A theory of the collective social organism

This paper seeks to argue that a collection of interacting organic agents behaves as if it were a separate entity in its own right. This result, although not new, will be cast in terms of a novel model that expands the usual formulations of the production constraint. This allows us to model a more general notion of an agent and thus the general equilibrium of a system. The paper will take advantage of an algebraic structure that is implicit in systems of exchange and transactions—of information in general, and goods and services in particular. This will allow us to apply standard tools of analysis to the problem of choice for both producing and consuming agents, within the context of the algebra. The result is a partitioning of economic activity into easily derived closed form expressions. Of importance is the general equilibrium of the unit social organism. This organism, by behaving optimally and interacting with its environment, gives rise to a general equilibrium setting, which apply both to the micro unit and the macro system as a whole. The theoretical implications lead to iso-curve fields for both the micro and macro system analyzed. The model also solves for a relatively large number of relevant economic variables within a single framework. These hypotheses are tested against time series of aggregate and sectoral annual economic data for the U.S. Of interest is the finding of a negative and significant relationship between labor and a variable akin to the marginal propensity to consume. This further implies that there is a tradeoff between labor and the amount of work that physical money performs in production. The output of the expanded production function is the turnover of goods and services as opposed to just goods and services within the time horizon. The model also finds that if the system reaches a steady state, then it must be a golden rule steady state where the rate of saving adjusts to the golden rule level. The paper concludes with a simulation and discussion of the comparative statics of a simple system.