STRUCTURAL ECONOMICS asserts that the distribution of the stock (capital) and flow (income) of tangible and intangible wealth in an economy is the foundational determinant of the economy's level of operation.
This stock and flow of wealth constitutes the structure of the economy which is constantly in a state of flux though tending towards a balance in the economy.
In addition, Structural Economics maintains that all policy (fiscal and monetary and even moral suasion and informed self interest) is effective in as much as it alters this structure. This alteration modifies the process of interaction between the relative percentage distributions (to be defined and discussed) of income and income recipients (in the economic sphere as well as the political, religious, military, cultural and intellectual spheres).
To manage the economy effectively and efficiently the primary target of policy needs to be the structure.
Specifically, the Relative Pecentage Distributions of Income (R%Y) and Income Recipients (R%N) must be within certain bounds defined by the Normal Distributions associated with the two R% distributions covering the same range as the two Relative Percentage Distributions. This balance induces a dilectrical process in the economy to keep the balance between the means of the R%Y and R%N distributions.
The exact structure of each economy needs to be determined in order to establish where on the x-axis income range the mean of the normal curves are. The sense that one has is that they need to be at the exact same point.
The Economy's performance will be greatly impeded when the R% distributions are skewed beyond this "critical mass" level of skewedness of the distributions and will tend to exclude lower end participants in seeking to find a new structure with the permanent exclusion of the lower end of the Y and N R% distributions or reduce the value of the wealth at the higher end of the range.
The only way to reintroduce these excluded members and maintain the value of the wealth stock at the upper levels is through realigning the structure to a balance.
This can be done by targeting fiscal and monetary policy to the structure as opposed to the Keynesian idea of increasing Aggregate Demand.
This may involve increasing "Aggregate Demand",however, it is done with a focus on the structure of the economy, on the distribution of the stock and flow of financial wealth and not on the totals.
At this point in history informed self interest and moral suasion, also important fiscal policy tools, will be critical in persuading other ranks of participation to support a restructuing program.
This work will present arguments to inform self interest, and point out the benefits of a balanced economy in which economic indicators such as the interest rate are both products of ther structure of the economy and indicators of potential for the economy in a feedback loop.
A brief comment on the scope of Structural Economic Analysis: it is of neither a micro nor macro magnitude. It is meso or between these two or possibly ultra or beyond these areas of inquirey because. It considers distributions as opposed to totals in macro economics. It seeks answers to more than the micro economic supply and demand tool that determines price and quantity. It seeks to determine the "health" of the economy and perscriptions to improve apon it.
Bob Williams
Ottawa, Canada
