Abstract Nature of Money and the Modern Equation of Exchange

Mieczysław Dobija

.

DOI: 10.4236/me.2011.22019                

Abstract

The essence of money economy reveals an abstract triad: capital – labor – money, where capital is an ability of doing work, labor is a transfer of the capital to products, and wages receivables correctly define money earned by the employees. The only proper money creating process is through labor. Money is a certification of work done; therefore labor is always self-financing. Using this theoretical framework, Governments can eliminate budget deficit, reduce direct taxes and unemployment while avoiding inflation. If the compensation paid in the public sector comes from the funds collected by taxation the economy works as a scarcity machine. In the reshaped economic system the Central Bank directly transfers salaries earned by the public sector employees to their bank accounts. Then the budgets are balanced, the direct taxes are limited, and the public debt no longer grows. The modern equation of exchange involves labor productivity as a fundamental economic ratio.

Keywords

Capital, Labor, Money, Central Banking, Labor Productivity, Equation Of Exchange, Budget Deficit

Conflicts of Interest

The authors declare no conflicts of interest.

References

[1]	J. Ch. Bliss, “Capital Theory and the Distribution of Income,” North-Holland Publishing, Oxford, 1975.
[2]	H. De Soto, “The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else,” Basic Books, New York, 2000.
[3]	P. Mirowski, “More Heat than Light, Economics as Social Physics: Physics as Nature’s Economics,” Cambridge University Press, Cambridge, 1989.
[4]	M. Dobija, “Abstract Nature of Capital and Money,” New Developments in Banking and Finance, Chapter 4, Nova Science Publishers, Inc., New York, 2007, pp. 89-114.
[5]	P. Atkins, “Four Laws that Drive the Universe,” Oxford University Press, Oxford, 2007.
[6]	W. N. Goetzmann and R. G. Ibbotson “History and the Equity Risk Premium,” 2005. http://ssrn.com/abstract=702341
[7]	B. Kurek, “The Risk Premium Estimation on the Basis of Adjusted ROA,” General Accounting Theory. Evolution and Design for Efficiency, Wydawnictwa Akademickie i Profesjonalne, Warsaw, 2008, pp. 375-392.
[8]	M. Dobija, “How to Place Human Resources into the Balance Sheet,” Journal of Human Resource Costing & Accounting, Vol. 3, No 1, Spring 1998, pp. 83-92. doi:10.1108/eb029044
[9]	M. Dobija, “Human Resources Costing and Accounting as a Determinant of Minimum Wage Theory,” Zeszyty Naukowe UEK, No. 553, 2000, pp. 39-62.
[10]	I. Cie?lak and M. Dobija, “Teoretyczne podstawy rachunkowo?ci kapita?u ludzkiego (Theoretical Ground of the Human Capital Measurement),” Zeszyty Naukowe UEK, No. 735, 2007, pp. 5-24.
[11]	W. Kozio?, “Pomiar kapita?u ludzkiego jako podstawa kszta?towania relacji p?ac w organizacji (Human Capital Measurement for Shaping the Pay Relationships),” Ph.D. Dissertation, Library of Cracow University of Economics, Kraków, 2010, pp. 191-195.
[12]	M. Dobija, “Theoretical Grounds of Public Finance Reform,” Argumenta Oeconomica Cracoviensia, No. 5, 2009, pp. 6-20.
[13]	R. W. Garrison, “Time and Money. The Macroeconomics of Capital Structure,” Routledge, London and New York, 2001.
[14]	A. V. Banerjee and E. S. Maskin, “A Walrasian Theory of Money and Barter,” Quarterly Journal of Economics, Vol. 111, No. 4, November 1996, pp. 955-1005. doi:10.2307/2946705
[15]	T. Buchholz, “New Ideas from Dead Economists: An Introduction to Modern Economic Thought,” A Plume Book, New York, 2007, pp. 229-234.
[16]	B. Lietaer, “Complementary Currencies in Japan Today: History, Originality and Relevance,” International Journal of Community Currency Research, Vol. 8, 2004, pp. 1-23.
[17]	D. Rushkoff, “Open Source Currency,” What Is Your Dangerous Idea, Edge Foundation, Inc., Polish Edition, 2008.
[18]	A. Smith, “An Inquiry into the Nature and Causes of the Wealth of Nations,” Library of Economics and Liberty, June 23, 2010.
[19]	The World Wide Web of the American Monetary Institute, 23 June 2010. http://www.monetary.org/need_for_monetary_reform.html
[20]	M. Dobija, “Labour Productivity Ratio and International Comparison of Economic Performance—Formalization of the PPP Theory and Preliminary Examinations,” IEA 15th World Congress, Istanbul, 25-29 June 2008.
[21]	M. Dobija, “Financing Labour in the Public Sector without Tax Funds,” Argumenta Oeconomica Cracoviensia, No. 4, 2005, pp. 5-20.