The Abraham Ibikunle Laniyan Theory of Wealth Macroeconomics (AILTWM) posits that universal prosperity and effective inflation control are mutually achievable through a novel focus on Capital Value Equity (CVE), which redefines capitalism beyond private ownership of means of production to universal access to initial capital for value creation. The theory integrates financial inclusion and productivity-linked monetary policy, with validation through specific econometric models.
However before we go into details we explore essence of universal capitalism for universal prosperity.New" macroeconomic theories for universal prosperity and effective inflation control do not represent a single, unified school of thought. Rather, contemporary economic discussions center on evolving or combining existing frameworks to address both goals simultaneously. These include concepts like:
1. Inclusive Growth Frameworks
This approach emphasizes that the pattern of growth is as important as the pace of growth. It moves beyond traditional GDP measures to focus on the well-being of all population segments.
Key mechanisms for prosperity:
Equal Opportunity: Focuses on providing broad, equitable access to quality education, healthcare, and capital markets, ensuring success is based on talent and effort, not background.
Strong Institutions: Advocates for transparent and accountable political and economic institutions that guarantee property rights, enforce the rule of law, and prevent the concentration of power or wealth in a small elite.
Active Labor Market Policies: Includes measures like re-skilling programs and flexible labor regulations (e.g., the "Swedish model") to ensure workers can adapt to structural changes like digitization.
Inflation control: This is often achieved through a commitment to macroeconomic stability, using balanced fiscal and stable monetary policies to avoid high inflation, which disproportionately harms the poor.
2. Modern Monetary Theory (MMT) Perspectives
MMT argues that a government that issues its own currency is not financially constrained and can use fiscal policy to achieve full employment and public purpose projects (a form of prosperity).
Key mechanisms for prosperity:
Job Guarantee: A central pillar is a government-funded job guarantee program for anyone who wants one, acting as an automatic stabilizer to ensure full employment and income stability.
Public Investment: MMT supports significant government spending on infrastructure, the green transition (Green New Deal ideas), and social services to boost potential output and general well-being.
Inflation control: MMT acknowledges that excessive spending can cause inflation, but it views taxation as the primary tool to control it. When inflation rises, the government can increase taxes to reduce the amount of money circulating in the economy.
3. Eclectic Inflation Targeting (EIT) and Integrated Policy
This is a pragmatic approach where central banks target explicit inflation ranges but also coordinate with other government branches to pursue broader goals like high employment and financial stability.
Key mechanisms for prosperity:
Policy Coordination: Emphasizes strong coordination between monetary (central bank) and fiscal (government) authorities, rather than one being completely independent and dominant.
Structural Reforms: Encourages supply-side structural reforms in labor and product markets to make economies more flexible and competitive, which supports both growth and disinflation.
Inflation control: The primary goal is a low and stable inflation rate, which helps anchor expectations and reduces uncertainty for businesses and households, thereby fostering better growth and investment outcomes.
These approaches represent shifts in thinking towards holistic policy mixes that ensure broad participation and manage price stability.
To help you explore further, we can compare how a job guarantee program vs. a universal basic income (UBI) would impact both prosperity and inflation based on these theories.
We go deeper exploring the novel theory
I. Core Theoretical Framework
The AILTWM is built on four central tenets:
1.The Capital Value Equity (CVE) Principle: Wealth generation is a positive-sum game in a free market, but access to initial capital is a major barrier to participation. "Universal capitalism" is achieved when every citizen receives a non-dilutive, universal capital stake KU at the age of majority, enabling all individuals to engage in productive investments, start businesses, or acquire value-generating assets, thereby shifting the focus from income redistribution to wealth distribution as a primary economic driver.
2.Productivity-Aligned Monetary Policy: The central bank's mandate is expanded from mere inflation targeting to targeting a stable Price-to-Productivity Ratio (PPR). Money supply (M) expansion must be directly tied not just to current GDP (Y) but to potential future output (productivity growth, (∆A), ensuring that new money creation is non-inflationary because it is anchored to real economic capacity growth.
3.Dynamic Wealth Multiplier (DWM): The theory suggests that the universal capital injection (KU) triggers a "Dynamic Wealth Multiplier" effect, where increased broad-based investment and consumption lead to higher aggregate demand and structural reforms in labor and product markets, boosting overall efficiency and long-term economic growth.
4.Taxation as a Stabilizer and Recalibrator: Taxation is used dynamically to manage inflation and wealth concentration.A progressive tax system, combined with a specific Wealth Concentration Tax (WCT) on extreme concentrations, is used to fund the next generation's universal capital stakes and dampen inflationary pressures by reducing excess liquidity when the economy overheats.
II. Econometric SpecificationThe AILTWM proposes several testable econometric models to validate its core assumptions and guide policy.
A. Universal Capital and Prosperity (DWM Model)A model to estimate the impact of the Universal Capital stake (KU ) on per capita GDP(yt) and the Gini coefficient for wealth(gt) :
yt=bo+b1ku_t+b2Gt-1+btxt+et
Gt = yo +yiku.t+y2yt+y3Zt + Ut.
Variables:
*yt:Real GDP per capita at time (t)
*Ku.t: Aggregate value of universal capital injections (policy variable).
Gt-1: Lagged wealth Gini coefficient.
Xt,Zt: Vectors of control variables (e.g., education levels, interest rates, trade openness).
Hypothesis Testing: The theory predicts b1>0 (positive impact on growth) and y<0(negative impact on inequality).
Methodology: The use of panel data across different regions/countries over time would allow for robust estimation of these relationships using techniques like Generalized Method of Moments (GMM) or fixed effects models to address endogeneity concerns.
B. Productivity-Aligned Inflation Control (PPR Model)
A model to test the central bank's ability to control inflation using the Price-to-Productivity Ratio (PPR) targeting:
π1&0+&1PPRt-1+&2Mt+&3Qt+vt
Variables:
*πt: Inflation rate at time t.
PPRt-1: Lagged Price-to-Productivity Ratio (actual price level / potential output measure).
* Mt:Money supply growth rate (policy variable).
Q_t: Vector of control variables (e.g., commodity prices, exchange rates).
Hypothesis Testing: The theory predicts &<0 (high PPR predicts lower future inflation, as productivity catches up) and that policies targeting PPR stability lead to a more stable pi _t than traditional methods.Methodology: Time-series methods, such as Vector Autoregression (VAR) or Dynamic Stochastic General Equilibrium (DSGE) models, would be employed to capture the complex interdependencies and dynamic adjustments over time.The AILTWM moves beyond traditional models by integrating a proactive wealth-distribution mechanism with supply-side-focused monetary policy, proposing an empirically testable framework for sustainable and inclusive economic performance.I can provide more detailed information on the specific data sources and statistical software (e.g., Stata, R, Python) needed to run these econometric models.
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