This glossary of definitions helps to keep discussions clear and precise. When in doubt about what is meant by specialized words or some over-used and abused common words, the definitions here should provide clarification. This glossary will be constantly extended and updated as the project progresses.
“If you want to converse with me, define your terms” - Voltaire
Arts are the body of knowledge and objects which deal with human concerns, including metaphysics, ethics and aesthetics, through non-scientific methods of varied perception, introspection, imagination and creative expression.
Asset includes real asset and financial asset.
Bad investment is investment which earns income less than the cost of capital, with the shortfall being equivalent to wasteful consumption.
Beauty in matters of the mind (including science) consists of simple, but profound and accurate, truths or observations. Beauty in economic theory consists of fewest simple assumptions accurately explaining substantive economic facts of observation.
Bullshit is statements of uncertain meaning or truth made by someone who is self-aware and while may not have any deliberate intention to deceive, is indifferent to, or ignorant of, the real meaning or truth of the statements.
Capital is the means of production including resources, technology, knowledge, goods and services which are useful for production.
Capital consumption, measured as the consumption of fixed capital, referred to capital depreciation where the means of production (e.g. machines) are wore out, broken down, lost or become obsolete.
Capitalism refers to an economic system which allows individuals to privately own and use capital. Consumption and production are largely individual decisions, not those of the state.
Classical economics assumes a free-market economy, unhindered by government intervention, tends to efficient equilibrium which is analyzed through the supply and demand of individuals and firms.
Collapse refers to a rapid falling or caving in of a structure or system when it is physically or intellectually no longer sustainable.
Consumption is the depletion of goods and services of economic production through individual or collective use, waste or decay.
Demand is the needs and wants of consumption and investment in an economy.
Econoclasm is economic iconoclasm. It is an attack on cherished economic beliefs and traditions, through the debunking of economic fallacies and the breaking of economic idols.
Economics is the knowledge obtained from the study of how human needs and wants are met in an uncertain world of finite resources.
Economic growth (recession) is the expansion (contraction) of supply, the production of goods and services, measured typically by the Gross Domestic Product (GDP).
Equilibrium is a static state where all economic variables are constant or fixed (e.g. the Arrow-Debreu general equilibrium). An equilibrium where the economic variables include rates of change is a dynamic equilibrium.
Fallacy refers to any assumption or proposition which is illogical or contradicts facts of observation, and usually deceives or misleads a society or a profession in significant ways.
Forecast is prediction about one or more events at particular time and place.
Financial asset is the ownership of financial investments; it is simultaneously the financial liability of someone else.
Financial investment includes the rights of financial claims, such as stocks, bonds and other financial instruments.
Free markets under capitalism refer to a system of economic production and consumption based on individuals freely expressing their preferences through markets, rather than based on the central planning decisions of the state. Free does not mean free-for-all or free from morality.
Good investment is investment which earns income exceeding the cost of capital, including opportunity cost and replacement cost.
Historicism is the belief that there exist universal laws governing the development of society which explain history and predict the future, like the laws of motion in physics.
Investment or real investment is the allocation and use of capital, goods and services for economic production and income generation.
Investment multiplier is defined by the ratio of the production created to the production consumed (the investment) - it is the ratio of output to input of an investment.
Keynesian black hole refers to an unsustainable economy which consumes more than it produces and thus consumes its store of wealth from past savings.
Keynesian economics assumes that a market-based economy may be inefficient with a low employment equilibrium and that its government should intervene to maintain employment and aggregate demand through stimulation using fiscal and monetary policy.
Keynesian fallacy is the false proposition that the investment multiplier is equal to the Keynesian multiplier, which is only the case for a zero-growth equilibrium. Attempts to increase economic growth by increasing the Keynesian multiplier have exactly the opposite effect.
Keynesian multiplier is the numerical factor which is the reciprocal of the value (1 - the propensity to consume).
Keynesian singularity is the notional situation where the Keynesian multiplier is infinite and the propensity to consume is unity, resulting in collapse into a Keynesian black hole.
Knowledge or know-how is human capital useful for production.
Labour is human energy to do work.
Liability consists of obligations of financial claims such as stocks, bonds and other financial instruments.
Macroeconomics is the study of the aggregate variables of the economy, particularly as a result of government policy.
Modern money theory is a theory which assumes that a sovereign state can freely increase or decrease its own fiat currency to manage its economy successfully with full employment and controlled inflation.
Money is a recognized claim on other financial claims, capital, goods and services and is useful for exchange, accounting and storage of value.
Money printing refers to a monetary authority creating ("out of thin air") fiat currency or claims without producing corresponding goods and services to validate or back those claims.
Money illusion refers to mistaking financial claims for actual purchasing power of capital and real goods and services.
Neoclassical economics is classical economics extended to include the macroeconomics of government intervention analyzed through the equilibrium of aggregate supply and demand.
Paradigm refers to an intellectual framework consisting of a set of key questions to be addressed, a set of core assumptions and a set of standard methodologies, which most take for granted to facilitate advancement and application of an area of knowledge.
Ponzi schemes are schemes which depend on operational expansion to fund ongoing payment obligations and rely on deception to hide growing insolvency.
Prediction in science refers to the indication of verifiable gaps in knowledge, which need not be knowledge about the future, as in forecasting.
Production is the time-consuming process of transforming capital to goods and services.
Real asset includes land, residential or commercial property, commodities, machinery and other real capital, for the private sector. For the public sector, real asset includes public buildings, infrastructure of utilities, transport, health, education and other government enterprises.
Resources include energy, materials, water, land and other property.
Ricardian equivalence is the equivalence of taxation and government budget deficits on personal spending, so that there is no overall change in aggregate demand.
Saving is the accumulation of assets. Real saving is the accumulation of real assets and financial saving is the accumulation of financial assets. The purpose of saving is to postpone spending or to invest.
Science is the body of knowledge, consisting of organized facts, obtained through the scientific method.
Scientific method is based on a close interaction with theory and facts, involving iterative applications of deduction from theory and induction from facts to achieve consistency between theory and facts.
Socialism is an economic system where the state or the society as a whole owns and controls capital and its uses.
Spending is using up available resources, including assets saved or borrowed, for consumption or investment.
Supply is the production of goods and services of an economy.
Theory is a method of organizing facts and discovering new facts.
Wasteful consumption is consumption which does not satisfy any individual or social need.
Wealth is accumulated capital. Financial wealth is net financial asset consisting of net financial claims on capital.