Theoretical Basis to Embed the Real into the Financial: Production-Consumption Compromise vs Supply-Demand Paradigm

Abstract

The “criterion of observability” that Kurz and Salvadori (2000) ascribe to Leontief spearheads the argument against the neoclassical theory relying on the non-observable utilities and preferences. We would lessen this strictness in the sense that if there is no way to go on without the non-observables, they should be introduced at least in a logically consistent manner. This will even improve a little their practical applicability.