Modeling the Economy as a Whole: An Integrative Approach

People have social, caring lives; they have households, parents, children, friends, colleagues, and a history; and they need to be fed, housed, clothed, married, schooled, and socially engaged. And the needed and desired goods and services are produced to sustain their socially constructed, caring lifestyle. Thus the social provisioning process is a continuous, non-accidental series of production-based, production-derived economic activities through historical time that provide "needy" individuals and households the private and state goods and services (that is, the social surplus) necessary to carry out their sequential, reoccurring, and changing social activities through time. As such then, a continuous provisioning process implies that it is something like a going concern whose core processes provide the material bases for social provisioning and are similar to a going plant and going business. This means, in part, that the social provisioning process is embedded in the social surplus approach. It also suggests that social provisioning is affected by historically situated social norms and cultural values, by the social activities to be supported, and by the decisions of acting persons. Hence, modeling the social provisioning process or the economy as a whole involves, first, stock-flow, social accounting consistent modeling of its productive and monetary structures and the embedding of the acting person within them. This economic model of the provisioning process is in turn linked at one end to cultural values, norms, and societal institutions and at the other end by household social activities and government services. In addition, the concatenated model is "linked" to a historical context or stage of capitalist development. Consequently, the concatenated model of the provisioning process of the economy as a whole, which is predicated on the concept of a going economy, is an integration of the social surplus approach, of input-output, stock-flow, social fabric, and social accounting consistent modeling, of historical contextualization, and of structure-agency methodology (Jo 2011; Mongiovi 2011; McDonough 2011; Hayden 2011; Olsen 2011; Lee and Jo 2011). As a theoretical concept and methodological approach, the economy as a going concern is abstracted from its historical origins and situated historically. That is, it represents a "currently" functioning working capitalist economy complete with structures, agency, social fabric, and social activities. Hence, the structures that give the economy its form, the organizations and institutions that structurally organize and coordinate economic activity, and the agency or acting person that initiates and directs economic activity operate interdependently, contemporarily, although not necessarily synchronically. So while the structures, organizations, and institutions provide the framework for the economy to be a going concern, to continuously generate economic activities, it is the acting person that makes it happen or not--the economy does nothing on its own accord. Therefore, to construct qua delineate the model of the economy as a whole, the first step is to descriptively model the productive structure and the surplus, which involves articulating the nature of circular production, fixed investment goods, and scarcity, decomposing the surplus into government, consumption, and fixed investment goods and services, and linking the surplus to the provisioning of households, state, and the business enterprise. The next step involves "social accounting" modeling of these linkages in terms of money incomes vis-a-vis workers, capitalists, and the state. This requires the introduction of government expenditures, a chartalist theory of money, a banking sector, financial assets and liabilities, and finally the financial structure of the provisioning process. With this in place, the social accounting of the relationship between profits, incomes, and the surplus is delineated and then integrated with the models of the productive and financial structures to produce a descriptively consistent model of the monetary structure of the social provisioning process. …