|Subject:||[socialcredit] outline of model|
|Date:||Saturday, July 14, 2007 10:43:57 (-0700)|
|From:||william_b_ryan <william_b_ryan @.....com>
Outline of the model as presented so far:-
Argument in reductio ad absurdum.
The flux-reflux diagram (diagram1) with the expanding
pipeline metaphor (diagram2), where the flux of the
diagram corresponds to the input to the pipeline, and
the reflux to its output. The rate of increase to the
volume contained within the pipeline corresponding to
the instantaneous differential between the rate being
inputted and the rate being outputted.
The relation to double-entry accounting, where
disbursement corresponds to the flux, and sales to the
reflux, where the differential corresponds to the rate
of accumulation to aggregate account balances
The expense curve, which is the exact image of the
disbursements curve delayed or pushed forward in time
through the conventions of accounting. The rate of
accounting profit being the instantaneous differential
between sales and expense, which is reporting
indirectly (through the accounting algorithm) the rate
of change in sales in respect to investment to
entrepreneurs and their financiers.
Douglas's refinement to the model (diagram4) - two
conceptual aggregate account balances instead of one -
the flux demarcated into A and B; where the
instantaneous differential between B and A being the
rate of payments into account balances held by firms;
and A being the rate of payments into account balances
held by consumers.
Here, expense being the exact image of the A+B curve
delayed through time to be matched against sales.
The rate of profit sustainable only if the rate of A
is remaining proportional to A+B through time,
assuming that the reflux from A is remaining
proportional to A (the propensity to consume from
income remaining constant). If so, the expense curve
is remaining proportional to sales through time.
But this is not possible if the ratio of A is falling
in respect to A+B, reflecting the lengthening and
broadening to the structure of production with
increasing division of labor and process ("labor
displacement" in the traditional jargon) requiring
increasing working capital balances in respect to
balances held by consumers to conduct day to day
Ergo, we know inductively that there must exist a
source or sources of credit extraneous to the flux of
credit represented by A+B that allows the ratio A/A+B
to remain constant through time, in order to close the
cycle of production into consumption on a continuous
A + unacknowledged sources of credit/A+B
The unacknowledged sources include such items as
selling at a loss to develop a market, writing off
debt through bankruptcy, "favorable" balance in
foreign trade, the pilling on of debt to the banks,
etc., all factors mitigating against the utility of
the market as a reliable source of information to
Reform concentrating on conscious rationalization to
the process; e.g., consumers' dividend and retail
discount from the macroeconomic capital account
augmenting the numerator to the ratio in displacement
of the unacknowledged sources.
A + Dividend/A+B
**In the future national accountancy this differential
in the changing ratio would be reflected by
corresponding credits to the macroeconomic capital
account from which dividends would be paid.
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