The Capitalist Economy and its Prosthetics

Front matter

THE CAPITALIST ECONOMY AND ITS PROSTHETICS

Edition transcript | Volume 13

Gerhard H. Wächter, born in 1955, is a business lawyer in Berlin, specializing in M&A and M&A-Litigation, and a law professor at Leipzig University. He did his doctorate on the theory and history of criminal law with Klaus Lüderssen at Frankfurt’s Goethe University, and studied with Niklas Luhmann at Bielefeld University and Stanley Diamond at the New School for Social Research in New York, before he worked with an international law firm, the German Treuhandanstalt and ultimately founded his own law firm in 1992.

Part I: Introduction to elementary economics of profit economies Part Il

Ancient capitalism, the ascent of ancient prosthetics and their dilemmas

Chapter V. Conservative-restorative policies and prosthetics in ancient capitalism ..149

Section 4. The failure of conservatism/restoration, ancient prosthetics and their

dilemmässu.c:.2..: 20 linie NH 186 Part Ill:

The deficiency of employment-generating spending in modern capitalism

Chapter VII. The structural deficiency of employment-generating spending in

Section 4. Proudhon and Sismondi: Producers cannot buy

their produce. u... rn ana yee na eva eee br 221 Section 7. Marx's insufficient theory on insufficient employment-generating spending .... 242 Section 8. Keynes: Firms’ deficient employment-generating spending

Part IV: The prosthetics of modern capitalism and their dilemmas

Section 1. Redistributive prosthetics funded with domestic taxation and expropriations .. 377 Section 2. Redistributive prosthetics funded with war, external violent wealth procurement

and Protections Missers seen ernennen ee 388

Chapter XI. Expansive prosthetics funded with money creation in commodity money TEGIMNES: wc u. 242: near h E aes ble kann 407

Chapter XII. Expansive prosthetics funded with money creation in state fiat money

CONVENTIONS. <5 3.2045 cu len ur dad ee eh a e Ea oe A aT nee Nat 509 List Of FIQUIES 2203-23 2.2 eS ee EE: 519

“Ehemals sah man mit ehrlicher Vornehmheit auf die Menschen herab, die mit Geld Handel treiben, wenn man sie auch nötig hatte; man gestand sich ein, daß jede Gesellschaft ihre Eingeweide haben müsse. Jetzt sind sie die herrschende Macht in der Seele der modernen Menschheit, als der begehrlichste Teil derselben’ (Friedrich Nietzsche, Richard Wagner in Bayreuth, Abschnitt 6, 1876)

“In the “entrepreneur economy” with, “on the one hand, of a number of firms or entrepreneurs possessing a capital equipment and a command over resources in the shape of money, and, on the other hand, a number of workers seeking to be employed.... the starting up of productive processes largely depends on a class of entrepreneurs who hire the factors of production for money and look for their recoupment from selling the output for money... A process of production will not be started up, unless the money proceeds expected from the sale of the output are at least equal to de money costs which could be avoided by not starting up to process... The firm... has no object in the world except to end up with more money than it has started with. That is the essential characteristics of an entrepreneurial economy.” (John Maynard Keynes, Collected Writings XXIX, page 63, 77, 78, 89 et seq.).

The first economic experience of the author came when he was nine years old. The son of his grandparents’ landlord, Armin, who lived one floor above, had a new gadget; namely, an old electric slot machine. The machine was exceptional in as much as it was — perhaps it was a relic from a more philanthropic age — programmed to let you win. This made Armin, who was already a very nice person in his own right, even more well-liked amongst his peer boys. The building’s other kids, the author included, would visit him, more than they had ever visited him before, and never forget to bring some coins. He allowed them to play with his machine, and they would happily return with the pockets full of “Groschen”. Armin’s father, Herr Jung, initially appeared to be glad about his son’s increased popularity and silently refilled the machine for some time. Of course, the day came when the fun was over. If the winners take their winnings home, somebody must refill the ante...

A deep-level and long-term understanding of capitalist society

The author decided to undertake the effort, which he now hands over to the public, in the aftermath of the world financial crisis - to understand what had happened then. He had seen himself as a Marxist in his youth, from around 1971 to 1981, but then found that systems theory (in particular of Niklas Luhmann) had higher explanatory potential. The writing of Peter Drucker also impressed him greatly. It took away some of his aesthetic aversion against money making and convinced him that business was a good place for creativity and thinking. Thus, the author, who was about to complete his legal education, made a turn and became a business lawyer, primarily in M&A, rather than, as originally intended, a criminal lawyer. As business lawyer, he was basically as neoliberal as most of his colleagues, if probably with somewhat more ongoing theoretical reading; of course, there was little time for that aside the daily work. He saw the EU as an instrument of peace, in particular to lastingly settle the scores between France and Germany, which pleased the author who was born just a few kilometers from the French border in the Saar region especially. He lived with this view throughout most of his professional life: Capitalism, in this period, appeared to him as certainly aggravating prior inequalities but without deeper flaw. Ultimately, the financial crisis of 2008 shook him up: If the substance of capitalism was competition in markets that moved from irritations to new equilibriums, how could such an unhealthy long-term ossification that unloaded in the crisis at all have been built up? The author was very impressed with the reaction of politics to the crisis, too. The nineties had been times of an apparent historic triumph ofliberal and neoliberal thinking in economics. Why did politics then not stick to liberal “Laisser- Faire” and let the markets do the job after the crisis and clear things up but quickly — after a moment of “Laisser Faire” only, (when they allowed Lehmann Brothers to go down its natural paths) - declared state emergencies all over and began to apply extreme anti-liberal anti-market-policies on a world-wide scale? Politics - no other explanation was possible - had much less trust in self-regulation of capitalism than the author at the time. Did they know or fear something the author did not see?

When the author began to collect questions and ideas for this book and made his first sketches in 2011, he nevertheless still believed that the project would remain a purely economic endeavor, “macro-economic” rather than “political-economical”. That only changed after he had finished the historical part on antiquity and conceived of what he would be calling “deficient producive spending’ in Part III. By then he had learned to understand that prosthetics and, hence, politics, ought always to have an important place in capitalism; capitalism did have a flaw, which was deficient employment-generating spending. It was incomplete and it needed prosthetics as a form of politics to deal with this flaw. But that was not the end. Around 2019, when the author had also worked his way through the echelon of methods of funding prosthetics, in what is now Part IV, because he could not believe that the method of money creation, which had come to crown the funding of prosthetics, would work forever, all of a sudden the fear of future wars began to creep into the book. This resulted from the insight that even if money creation was exhausted, the necessity of prosthetics would stay. The echelon of prosthetics or of their funding, respectively, now appeared not as an echelon but rather as a Nietzschean wheel of eternal recurrence, with war, accordingly, to reappear in the future. History, unfortunately, was faster than the completion and publishing of this book.

Three basic concepts are used in this book; the first is the profit motive as the fundamental economic driver and the economic essence of capitalism; it is commonly referred to as M—C-M’." This motive leads, out of itself, to a deficiency of employment-generating spending or of producive* spending. This syndrome, antinomy, contradiction, etc. lies at the heart of everything; it is purely economic in nature but has crucial social consequences. The second concept is prosthetics, now a social, in fact, mainly political, brotherly complementary correction mechanism, which is executed by the state. Prosthetics try to moderate the problems that capitalist societies have with the deficient producive spending. They mitigate the destiny of the victims of the ancient and modern social drama. But prosthetics are, unfortunately, unthinkable without their dilemmas; the dilemmas of prosthetics are the third concept, which the book uses. These three central concepts capture three moments, which, through their evolution and interplay, largely determine the history of capitalist societies - in the long

1 “Money — commodities - more money”, abbreviated as or M-C-M”. See “Conventions” and page 81 et seq.

2 We have made up the word “producive”, as opposed to “productive”, as a short label for “employment-generating” or “inducive to employment and production”. (We might even have used the made-up word “employcive”). Whether spending or revenues are “producive” or “employment-generating” looks at whether they lead to certain inputs in economic processes, namely labor-inputs, while “productive” looks at the output of processes, namely whether a new good or service is created. Typically, productive processes are also producive. But sometimes they are not. E.g., if bottles with money are buried and excavated, or if soldiers are employed to destroy a city, this is producive but not productive.

run at their deepest level-: capitalism's flaw of deficient employment-generating (or producive) spending, states’ corrective reaction to this flaw with prosthetics, and the dilemmas of the applied prosthetics. They allow to re-frame our view of the past and present of capitalism.

Asto style, the author aims at providing as realistic an account of the economy as, e.g., Han Fei, Thucydides, Machiavelli, Pufendorf, Hobbes, Clausewitz, Marx, Nietzsche, Theodor Mommsen, Carl Schmitt, Lenin, Paul Kennedy and Henry Kissinger or Niklas Luhmann have provided, as the case may be, on history, the state, geopolitics, society or war (notwithstanding their obvious differences).

Capitalism, today, is as vigorous, creative, and dynamic as ever before; yet, by the same token, it always was and still is also an ailing patient. In fact, it has very recently been moved from a regular day ward to intensive care. We witness protectionist state interventions, huge fiscal state subventions, and, over two decades permanent, massive horror-monetary policies (such as “ultra-unconventional” quasi-zerointerest-rates and massive asset holding of central banks), which the leading ideologists of capitalism would themselves have considered unbelievable just fifteen years ago.’ The massive central bank asset purchases are ultimately financed by state fiat money creation. Occasionally, we see measures, which are directly borrowed from socialist revolutionaries, such as bank nationalizations after the crisis of 2008, yet they are implemented in order to save capitalism. Nevertheless, economic liberalism still occupies center stage in pro-capitalist arguments. A patient, capitalism, if permanently attached to dozens of hoses, tubes, pumps, cables, electric engines, and suction-mechanisms, yet still quite powerful, continues to chant the song of economic “liberty” and non-intervention.

The theoretical approach of this book and mainstreams’ economics

It may be useful to relate this book’s theoretical approach to the prevailing teachings of mainstreams economics* of the day. First, if anatomists could carve open

3 See Roitzsch/Wächter, ZIP 2008, 2301 et seq.; Roitzsch/Wächter, DZWIR 2009, 1 et seq,

4 We use the expression “mainstreams economics”, which in our view encompasses neoclassical economics and the neoclassical synthesis, in the plural to counteract the misunderstanding that there is only one single main stream of economic reasoning, which quasi-officially reflects, supervises, defends and represents capitalism. Capitalism, contrary to Catholicism and a socialist state managed economy, neither needs a single commando post to rule it nor a single orthodox theory. Rather, an eclectic landscape, in fact, increases the flexibility of changing policy interference. By the way, theories with a cathedral-like doctrinal design have anyhow become endangered species. Hegemony is today no longer achieved by conceiving and purifying a doctrine and propagating and defending it intellectually but by influencing swarms never to unite on an undesired course.

the economy like a human body in a dissection room, then they would find a purée of fast-moving communications, money and commodities between billions of emitters and recipients, but no substrate of pre-arranged moving parts in an order with predetermined operations; there is nothing like hearts, lungs, livers, or connections like an aorta and nerves, like a clockwork or like a connected gasoline tank, a carburetor, cylinders, pistons, a crankshaft, wheels etc. The distinguishable, visible realities — wealth owners, businesses, workers, canals, trade routes, naval connections, pipelines, antennas, satellites, cables, production, the internet or money transfer systems — have no meaningful overall structure or connections. Therefore, the attempt to view “the economy” as a system comprised of stations with a spatial organization is doomed to fail. Rather, as Dirk Baecker, a pupil of the well-known German systems theorist Niklas Luhmann, puts it, the economic system consists of elementary events in time; they “are the system, which reproduce it and through whose reproduction they reproduce themselves...”.° Accordingly, the economy is comparable to an epidemy, a neurosis, a psychosis, a weather system or even an explosion. This exposes economic theory to the daunting task to categorize highly ephemeral events into elements and to analyze systemic connections between such elements.

Second, economic theory that tries to attack the task is hampered by two experiences in the recent history of economics. A great historic passage of arms occurred between Marxism/Socialism/Communism. It ended with the loss of the Marxist side politically, and in a rigidified and dogmatized aggressive schism intellectually. Both sides were wrong in essential regards, but the fact of their enmity helps them to entrench and to both survive. The fallacies of Marxism save mainstreams economics (certainly in the eyes of mainstreams economists) and the fallacies of mainstreams economics save Marxism (certainly in the eyes of left-wing audiences). The veterans of an exhausted battle collude to block progress. A lesser passage of arms resulted from the challenges posed by Keynes. The outcome was more amicable, but it was not more favorable to theoretical progress as it drove economics into intellectual eclecticism. Therefore, today’s general landscape of economic theory is false doctrinarism with eclecticism superimposed; it could not be worse. Concepts, which rule in pro-capitalist mainstreams economics, such as competition or price levels, are macroeconomically almost irrelevant. This fate is shared by leading anti-capitalist concepts. Like inequality is not the crucial moment in society, history is not the history of class battles. Marxian “exploitation” is even more misleading than the focus on inequality. Exploitation does - quite simply — not exist.

5 Marx, when he famously stated in the first sentence of Capital volume | that the capitalist mode of production “presents itself” as an “immense accumulation of commodities”; pointed to very much the same problem.

6 Baecker (2008) page 34, translated by the author.

Third, economic academia has invented methodological instruments that all but guarantee that economics remains in this sad state. On the side of mainstreams economics, mathematization structurally disenables historic and sociological thinking, which would be required for a jump ahead. But history cannot deliver quantitative data, which the mathematized reasoning of today’s economics can only digest.’ Furthermore, mainstream economic academia has a preference for “papers” that have a certain size and style of argument; this also blocks attempts of self-liberation from the outset because the format of “papers” educates economists to restrict themselves to low-caliber amendments.

Fourth, we need to distance ourselves from Marshallian supply and demand graphs, by which many mainstreams’ economists are mesmerized. While there is, of course, “Walrasian tätonnement”, it only illustrates how individual prices for commodities are affected by competition. What, yet, macroeconomically matters are not ups and downs of such prices or price levels, but whether elementary economic events in the form of C-M-C’ and M-C-M’-circuits can close in such a volume as to provide firms with the revenues to keep them going and property less workers to subsist. For that, we need interrelations between price levels for meaningfully selected commodities, in particular for labor, equipment, and inventories, final produce and means of subsistence. Hence, we would at least need a series of interrelated graphs, which show the feasibility of system-building in in the sense of C-M-C’ and M-C-M’.®

Fifth, methodologically, as already hinted at, we use concepts of modern systems theory. To repeat, there is an ongoing autopoietic building of the economic system through elementary events, which emerge over time, which are the system, reproduce it and through whose reproduction they reproduce themselves.’ Ongoing system-building is, accordingly, far from assured, but instead a problem. Theoretical analysis of capitalism, then, must look out for the conditions that must exist for system-building to continue, for the preconditions of ongoing successful economic system-building. This allows us to re-conceive of a great deal of economic problems from being problems within the system (the system works, but it ought to work better) to issues of there being “too little system” (the system's diameter or activity being deficient). “More” economic system may, e.g., be more employment contracts, more

7 “Traditional economics were not developed because anyone thought they were a good description of real human behavior; they were adopted to make the math work in the equilibrium framework.” (Beinhocker (2007) page 118).

8 The common supply and demand curves do not offer insights about why they are shaped in the way they are. What are the offered prices for labor derived from? From the costs of workers’ subsistence? Are firm’s supply prices for products derived from their productions costs plus a profit margin? What “rigidities” are there? Accordingly, the curves do not explain why they don’t cross and deals are not concluded, i.e., in times or areas of unemployment.

9 See again Baecker (2008) page 34.

contracts between firms and suppliers (e.g., following new inventions and technological breakthroughs), and more purchases of consumptive goods that enable circuit closure.

Ongoing system-building depends upon interconnectivity in time over several generations. Earlier generations cause, and enable later generations of economic events (by rendering commodities and money available) and expected events of future generations of economic events motivate and induce system-building the present middle generation. The generations overlap; each generation of events is a middle generation to future generations. Successful system-building propagates in many lines into many directions, like - to return to the already given example — an epidemy or explosion. But one can also compare economic system building to melodies, where prior tones, their relationship, their rhythm, beat, meter, scale etc. determine whether and how the melody can go. Or take a Vienna Waltz, in which a pair of dancers’ prior movements (the positions, through which they pass, and their ongoing movements, when they arrive there) as well as their idea of how they will continue, determines how the dance will unfold . A false tune in a melody or a dancer being “on the wrong foot” at a certain moment will interrupt system-building. Other examples include “pass systems” in team sports, e.g., soccer. Situations such as these emerge if players without the ball can move into a position and when the passing players see them and are able to deliver the ball at the right moment. Predator-preysystems survive and propagate on condition that predators can find and kill enough prey for them to survive (without killing too much of it wherein they would extinguish the prerequisites of the predators’ survival).

Economic system-building is by no means a homogenous or a steady flow (at the same speed of the same material), but is a discrete, discontinuous activity which comes in eruptive and stuttering pushes, in a certain one-two-rhythm. What “runs” through society, if it does, and “builds economy”, if it does, is a structured, self-conditional, self-determining (self-hindering, self-enabling, self-observing) process, which is as well past-related as future-related. It is “on” if certain material and motives are there, certain filters and portals are on (and others are off), each at the right moment.

We connect the systems theoretical concept of elementary economic events with the proposition that system-building in profit economies operates, especially, via the integration of economic events into two particular types of sequential two-leg-patterns. These two-step combinations, which are always two exchanges, are C-M-C‘ (a sale of a commodity to obtain money and to purchase another commodity to use it as value-in-use) and M-C-M’ (a purchase of commodities, including labor, to sell the un-processed or processed commodities at a higher price). Mankind have been well aware of the distinction between these two circuits, with their two legs, for millennia; this awareness often surfaced as the worries of spiritual leaders, religious men and philosophers, about production being abused for money-making. And it was, of course, also present, at least intuitively in the consciousness of merchants since antiquity.'°

The operation of the two types of circuits is the only form in which economic system-building is possible and they are interdependent. The expectation of the closure of a C-M-C’-circuit by its M-C’-leg induces firms to trigger investive M-C-M’-circuits, the M-C-leg of which will enable the closure of other investive M-C-M’-circuits. Because this is so, the expected new investive M-C-M’-circuits will also induce other new investive M-C-M’-circuits. Finding and telling the narrative of capitalism, therefore, requires looking out for when and how C-M-C’-circuits and M-C-M’-circuits can close. Economic system-building, to repeat, is as much causal as teleological; causality and finality work together.

Sixth, we must do away with the idea that the economy has an inner “original purpose” or a “function” for society (e.g., the procurement of goods or of scarce goods) with such assumed function intrinsically controlling the economy. The economic system has no steering mechanisms, which seek to ascertain such goalattainment. Discussions about “the” economy’s purpose or function are, thus, empty, magical, mystical and romantic at best, putting a veil over the quest for profit as the economy’s major, dictatorial system-builder, which, in addition, only operates at the level of individual wealth owners. We can approach the same issue from another side: Even if triggered C-M-C‘-circuits or M-C-M’-circuits do close, including productive, employment-generating circuits, there is no built-in assurance that enough of them will be triggered and close given the number of non-owners, property less workers, whose subsistence depends on employment. Only Quesnay’s holistic “royaume agricole” allowed that all members of his classes could live from the “dépenses” of the other classes — but that is not the reality.

Seventh, while we reject an original purpose of the economic system in the sense of the existence of an economic steering mechanism, which compares economic output with social requirements and takes correcting action, we, of course, do observe that society and politics take a lot of corrective actions if the economy does not deliver what they expect. In fact, these correction mechanisms will shift into the center of this book; this is what prosthetics is all about. In other words, the economy is “neutral” to society (it is only guided by profit and does not care about the society), but the society is not “neutral” to the economy. If individual humans react to economic outcomes with hunger, homelessness, suffering, depravation, illness, etc., then society and politics will react, society spontaneously with anomy, banditry, unrest, etc., and politics, more organized and purposeful, with rebellion, political entrepreneurship, military entrepreneurship,” warlordship, revolutions - or prosthetics.

10 A well-known merchant's reference to M-C-M' is “Buy cheap and sell dear!”. 11 The term “military entrepreneur” is used by Smith, Introduction: The Sung dynasty and its precursors, 907-1279, page 5.

Marx and other predecessors, truisms, banalities, centaurs and pans in economics

Authors like Sismondi, Malthus, Marx, Luxemburg, Keynes, Kalecki, and Minsky have in part pursued a perspective similar to the one here adopted. Marx, the list’s most monumental figure, requires a separate introduction. He was a man of broad knowledge, had a deep understanding of society and history, and was a strong critical independent thinker. Based on his acquaintance with Hegel, as well as with materialist theory of history, he was better equipped to generate early “systems-theoretical” and “evolution-theoretical” insights than most of his generation-mates. His use of Hegelian dialectics to pursue “contradictions” in the economic system was breathtaking and leaned towards a theory of system-building in the economy over time. He also correctly pointed at profit as the driving mechanism from which the contradictions of capitalism would ensue (such as M-C-M’, which we have, of course, adopted from Marx). Yet, he was also utterly wrong in what he elevated to his most important economic dogma, i.e., in his fallacious labor-theory of value and his concomitant exploitation theory. He, in fact, probably adapted Ricardo’s labor-theory of value because he wanted to evolve his exploitation theory out of it. His doing greatly damaged the advance of economic theory. It is true that everybody in a profit economy or in a capitalist economy tries to “exploit” everybody else as a means for their purposes. It is also true that firms, entrepreneurs, or capitalists “exploit” the fact that workers are without the means of production and have no alternative to seeking employment by firms.

However, Marx wanted to use the term “exploitation” in a narrower, more specific and, as he believed, deeper economic sense. Only labor value created by employed workers could create surplus value and profit, and exploitation consisted in an appropriation of that surplus value. This was exactly wrong, yet after Marx had reached his historic status (it should be borne in mind that from 1919 to 1990 he was the most important ideological founding father of the largest country in the world, the USSR, and since 1949 to today he has retained this position in the world’s most populous country, China), his theory became so entangled in political necessities that it became quasi-impossible for critics of capitalism to correct this central doctrine. Doing so would have constituted high treason at in the eyes of the workers’ movement, and possibly in the eyes of revolutionary states as well. We are free of this concern. Accordingly, we dare to connect to a time of the economic history before the theory of labor value and exploitation had been invented, to Sismondi and Malthus u in particular. Furthermore, we also find that Marx’ “general formula of capitalism”, which is M-C-M'’, can operate very well without a theory of labor theory and of exploitation. We hope that we can use Sismondi, Malthus and Marx’ “general formula of capitalism” to work out extremely valuable and powerful insights further down in the book.

Our re-narration of capitalism will build upon a great deal of content that has been known for a long time. It even sometimes approaches the status oftruisms, banalities, or tautologies. This applies already to M-C-M'’, which, as we already stated, was known to and often consoled by spiritual and religious leaders and philosophers for millennia and of which merchants must also have always been aware. Hyman Minsky correctly analyzed the lack of payment capability as depressing capitalist investment, production, and employment; but this insight too, goes hardly beyond what every schoolgirl knows (you run into problems if you do not pay your debt when due). Keynes correctly saw investment alternatives competing in the minds of entrepreneurs. Yet, is it not obvious that entrepreneurs, capitalists or firms will seek to maximize their profit? In other words, the elementary building blocks, which have to appear in economics seem to be quite simple and easily accessible. If economics is, nevertheless in a deplorable state, then that may result from them not being put into the proper order as well as from attaching all sorts of false add-ons and outgrows to them. The world of economic concepts, we believe, resembles a fairy tale world of centaurs, minotaurs, and pans and a lot of our reasoning has to go into telling the sound parts from bad parts, where to make cuts, and how to recombine both the existing heads and bodies of such creatures.

Productive and sterile economy

In Part I of this book, we introduce to the elementary economics of profit economies and establish fundamental economic terms and doctrines. In specific, we observe the conditions under which the masses of non-owners might find employment and subsistence in modern capitalism. In order to do so, we indeed coin this book’s central terms from the perspective of political intervention. Like a physician imposes terms upon human biology so as to best detect illness and steer therapy, we impose our terms upon the economy to best capture what matters for society in the economy, and what best guides its political interventions. Since antiquity, states have regarded profit economies as powerful, but also as half-finished and incomeplete and considered and applied prosthetics; we follow them in their observation and elevate distinctions, they already used implicitly, to explicitness and higher clarity. We will, particularly, use a distinction, which has long silently guided prosthetics from the background: the distinction between the productive and the sterile economy. In the tradition of Quesnay, we, thereby, split up the economy into two abstract and purified economies: a productive economy with employment-generating or producive spending and with employment and subsistence-effect for the non-owners and ina sterile economy, or a wealth economy, without employment effect.” In other words: One economy contributes everything to the subsistence of property-less workers; the other, the sterile economy, contributes nothing. Yet unlike in humans, where the “red” blood with oxygen and the “blue” blood without oxygen each have clearly distinguishable circulation channels (heart chambers, arteries, and veins), through which they travel separately, the productive and sterile economy are not physically apart. Nevertheless, for the sake of clarity, it makes sense to use the abstract idea of a pure and wholly employment-free and sterile wealth economy and of an equally pure productive only-employment economy, which are both regarded as after “carve-outs” of what does not belong there. E.g.: While selling a house, in contrary to building one, does not lead to massive employment-generating or producive spending on construction workers etc., it still involves a certain amount of spending on legal, notarial, clerical activities, which is employment-generating, etc. We, thus, arrive at the pure idea of a distinct productive and sterile economy only after such corrections or carve-outs. But this will not affect the principle: It is much better to use terms and concepts, which have explanatory power but difficult borderlines, than terms and concepts with clean borderlines but with fuzzy content and little explanatory power.”