Nature of Competition: The Unit of Account

 

In economics, the term “unit” has two uses. The one is the name used in the accounting, such as the dollar sign ($) as opposed to the euro sign (€), or the yardage as opposed to the meterage. The other is the marginal unit (M for mass) used in the decision making, such as the one-dollar bill (U∙m) as opposed to the one-euro bill, the one physical yard (L as a type of M) in race as opposed to the one meter. Probably we would be better-off if we vary the first “unit” to “metric.” For instance, the dollar sign is the metric of account and the one-dollar is the unit as such.

 

At the household. The metric of account is the hour, or hora in Latin. The marginal unit is hora as well. Our end @home is always and everywhere the utility, outright or removing a disutility; while the currency as fundamental means is the hour. So, the home economy is accounted for in terms of M∙U∙T^-1; M is always real, U real but situational and private, and T real but continuous and universal. As one of the three is private, the whole is private in theory and practice. “Don’t ask don’t tell.”

 

In the market as of the past in history. For the sake of convenience, we were in the US. The metric is the dollar sign ($). The marginal utility, private and public, is to be legally tendered via a NOTE of 25% linen and 75% cotton with the face of George Washington and two signatures in the face. So, the dollar bill (U∙m, “m” for legal mass) represents the marginal unit of all utilities, “public or private.” The dollar bill was literally used as the medium of exchange (M∙U). For instance, 100 util in U∙m, or $100 worth of bills, always and everywhere equals to 100 util in M∙U of any and all kinds.

 

In the market of the present. The metric is consistently and continuously the dollar sign ($). However, the dollar bill is less and less frequently used as a medium. In a sense, the dollar bill is virtually disappeared (approximately saying at least). The magic comes from the fact that the vast majority of money trade is “in name only” or just ended up as entries of two names in the books in some place, real, virtual or digital.

             Suppose you and I have an account each at J.P Morgan Chase. When I pay you one million dollars in benevolence or otherwise, the debit in my name will be reflected as the credit of your name. Where is the money? It was back there over my right shoulder and is back there possibly over your left shoulder when left-handed.

 

In the market in the future. Nowhere will be  the money. All trade enters in the books. Don’t even think about liquidity preference, money demand (L= M^d) or money supply (M^s): there be no (0) such thing as a nonexistent (0). After all else, “Money is useless until we get rid of it” (Paul Samuelson and William Nordhaus, Economics, 2010, p.458).

             When we are really confident, we do not use so many words of qualifiers. “It’s the credit, Sirs.”

 

The commonwealth. In the public arena, there is no alternative to the monetary price (U∙m). It becomes the legal metric of utility (M∙U). In this regard, Gregory Mankiw defines, “GDP is the market value of all final goods and services produced within a country in a given period of time” (M∙U∙T^-1). In the life of innocent people of the Democratic Republic, the utility dimension (U) is very real, actual and practical.

             All in all, the metric of account for the economy is the dollar sign ($). As such, 5 dollar worth (M∙U) of apples and 7 dollar worth of oranges make 12 dollars of welfare in aggregate; all the way to $29.724 trillion of the US GDP in 2024, in name only or otherwise.

 

In macroeconomics. In some pages, money (M^d) is preferred at all cost to all else, and that “unanimously,” more often than not. In other pages of accounting for the macro-economy, on the contrary, money becomes “in name only.” The “real” interest is in the real production function (L, K, N), the real GDP (Y), the real investment (I), the real saving (S), the real interest rate (r) or the like. In short, the utility numeric (U) is “gone with the dollar sign,” for good to Eternity.

             In the hinterland, we the blessed are destined to produce, produce, produce, produce and produce whatever it might be. No wonder, we will be happiest with “secular stagnation” due to efficient-most aggregate supply (AS). Only one regret: “Nothing is more wasteful than doing with great efficiency what should not be done” (Theodore Levitt, Ted Levitt on Marketing, 2006, p.169). Reminded of Nazism? Yes, but that’s not alone, fortunately or unfortunately; it has company.

             Confucius (would) Say, “Umm, where there is creative destruction (+), there is destructive creation (-).” Where there is Vienna, there is Cambridge, on the wayside. 

 

The legal unit of utility of, by and for the people in the US