question: what is the minimum set of foundational propositions for a consistent reconstruction of the evol...

The present paper scrutinizes the logical foundation of Marx’s dialectic analysis of the evolving money economy. The minimalistic frame of reference is thereby given with the set of structural axioms. It turns out, first, that the commonplace notion of exploitation has to be replaced by crossover exploitation among capitalists and workers; second,...

Tastes and technology are the ultimate givens of standard economics. Their interaction is mediated by the marginal principle. This approach is unsuitable to explain the nature and magnitude of overall profits and their distribution within the business sector. The present paper therefore takes a quite different analytical route. The standard behavio...

The purpose of the present paper is to demonstrate how the interaction of the structural axiomatic core and the behavioral propensity function produces plausible outcomes in the product market. The propensity function is a compact formal expression of random, semi-random, and deterministic behavioral assumptions. Its two components are direction an...