Circular Flow: Drawing Further Inspiration from William Harvey
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Citation:Rankin, K. (2012). Circular Flow: Drawing Further Inspiration from William Harvey. 53rd New Zealand Association of Economists (NZAE) Annual Conference. 27-29 June, Palmerston North, New Zealand.
Permanent link to Research Bank record:https://hdl.handle.net/10652/2162
The simple flow model presented here differs markedly from the standard presentation, and draws its inspiration directly from the human body (or at least its upper half) in the spirit of Quesnay and Phillips.6 It its core form, this is a closed economy model, analogous to the global economic and financial system.7 And, in the spirit of classical economics, it posits classes of households. These two classes are the 'saving class' (S) – a modern conflation of the classical capitalist and landlord classes – and the 'subsistence class', although for the latter I prefer the prosaic 'lower income class' (L) who essentially spend their income as they earn it. The L-class can be thought of as the labouring or working class, albeit in a modern welfare-state context.