Description of the Book:

Consequential Macroeconomics -- Rationalizing About How Our Social System Works

David Chester

[2015]

In the past the subject of theoretical macroeconomics has been treated badly and in an incomplete unscientific manner. The basic model for representing the general social system of a nation has never been properly developed. The results previously obtained, from the over-simplified models of the past, are unsatisfactory and they sometimes even conflict with common sense. When the alternative of computer-modeling is used, the detailed results are too complex, difficult to follow and they are unsuitable for students and teachers to appreciate, interpret and understand what really is involved.

The aim of this book is to correct this situation and to provide a very logical and compact, but sufficiently complete, theoretical presentation about how our social system actually works. The emphasis is on viewing the system from sufficient a distance so as to be able to envisage it as a whole, in order to provide an improved and better perception and understanding of the full structure of our social system. It also introduces some original aspects of analysis into the subsequent methodology.

The 320 page book is presented in parts 6 named:”getting started”,”model”,”analysis”, “decisions”, “money” and “consequences”. It contains an introduction and a set of 7 appendices, a list of references and an index. This is an original engineering approach to this subject, where the ideas of Jean Says, Henry George, David Ricardo, Leon Walras, Wassley Leontief, Henry Hazlitt, and several others are combined into well-knit scientific framework.

The approach taken here starts from scratch. After the introduction and general review of the overall problems in representing our social system, a series of assumptions and early considerations are provided, along with the necessary definitions. From this standing, there is built up a base model (see diagram) that is logical in its development and which is virtually complete, whilst not being more complicated than is absolutely necessary--to provide for the subsequent analysis in a scientific manner.

The model is expressed in three ways, by this diagram, by equations and by a matrix using W.W. Leontief’s "Input-Output" method. Its various parts are then described and used for analysis and explanation about the circulation of money, goods, services, valuable documents, etc. This leads an examination of the general equilibrium and stability of the system.

Short-term disturbances to the steady-state result in the need for decision-making, which is carefully described in detail and illustrated by four simplified numerical (hand-calculated) examples, three being about taxation and the short-term dynamics. These calculations show that compared to the benefits in progress that result from an increment in income-tax (yes, it is beneficial overall), a tax on land-value is about 3 times better! The decision-making depends on some properties of the system, which are introduced to complete the descriptions of this process.

Theories about money and banking are given which lead to a discussion about the functions of government over longer periods of time. There follows a development about the limitations to growth of the system, related to George's description of the "savanna" in "Progress and Poverty". The book concludes with a long review and summary that provides a better and somewhat new understanding about what macroeconomics really is all about.

The book is suitable for students of economics who wish to avoid the confusion of past explanations or are new to this subject. They should have a small acquaintance with economics and some high-school mathematics to include elementary (square) matrices and the notation of the calculus. This book is useful for teaching purposes, particularly because it uses a more general terminology (with full definitions) than is often the case. However the development also opens the way for research, since it provides a new and easy-to-use tool for analysis of short-term policy changes within the whole of a nation’s social system.