The abstract theory posits that capitalist economies can be modeled as coupled dynamic systems where endogenous money creation and physical production flows interact to determine aggregate variables without relying on static equilibrium assumptions. The core mechanism derives from a Sraffian framework extended with engineering-derived time constants, establishing that price levels function as monetary markups on the cost of circulating capital to convert physical surplus into value, while growth arises solely through debt recycling rather than exogenous increases in money stock. This approach challenges neoclassical orthodoxy by replacing stable equilibrium solutions with unstable disequilibrium dynamics and refutes dimensional errors such as confusing stocks (capital) with flows (circulation).
The abstract theory posits that capitalist economies can be modeled as coupled dynamic systems where endogenous money creation and physical production flows interact to determine aggregate variables …