The New Future of Money: How Our Debt Money System is Wrecking the World And How You Can Change It

By Ssemakula Peter Luyima

Ssemakula Peter Luyima provides a new concept for World Economy in the 21st century, by producing a revised concept of MuRatopian Economy; 30 years after Professor Kaoru Yamaguchi presented a synthesized analysis of the Neoclassical, Keynesian and Marxian with his own public money economic model. It is this author’s intention not only to provide an integrative concept for reconstruction of the World Economy, but to present an equitable economic strategy in the context of Louis Orth Kelso’s important two factor economics at the same time. This book is an introduction to a new upcoming theory MuRatopian Intersection Economy.

• Language: English
• Publisher: FeedARead Publishing
• Release date: Nov 19, 2015
• ISBN: 9781786103284

Ssemakula Peter Luyima

New Economic Paradigm For The Survival of Civilization Ssemakula Peter Luyima provides a new concept for World Economy in the 21st century, by producing a revised concept of MuRatopian Economy; 30 years after Professor Kaoru Yamaguchi presented a synthesized analysis of the Neoclassical, Keynesian and Marxian with his own public money economic model. It is this author’s intention not only to provide an integrative concept for reconstruction of the World Economy, but to present an equitable economic strategy in the context of Louis Orth Kelso’s important two factor economics at the same time. This book is an introduction to a new upcoming theory MuRatopian Intersection Economy. The author was born in Arua, Uganda East Africa. He is an independent researcher, currently advancing a general concept of MuRatopian World Economy, which was first developed by Professor Kaoru Yamaguchi by means of Public Money System. The pioneer efforts of Ssemakula Peter Luyima has led to the marriage of Public Money, binary economics with structural axiomatic economics to serve as a new foundation of economics. These interactions form a new theory called MuRatopian Intersection Economy presented in this book, to achieve equitable economic development of the continents of the Earth.  

Book preview

Chapter One

MuRatopian Sharing Transition Economy-A Model For A New Intersection Economy

The basic moral problem that faces man as he moves into the age of automation, the age of accelerating conquest of nature, is whether he is really fit to live in an industrial society; whether his institutions will adjust rapidly enough; whether he will rivet himself with an absurd institution like full employment in the economic order when it is not only unnecessary but unadministrable in anything but a slave society; whether freed from the necessity to devote his brain and brawn to the production of goods and services, he can address himself to the work of civilization itself (Louis O. Kelso, 1964)

1.1  Theory of MuRatopia Intersection  Economy

T

he Subject of Capitalism has earned itself, the undesirable nickname of 1% and 99%. It has, unhappily, well deserved it. Partly because of the nineteenth century capitalism as it existed in England and United States, partly because the economic injustices of our "debt money system", it has generally arrived at conclusions, which, if true, would render the great mass of mankind devoid of any hope for the future.

The present economic system is rapidly taking down humanity. New spirits and new minds are approaching the subject of Economics and revealing fresh and wonderful truths,—truths which, when appreciated by the millions, will show a glorious future lying before us, represented in practical, towards a better socio-economic future, which we have but to stretch out our hands to grasp and make our own.

MuRatopian Intersection Economics is a new economic theory, and means simply, the dynamic integration of the concepts of public money system (new design system: monetary reform) advanced by Professor Kaoru Yamaguchi, and Louis Orth Kelso and Patrica Hetter Kelso’s Two factor Economics of the nature of the production and distribution process in economics.

The present global monetary and financial order has recently entered a new phase of collapse, as marked by such prominently discussed examples as (a) the accumulation of government(s) debt, (b) the waves of collapse caused by "conventional finance system", such as the system of money as debt, and (c) other impending, similar crisis in nations of Europe, Greece, and former British colonial economies-now commonwealth member countries in Africa. The current, ongoing government bankruptcies or near-bankruptcies of both governmental and private institutions is not a mere coincidence of separate and distinct local problems, but, rather, this pattern of increasing local crises is the result of an epidemic: a systematic disorder of the worldwide financial and monetary system as a whole.

The present phase of the economic crises inside Africa and worldwide is the result of the interaction between the ongoing, new phase of collapse in the world monetary and financial systems, and the relative exhaustion of Africa’s ability to deliver a stream of loot to western financier interests. Thus, the depleted economies of Africa and other developing nations are an important feature  of the current downward pressures upon nineteen century capitalism-centered world financial markets. This has a reciprocal effect: At the same time, the so-called foreign aid economic dependence-process in Africa has put the continent on its death-bed by the inability of the western side of the financial system to supply sufficient assistance to keep the African economic development process alive in its present form.

For related reasons, there exists no possible solution to this crisis, either for Africa or for the World, within the bounds of the previously accepted terms of dominant international economic and financial institutions. The present world system, as derived from the post 1971 form of floating exchange rate international monetary system, and present doctrines of International Monetary Fund (IMF) and related conditionalities, is doomed to extinction during the near-to medium term.

The present system will either be brought to an end in an orderly way, through government acting responsibly to put existing central banking and financial systems under public money administrations reorganization in bankruptcy, or through a chain-reaction form of rapid, debt Crisis implosion of that speculative financial bubble which the world’s financial system has become.

All workable alternatives to general collapse require governments to assume responsibility for the establishment of new monetary and financial institutions to replace the bankrupt institutions which continue to dominate the world up to this moment.

The special problem of African and other developing nations is that it is among the growing roster of nations whose margin for existing under the rules of the present IMF conditionalities is virtually exhausted.

To define the cure of sickness, we must always address the nature of the disease. To cure the sickness of Africa’s economies today, we must identify the causes of this sickness accurately. Development campaigners have argued that the rules on debt, aid and trade need reforming to help lift more African nations out of poverty.

This might remind us of the story of a man who went to a doctor seeking help to overcome cold. The man took the medicine the doctor prescribed, and the cold turned into pneumonia.

The doctor then told him it was necessary to increase the dosage of the same medicine. The man accepted this advice, and died. However, that is not the end of the story. The dead man’s family invited the doctor to the funeral, but the doctor had a conflicting appointment. The doctor had been taking the same medicine, and was attending his own funeral.

That is Africa’s experience with the western physicians so-called miracle cures for the African economies. When we look at the economies and markets around the world, we see that foreign nations, the conventional free market economy, have themselves become sick from their own medicine. Perhaps, if we knew what kinds of policy the collapsing western economies need to overcome the effects of their own medicine, that is the policy which Africa needs, too.

Therefore:

To define the causes and remedies for the present crisis in the African economies, we must begin by recognizing that no competent analysis of the past decade’s collapse of African continent economies is possible, unless we view the collapse experienced by Africa as a special phase within an ongoing process of collapse of the world economy as a whole.

The crisis of Africa could not be understood, nor competent corrections defined, if we do not recognize a second, added factor: that the worst features of the accelerating, conventional finance system were the result of the openly stated, by way of corporate finance, major corporations in Africa and their shareholders grow richer by acquiring capital roughly in proportion to their existing wealth. The capital earning capacity benefits created by this process of capital acquisition with the earnings of capital are highly concentrated.

The ownership-broadening approach to corporate finance continues with several propositions that are not widely recognized, and that may prove controversial because they seemingly defy widely-shared preconceptions regarding production, distribution, and growth.

IMF Shock therapy has been accompanied by a program of intensive "capitalist accumulation: Vast amounts and varieties of the former colonial economies commonwealth member-states have been dumped on the world market at ridiculously low prices, providing a small margin of foreign exchange into the bank accounts of African nations and other speculators engaged in selling valuable assets of African economies on the world markets. The motive for this conventional financial looting policy is, not only subsidizing a sagging western economy with this margin of colonialist style looting of the former colonial economies in Africa, but also geopolitics: Weaken the economies of Sub-Saharan Africa, and strengthen the margin future world hegemony for the superpower led special interests based upon conventional financial system". 

As one approaches the duties of shaping of economic policy under the conditions of crisis, it is indispensable to distinguish between sound principles, on the one side, and, on the other side, the variety of policies which would each and all be consistent with those principles. One must understand clearly the distinction between sound principles and alternative choices of good policies which may be based upon those principles. The most useful illustration of this distinction is found between axioms and theorems in a formal, theoretical economics.

If the principles (the axioms and postulates) of a theoretical economics are good, any theorem consistent with those principles will be sound. The question to ask, is not Do we have a good economic policy? We should ask, instead, Do we have a policy which is consistent with sound principles?

In this circumstance, do not ask merely for economic ‘blueprints’ seek to discover the scientific principles which must replace the generally accepted teachings of the economic textbooks and international monetary and central banking institutions. To illustrate the point: Presume you have been delivered a blueprint for a policy dedicated to economic recovery; by what set of principles would you judge whether that blueprint should be considered sound, or incompetent? Therefore, before asking for blueprints" settle the issue of principles. Once the right new principles have been chosen, any choice of policy consistent with those principles will be a sound policy.

Once sound principles have been adopted, policies may vary on condition they are consistent with those principles; sound principles must not vary until science had discovered a better set of principles.

Fortunately, the required new choice of principles is readily discerned from a brief examination of the changes in the binary economic approach introduced by philosopher Louis Orth Kelso and Public Money System advanced by Professor Kaoru Yamaguchi. 

1.2  Pioneering approaches

From the standpoint of principle, there are two preconditions for the economic recovery of Africa and the World. First it must adopt a form of MuRatopian Sharing Economy consistent with the principles underlying the integrated concepts "Public Money System and Kelsonian binary market System". Second, this brings us to our new economic theory MuRatopian Intersection Economy.

The wealth of any given society is its "independent productiveness" capacity of labour and capital to produce and distribution of capital acquisition as a second, and potentially greater and more sustainable means of distributing demand among its members such as shareholders, employees, and their customers, as its members require. The two sources of potential wealth are those that lie in capital include land, animals, structures, and machines—anything capable of being owned and employed in production. It does not include financial capital, which is a claim on, or ownership interest in, real capital (exclusively ownership-broadening system), and those which lie in labour. Both these two factors are necessary for the production of economic wealth.

In Capital lies a huge potential wealth awaiting the distribution of competiveness to capital acquisition with the earnings of capital to poor and middle class people and requires no government redistribution, taxation, borrowing, command, or other market intervention.

Now the wealth of any given MuRatopian society, regarded from the point of view of binary analysis, grows with increase broader distribution of capital acquisition and with corporations voluntarily deciding, based on the binary understanding of growth, to operate in a potentially more profitable manner by including their employees, customers, neighbors, and others in the process by which they acquire capital with earnings of capital.

With each increase in the numbers of workers, with every addition of a broader distribution of capital acquisition with earnings of capital carries with it the prospect of more broadly distributed earning capacity and earnings in future years, the productiveness of capital, and distribution of capital acquisition, can produce more from the market economy process upon which capital expends its efforts.

And this wealth grows with the progress of national economies, with the growth of public money systems and the improved sustainability of society’s natural resources. 

When exercised in the right direction they can all add to society’s capacity to produce and distribute, in general, earning capacity can be enhanced by some combination of two contributions; (1) wages earned through employment and (2) money earned through the ownership of productive capital.

It cannot be emphasized too much that, as society’s productive powers are used or misused, so will it, as a corporate whole, be well provided for or miserably poor.

The production of wealth in any society progresses from capital doing an ever-increasing portion of the total work for the production of the most elaborate conveniences and on expected demand for consumer goods in a future period, a voluntary pattern of steadily broadening capital acquisition promises more production-based consumer demand in future years and therefore more demand for a fuller employment of labor and capital in earlier years. 

Inequality is indeed increasing almost everywhere in the postindustrial capitalist world. But despite what many on the left think, this is not the results of politics, nor is politics likely to reverse it, for the problem is more deeply rooted and intractable than generally recognized. Inequality is an inevitable product of nineteen century capitalist activity, and expanding capital accumulation increases it—because some individuals and communities are simply better able than others to exploit the opportunities for development and advancement that nineteen century capitalism affords. Despite what many on the right think, however, there is a problem for everybody, not just those who are doing poorly or those who are ideologically committed to egalitarianism-because if left unaddressed, rising inequality and economic insecurity can erode social order and generate a populist backslash against the capitalist system at large.

In recent decades, developments in technology, finance, and international trade have generated new waves and forms of insecurity for leading capitalist economies, making life increasingly unequal and chancier for not only the poor and working classes but much of the middle class as well. The right has ignored the problem, while the left has sought to eliminate it through government action, regardless of the costs. Neither approach is viable in the long run.

The need for a more rapid method of binary growth factor and monetary reforms arises, the nineteenth century capitalism system is proven to be inadequate, and MuRatopian Intersection Economy is introduced as a new suitable economic theory. 

Public Money and binary financing is an important part of the postindustrial capitalist world; it is an instrument created by society to enhance sustainable, environmentally friendly economic growth and to facilitate the exchange and distribution of the goods that labour and capital has produced for they society.

Professor Robert Ashford is a senior-ranking binary economist, and also other Kelso Institute important collaborators, who are leading a rear-guard effort to prevent the never ending threat of global economic collapse which is unleashed by conventional financial system and in addition to Professor Kaoru Yamaguchi’s Public Money System, being advanced in this book as integrative new system designs to form the MuRatopian Intersection Economic Theory.

Figure 1.1

1.2.1  Theoretical Economics

The task of theoretical economics is to create a mental map of the whole MuRatopia Intersection economy without firsthand experience. Binary economics asserts that capital has a potent distributive relationship to growth. If this proposition is true, then democratization of capital acquisition (by reforming the economic system to extend to everyone the competitive opportunity to acquire capital with the earnings of capital) will enable all people, rich and poor, to become wealthier and an under-capacity producing economy to grow up to its potential level and perhaps beyond full potential as that term is generally understood. (R.Ashford and D.Kantarelis, 2008)

That is, in the face of ever increasing automation, how should we deal with our under capacity producing capitalistic economics, the new foundational propositions about the MuRatopia Intersection economy as a whole economic science is the democratization of capital acquisition. In most modern economies, most capital is acquired with the earnings of capital; whereas relatively little capital is acquired with the earnings of labor. There exists a reality beyond our theories and concepts of it. [Ashford 1990, 1996, 1998, 2002, 2005] 

The set of basic propositions has to reduce the vast complexity of the real thing to almost nothing. From this almost-nothingness the real world complexity then has to be logically reconstructed.

Conventional wisdom effectively treats capital (land, structures, machines, and the like) as though it were a kind of holy water that, sprinkled on or about labor, makes it more productive. Thus, if you have a thousand people working in a factory and you increase the design and power of the machinery so that one hundred men can now do what a thousand did before, conventional wisdom says, ‘Voila! The productivity of the labor has gone up 900 percent!’ I say ‘hogwash.’ All you’ve done is wipe out 90 percent of the jobs, and even the remaining ten percent are probably sitting around pushing buttons. What the economy needs is a way of legitimately getting capital ownership into the hands of the people who now don’t have it. (Louis O. Kelso, 1982).

The standard set of behavioral axioms is in the present chapter at first replaced by structural axioms. By choosing objective structural relationships as axioms behavioral hypotheses are not ruled out. On the contrary, the structural axiom set is open to any behavioral assumption and not restricted to the standard optimization calculus (Kakarot-Handtke 2011b). Hence it is analytically possible to dislocate human behavior from the center of the domain to the periphery.

1.2.2 MuRatopia Intersection  Economy Axioms and definitions

The first three MuRatopian structural axioms relate to income, production, and the work of capital (such as robot-assembly lines, computers, et al) has been displacing and vastly supplementing the work of labor. Casual observation reveals that, overtime, in most work places, work done by labor (labor productiveness) has been diminishing relative to work done by capital or automated machines (capital productiveness) while total output has increased. This process whereby more is produced by using more productive capital and relatively less labor (whereby capital productiveness both displaces and vastly supplements labor productiveness) causes incomes of capital owners to rise relative to incomes of non-owners. For the remainder of this inquiry the period length is conveniently assumed to be the calendar year. Simplicity demands that we have at first one world binary economy firm, and one product.[3]

Total income of the household sector in period is the sum of owners and retained employees income, i.e. an increase in their income and while the income of displaced employees declines , and the economy consists of identical business N and identitical employees M.

Output of the binary business sector is the product of business automation, inventories and eliminates employment possibilities and depends on universal participation by way of both labor and capital ownership, income earned by Capital and working hours.

Consumption expenditures of the household sector is the product of price and quantity bought

The axioms represent the pure consumption MuRatopian market economy, that is, operates on the assumption that an essential purpose of capital investment is to produce more with more capital and less labor. Albeit quite obvious, it is worth to emphasize that all axiomatic variables are measurable in principle. An effort is made to explain the fundamentals of MuRatopian Intersection Economy and the promise of binary distribution, efficiency, and growth by utilizing Structural axiomatic models.

According to MuRatopian Intersection economics, a true democracy requires individual participation in both political power (universal suffrage) and economic power (universal participation in production by way of both labor and capital ownership). By this definition, it is undemocratic that only some individuals are able to acquire capital with the earnings of capital. Believing that the distribution of capital ownership has a potent distributive relationship to growth that is suppressed in under-producing capitalist economies (because institutional barriers prevent and discourage efficient, growth-enhancing ownership-broadening transactions), binary economists propose institutional reforms intended to open capital acquisition more competitively to all people.. Thus, New Supply and Demand Law of Markets–advanced in this book–would become a practical reality for the first time since the Industrial Revolution began.

The ultimate aim of this chapter is to present a logical and unified market system that is structured to combine economic efficiency.

Definitions are supplemented by connecting variables on the right-hand side of the identity sign that have already been introduced by the axioms. With (5) wage income and distributed broader capital acquisition with earnings of capital within MuRatopian Intersection economy is defined:

DEFINITIONS ADD NO new content to the set of axioms but determine the logical context of concepts. New variables are introduced with new axioms.

Formal axiomatic systems must be interpreted in some domain . . . to become an empirical science. (Boylan and O’Gorman, 1995, p. 198)

The economic interpretation is rather obvious for the set of structural axioms. What deserves mention is that total income in (1) is the sum of wage income and distributed broader capital acquisition with earnings of capital in binary growth firms and not of wage income and profit. Profit and distributed broader capital acquisition with earnings of capital are quite different things that have to be thoroughly kept apart.

The MuRatopian Intersection Economy market system provides a new explanation for poverty in an industrial economy and suggests a new strategy for making all people sufficient without taking property from others.

1.2.3 An Opening

Figure 1.2 makes the MuRatopian Intersection Economy axioms immediately concrete. The diagram looks like the familiar Cartesian coordinates. However, since there is no use for negative values the four axes represent the positive values of the variables employment L, income Y , consumption expenditures C, quantity bought X and output O, respectively. The bisecting line in the north-western quadrant mirrors income from the horizontal to the vertical axis. This facilitates the direct comparison of the nominal values of income and consumption expenditures. The quadrants are numbered according to the axioms they enclose.

Figure 1.2 In the binary growth product market, economic power is universal participation in production by way of both labor and capital ownership.

In the 1st quadrant wage income is given as product of wage rate (democratic capital acquisition) and working hours L. The wage rate (democratic capital acquisition) is equal to the tangent function of the angle α   at L = 1. Angles are not needed for our analysis hence they are denoted with the respective economic variables that are used for graphical multiplication. Total income Y consists at the beginning of capital acquired by displaced employees and other people . Distributed broader capital acquisition with earnings of capital in MuRatopian Intersection economy as constituent of the 1st axiom (1) has been set to zero and shall be considered separately later.

In the 2nd quadrant output O is given as product of income earned by capital and working hours L. The productiveness is determined by the underlying capital earning ownership-broadened process and wages earned through employment. The 2nd axiom (2) should therefore not be interpreted as a linear production function. It is fundamental mathematical relationship between human beings and non-human factors of productions when they are used to produce goods and services- a relationship which traditional economies ignores.

This relationship is captured in the term productiveness which is conceptually distinct from productivity as that term is employed in traditional economies. A system based on productiveness, as distinguished from productivity, provides a paradigm as different from modern capitalist or socialist economies.

Accordingly (Robert Ashford, 1994), to correct discrepancies in income distribution, the logic of binary economics reveals that nations must revamp the traditional strategies for both capitalist and socialist economies. They must eliminate their virtually exclusive dependence on employment, welfare, and traditional growth strategies, and initiate a program to achieve universal capital ownership according to binary economic principles.

In the 3nd quadrant consumption expenditures  C is given as product of price P and quantity bought X.

Since the quantity produced O is here the present demand for the employment of capital and labor which depends on expected demand for the consumer goods in the future period to be bought X the firm that at the moment represents the entire binary business sector has a steadily broadening capital acquisition promising more production based consumer demand in future years and therefore a period of more demand for a fuller employment of labor and capital in earlier years. The binary growth of inventory in period t is defined as:

In the period under consideration the product market is cleared. Consumption expenditures C in the 1st quadrant is high than income Y, that is, the households consumers. Financial expenditure is defined as:[4]

In the period under consideration the household sector’s budget is balanced.

Is this configuration realistic? Of course. If the techniques of corporate finance were opened competitively to all people, then the present demand for capital investment and employment would increase in anticipation of the broadening distribution of capital income to poor and middle class people with unsatisfied consumer needs and wants. The firm under binary financing sells the quantity in the next period in addition to the current output the inventory. Hence, seen over two periods, the product market is cleared. Problems arise, though, if the stock of unsold products accumulates over a longer time span, that is, if the configuration of Figure 1.2 is identically reproduced in subsequent periods. It is similar with saving. If the households dissave in the next period their budget is balanced over two periods.

Problems arise such as the problem of concentrated ownership distribution caused by traditional capital financing. To achieve sustained growth, productive power represented by capital must be linked through property rights to those whom society expects to purchase what it produces. The business sector’s productive capital in period t is defined with (7) as the distribution of income from self-financing capital with projected income sufficient to amortize the acquisition debt within a reasonable cost recovery period – resulting to a larger economy as a whole identical with the more broadly capital ownership acquired by individual consumers on market principles, that is, consumption expenditures C – and costs – here identical with wage income earned by capital :

Since distributed capital acquisition within MuRatopian Intersection economy in (1) is zero we have in this simple case Y = . Hence from (7) in combination with (6) follows

To democratize the process of capital acquisition consider a lending system that would, under specified conditions, allow banks to make special N period binary loans (like mortgages) to individuals to enable them buy assets represented by full-dividend-paying shares of corporate stock. The loans would be non-recourse as to the individual borrowers, but would be secured by a claim on the projected earnings of the assets acquired. The loans would be further collateralized by those assets and by such other collateral or loan insurance as may be negotiated. The shares would distribute all earnings (which of course exclude from revenues depreciation, research and development expenses) first to repay the loans and then to provide a capital income to their binary owners to supplement labor income and welfare benefits. After N periods, the assets will become loan-free property of the borrowers. Thus, such capital democratization will enable individuals to earn income in a binary way (i.e., from two sources: labor and capital).

The MuRatopia Intersection Economic Theory approach is in particular interest to socio-economist because it allows for distribution of income on market principles based on new structural Laws of Supply and Demand.

Stated more broadly, the theory of binary growth holds that economies grow on market principles, not only with increases in investment and worker productivity and decreases in transactions costs, but also as an independent (and much more potent) function of the distribution of capital acquisition on market principles. This proposition is exactly the opposite of the claims of traditional capitalist economic theory (Robert Ashford, 1994).

There is, to be sure, not much use in speculating about what the households or our single business firm would or could do in the given situation or to introduce some convenient behavioral assumptions that make that household saving is always zero in the pure consumption binary market economy. What can be done, though, is to determine the structural conditions for a reproducible period configuration.

On the individual level, it makes a big difference who owns the capital. Generally, it is the difference between being rich and poor. The more capital you own, the greater your ability to participate in the economy both as a producer (owner) and as a consumer. Likewise, on the national level, all the world’s large economies are capital-rich economies. Both individually and nationally, affluence is the product of capital, whereas jobs and welfare rarely produce more than subsistence. What is true for rich people and nations is true for the poor. The more fully each individual provides productive input in the economy not only as worker but as owner, the more fully he or she can participate as a consumer, and the larger the economy will be.

1.2.4 Reproducibility and Capital productiveness

After the implementation of the binary conditions of market clearing X = O and budget balancing C = (at the moment Y = The pure consumption market economy looks as shown in Figure 1.3. This configuration is referred to as supersymmetric. It is important to notice that the two conditions are not a constituent part of the axiom set but an – in principle – arbitrary addendum.

FIGURE 1.3 IMPLEMENTATION of the binary conditions of product market clearing and budget balancing

The market clearing price then follows from (1) and (3) as:

The market clearing price is equal to unit wage costs and ownership-broadened productive capital. Hence profit per unit of output is zero and therefore overall profit is zero. This configuration is reproducible. The firm sells its period output completely and voluntarily distributes income according to binary financing system. It is worth emphasizing that to acquire capital with the earnings of capital, existing owners (primarily the rich) use (1) the pre-tax earnings of capital, (2) collateral, (3) credit, (4) market and insurance mechanisms to diversify and reduce risk, and (5) a monetary policy intended to protect property. Binary economics holds that the same institutions and practices that work profitably for well-capitalized people can also work profitably for all people. Moreover, in an economy operating at less than full capacity, because demand for capital goods is a derivative of demand for consumer goods in a future period, Moulton (1935, 1975), if capital can competitively pay for its acquisition costs out of its future earnings primarily for existing owners, it can do so even more profitably if all people are included in the acquisition process..

The market clearing price in (9) is independent of employment. Hence, if employment changes while wage rate and productiveness remain unaltered then the price remains constant. This case is depicted in Figure 1.4.

Figure 1.4 Different employment levels under the condition of market clearing and budget balancing with constant capital productiveness and wage  rate

It is therefore possible that the market economy moves from underemployment to full employment utilizing binary financing to improve on wage rate and price of the distribution ownership of productive capital is given. If binary capital productiveness and wage rate change on the move to full employment this will increase steadily and thereby provide the basis for binary growth and sustainable market clearing price as given by (9). Since financial profit is zero under the condition of balanced budget it is of no consequence for the business sector whether the MuRatopian Intersection economy operates at full employment or underemployment.

Profit is zero in both cases. Each year after the initial cost recovery period, an additional year of binary productive capital will have paid for itself and will be distributing capital income to poor and middle class people. From (9) follows immediately for the real wage and a seven year capital cost recovery period:

IN THE LONG RUN, THE linkage between supply (in the form of the incremental productiveness of capital) and demand (resulting from the widespread market distribution of capital to consumers) approaches 100%. The more binary financing that is undertaken, the greater are the distributional growth effects. 

To maintain market share in the projected growing economy, based on their capital investment planning horizon, producers will have to increase production and productive capacity before binary income begins to be distributed to its new owners.

Because present demand for capital goods is positively affected by anticipated future demand for consumer goods, the broader distribution of capital acquisition and capital income should be reflected in increased employment of labor and capital within producers’ capital investment planning horizon. With a capital cost recovery period of seven years, and a capital investment planning horizon of five years, market incentives for increased capital investment by producers of consumer goods might materialize for some producers in the third year.

1.2.5 The New MuRatopia Sharing Economic System

Due to the ongoing fundamental problem in conventional economic policy of the World, the world as a whole has been moving at an accelerating, into not only a new world economic depression, but also depression connected  poverty against entire nations and people in many parts of the world.

At the moment throughout the world, we are already inside the opening phase of a new economic depression. We are, at this moment, at the brink of a chain-reaction of collapse of financial institutions. If this collapse of financial structures occurs, the collapse of combined financial, political and social institutions worldwide will be devastating as the collapse of Central Europe during the middle of the fourteenth century. Without a more or less immediate, and comprehensive reform of the world’s leading monetary institutions, and a profound and sudden change in monetary policies, this combined economic and financial collapse cannot be prevented.

To add to the fact that many among the most influential and powerful financial executives of the world broadly agree with Louis O. Kelso characterization of the international, economic and financial situation, even though a majority of them continue so far to reject the specific binary economic policy-recommendation he proposed since the introduction and definitions terms in the Capitalist Manifesto, published in 1958.

I humbly ask you to focus your attention for a moment on the manner in which conventional finance system and the depression are interacting at this particular moment of history. Then, I shall stress the connection between the principles of public money and modern binary reform market economy. This defines the scientific basis for the establishment of a New MuRatopia Economic System meeting the requirement of public money policy and binary analysis market system.

The chief role of this book is to communicate a just new world economic system, to design public money policy-structures of economic and monetary policies, through which general objectives of binary reform market analysis can be brought into durable reality over the period of twenty-five to fifty years ahead.

The standpoint in economic science is essentially the proposal advanced by the Kelso Institute organization, the proposal which Louis Orth Kelso was the first to name "the binary system of economic power". This binary market System was based on the discovery economic science by Louis Orth Kelso and Patricia Hetter Kelso, and was channeled into the United States through students of Kelsonian teaching-order, who are the leading defenders of binary economics. The further development of the Binary financing system after the demise of Louis Orth Kelso was chiefly the work of the widow Patricia H. Kelso, Professor Robert Ashford, and other distinguished collaborators of Kelso Institute.

The new economic theory MuRatopia Intersection Economic System is a noble effort that incorporates the binary reform market system policy by Louis Orth Kelso and public money system by Professor Kaoru Yamaguchi, one that commits a new just economic system of ridding the world of the conventional financing system and vestiges of nineteen century of capitalism, and what Louis O. Kelso described as the continuing failure of Capitalism nineteenth-century methods in the world’s economic and monetary affairs.

He projected a practical program for bringing out the economic changes needed to transform our present economic system into what we now call a truly "MuRatopia Sharing Economy" for the post capitalist world, a policy centered around a system of ownership-broadened capital acquisition with the earnings of capital for the poor and middle class people concurrently with the formation of new capital, such as transforming the Sub Sahara region into the breadbasket of Africa.

After Louis Orth Kelso death 1991, there are few leading binary economists who have maintained binary policy-initiatives along the same lines. The efforts of the Professor Robert Ashford and Patricia H. Kelso among others are most notable. The great project proposals of the Kelso Institute illustrate the same direction of effort.

My own efforts, especially with advancing the MuRatopia Intersection Economic Theory, have been chiefly to integrate the two concepts with Structural axiomatic economics, taking advantage of the foundation of Kelsonian binary model in developing a scientific-analytical apparatus of the sort required for a more refined application of the MuRatopia Sharing Economic System that includes public money system advanced by Professor Kaoru Yamaguchi.

In economic science, beginning work of Louis Orth Kelso, we measure the performance of economies by their successful increase of household participation in production through their ownership of capital and increasing number must depend upon competitive market opportunities to acquire capital with the earnings of capital.[5]

The quantity we measure is probably best named potential relative binary business-financing techniques to create ownership-broadened pattern that provides sustainable earning capacity for working and middle class people. In other words, what is the average number of persons which can be sustained per square kilometre of habitable, improved land, solely by means of the changes in the material conditions of nature effected by broadening capital acquisition with the earnings of capital as a means of sustainable growth and sustainability.

So, since Louis Orth Kelso discoveries, we define economic science as a study of the manner in which the use of technological progress maintains and increases this potential relative ownership of productive capital.

MuRatopian Intersection economics holds out hope for those without access to capital. At the same time it offers the prospect of significant public money policy and economic growth. It is unlike classical economics with its Supply Siders, who focus on capital formation, and it’s Keynesians, who focus on the creation of demand. The New Economy envisions the formation of capital in such a way that the income produced would be used for consumption rather than reinvestment. It is this connection between the formation of capital and the demand for goods and services that provides underperforming economies the prospect of significantly improved growth.

1.2.6 The logical emergence of profit

Profit has been defined with (7). In explicit form, after the substitution of (3) and (4), this definition is identical with that of the theory of the firm:

Using the first MuRatopian axiom (1) one gets alternatively:

The three definitions are formally equivalent. Profit can be seen from different perspectives. Taken together, the three perspectives make a comprehensive view. If distributed broader capital acquisition with earnings of capital in firm is set to zero in (12), then profit or loss of the business sector is determined solely by consumption expenditures and wage income with earnings of capital from democratic capital acquisition. For the business sector as a whole to make a profit, consumption expenditures have in the simplest case to be greater than wage income based on binary growth as shown in Figure 1.5.

The price is determined by the axioms (1) to (3) and the condition of market clearing:

Figure 1.5 The emergence of profit under the condition of binary market clearing

We define the expenditure ratio as:

Together with (13) this yields the market clearing price in general form:

The market clearing price is higher or lower than unit wage costs depending on the expenditure ratio . In Figure 1.5 the profit per unit is positive because > 1 . So that profit comes into existence for the first time in the pure consumption MuRatopian Intersection market economy, makes profitable the employment of more capital and labor, and enhances the prospects of sustainable economic growth. It will also therefore increase the market value of well-run corporations and the wealth of the shareholders within the growing economy.

The logical explanation of profit in MuRtopian Intersection Economy therefore consists in: the prospect of more broadly distributed capital earnings in future years that provides incentives to profitably employ more labor and capital in earlier years. Without redistribution, modest changes in the system of corporate finance will enable market participants to price the value of more broadly distributed capital acquisition and thereby provide market incentives to produce (1) enhanced earnings for poor and middle class people, (2) enhanced corporate profits and growth, (3) reduced need for welfare dependence, government spending, borrowing, and taxes, and (4) enhanced sovereign credit worthiness. In this case the existence of profit for the economy as a whole does neither depend on the working hours, the wage rate nor on productivity.

Presently through these corporations, almost all new capital is acquired with the earnings of capital, and much of it is acquired with borrowed money, Brealey et al. (2006). At the same time, as reported by Wolff (1995a,b) the ownership of this corporate wealth is highly concentrated so that approximately 1% of the people own 50% of the wealth and 10% own 90% of the wealth, leaving 90% people owning little or none. Thus, capital returns its value at a rate reflective of its long-term (suppressed) earning capacity as it buys itself for a small minority of the population.

1.2.7 Distributed Capital Acquisition in MuRatopian Intersection  economy

Once profit has come into existence for the first time (that is: logically – a historical account is a quite different matter) the business sector has the option to voluntarily distribute the earnings of capital, and potentially greater and more sustainable means of distributing demand. This in turn has an effect of profit. This effect is captured by (12) but it is invisible in (11). Both equations, though, are formally equivalent. Profit in a binary firm and the spending out of distributed capital acquisition and with earnings of capital is depicted in Figure 1.6.

Figure 1.6 Distributed capital acquisition and spending out of distributed earnings of capital under the condition of binary market clearing and budget balancing

If the household sector’s budget is balanced, i.e. if consumption expenditures are equal to total income with the earnings of capital in (12) then profit is, a collar, equal to distributed democratic capital acquisition with earnings of capital:

The market clearing price is higher than unit wage costs in the supersymmetric case if distributed capital acquisition to poor and middle class people is greater than zero. Given the amount of distributed capital acquisition as well as wage rate and productiveness of capital capacity strengthens the promise of capital to pay for itself with its future earnings, makes profitable the employment of more capital and labor, and enhances the prospects of sustainable economic recovery.

The determinants of profit look essentially different depending on the perspective. For the firm price , and employment in (11) appear to be all important for profit; under the earnings of income by capital productiveness perspective of (12) these variables play a major role in increasing productiveness of capital and the distribution of its acquisition. The profit definition provokes a cognitive dissonance between the micro and the macro view. It is therefore worthwhile to realize that equations (7), (11), (12) are not only equivalent but indeed indispensable for a consistent view of profit.

Profit and distributed capital acquisition with earnings of capital and growth in firms is clearly distinguishable. The latter is a flow of income from the business to the household sector analogous to wage income. By contrast, profit is the difference of flows within a business sector. Profit is not connected to a factor input. Accordingly, to enable all people and major, prime-credit-worthy corporations to capitalize on the potent distributive relationship between voluntary ownership-broadening capital acquisition and growth, a MuRatopian Intersection economy requires modest reforms in the market infrastructure governing corporate finance so that all people (not merely a minority of the people) are vested with competitive capital acquisition rights to acquire capital with the earnings of capital. In the more democratic binary system of corporate finance, the major credit-worthy corporations of an under-producing capitalist economy would have a practical means of meeting their capital requirements while encapitalizing their employees, consumers, neighbors, and others. The