Summary, Synopsis

The initial “Motivation” presents the analogy of the blind men trying to describe an
elephant. It is used to show that an holistic approach and analysis are needed in
order to better understand of what our social system (of macroeconomics) consists
and how it functions. The introduction complains that in the past, the subject of
theoretical macroeconomics has been badly treated--in an incomplete and
unscientific manner. The basic model for representing the general social system of
a country has never been properly developed, due to the failure to seriously state
and explain the initial assumptions (which were presumed instead). Consequently,
the results obtained from the over-simplified models of the past are unsatisfactory
and sometimes they even conflict with common sense. When the alternative of
computer-modeling is used, the results become complex and difficult to follow. They
are unsuitable for students to appreciate, interpret and understand the essence of
what is involved—that is in how our society functions, both in part and as a whole.
The aim of this book is to correct this situation and to provide a logical and compact,
but sufficiently complete, theoretical presentation about of what our
macroeconomics system comprises and how it actually works. The attitude taken
here is about viewing the system from sufficient a distance, so as to envisage it as a
whole as well as its components. It aims to provide an improved and better
perception and understanding of the complete macroeconomics structure. It also
introduces some original aspects of analysis into the subsequent methodology.
We start from scratch. After a review of the overall problem of complexity in
representing our social system, a series of assumptions and early considerations
are provided, along with the many necessary definitions. From this standing, there is
built up a base model that is logical in its development and which is virtually
complete, whilst not being any more complicated than is absolutely necessary—in
order to provide for the subsequent analysis, in a formal scientific manner. This
model is necessary and sufficient to cover what our social system does.
This model contains 6 entities: Landlords, Government, House-Holders, Producers,
Capitalists and Finance Institutions (banks). They are connected by 19 double flows,
consisting of money which opposes the various kinds of goods, services and
valuable legal documents that are uniquely provided by each entity. The model is
expressed in three ways, by a diagram, by a set of algebraic identity equations and
by using W. Leontief’s input/output matrix. (The latter is subsequently used in the
development stages of this work.) The various entities, as parts of the model, are
described and used for explanation about the circulation of money, goods, etc. This
leads an examination of the matters of general equilibrium and stability of the
Short-term disturbances to the steady-state result in the need for decision-making,
which is carefully described in necessary detail and later illustrated by four simplified
numerical (hand-calculated) examples, three being about changed taxation and the
associated short-term dynamics. The decision-making depends on the properties of
the 6 entities. These properties are subsequently introduced and described, to
complete the analyses of this aspect of the whole system. This model is capable of
simulating the progress of the complete system, following small changes.
Theories about the development of money and banking are given, as well as the use
of interest on borrowing. This leads to a discussion about the functions of

governmental control over longer periods of time. There follows a development
about the possible factors affecting the limitations to growth of the general system.
The last chapter of the book concludes with a long summary, which takes into
account the particular perspectives used in this work. The topological properties of
the system are noted. Past confusion between the macro- and micro- aspects of
economics are described and inhibited. This viewpoint provides a better and
somewhat original understanding about what theoretical macroeconomics really is
all about. Matters missed out are noted.
Due to a need for continuity, 7 appendices are included.