Surplus theory originated with Ricardo and was later developed by Sraff[a]. The use of surplus theory as a theory of price morphed into the cost limit of price. Surplus theory is not a good theory of price but is a good analysis of production.Reposted from heteconomist.com
On it’s own, surplus theory cannot explain how to achieve full employment and neither can MMT. MMT stops at explaining how full employment can be funded but doesn’t explain how governments should spend money. Using surplus theory and disequilibrium theories, it appears that the way to achieve full employment is by achieving an increasing surplus. Evolution has managed to achieve this consistently over a period of billions of years. Information theory has been used to demonstrate that evolution is a process of genetic information gain, therefore each generation produces an information surplus.
Evolution is often portrayed as a single process, however evolution evolves new processes as well as new individuals. Information gain has accelerated as the initial process of mutation has been enhanced by permutation, sexual selection and intelligence. It’s even arguable that the human ability to manipulate information is a new meta-evolutionary process.
Information gain is a form of accumulation of real capital. According to Paul Romer, this is the most important form of capital and this is how governments should invest surplus labour (the unemployed). Train more people. Employ more teachers. Allow people to study. Allow people to conduct research. Allow people to try and fail because this is also learning. According to evolutionary principles, the most important research is the meta-research, i.e. research about how best to conduct and fund research.
Comment on Fiat Money is Logically Prior to Capital
by Hacky The Hufrex