Einstein’s Criterion Applied to Logical Macro-Economics’ Modeling

Abstract

A fully comprehensive representative model of our national macroeconomics is derived from first principles, using the absolutely minimum necessary amount of analytic logic. Two vital features of the procedure for portraying our society are that it is to be modeled by using a diagram, and that it is in the form of a system. This presentation of the structure is essential, for us to properly understand about how our whole macroeconomics system works and to explain and analyze it. Two basic assumptions are necessary to reduce the otherwise undefined complex society to a manageable model. These are firstly that the system connects a number of particular types of traded exchanges of goods, services, access rights, legal documents, etc., and secondly that they pass between various pairs of discrete unique role-playing agents or entities. The many similar exchange activities are idealized aggregates within the paths of the system. It is found that only a limited number of kinds of these exchanges are needed, and that an even smaller number of the entities suffice to cover the whole system. Derived from the general nature of our society, there are but 10 necessarily different kinds of these exchanges and they are sub-divided and included in a table of 19 specific mutual flows of money, being exchanged for goods, services, etc. It is found that these flows need to pass between only 6 entities. From the resulting tabulated list, a block-and-flow diagram or model is drawn. Since the minimum number of activities were logically determined and incorporated using the least number of individual entities, it is concluded that this system is the simplest possible, yet still being a sufficiently complete model of our society, arranged in an absolutely ideal, logical and best scientific form, for further use.