Unpublished Paper
Golden Ratio of General Competitive Equilibrium: the work of Invisible hand under wage and price dispersion
Economics D11, D63, D83
(2021)
Abstract
Recent researches on labor-search-leisure model have described local multiple equilibria of Invisible hand under wage and price dispersion. This paper analyzes the general competitive equilibrium, where the Invisible hand creates harmonic proportions of mutually beneficial exchange. The analysis results in the rigorous mathematical proof that at the general competitive equilibrium both the marginal rate of substitution of leisure for consumption and the marginal rate of transformation of production into services are equal to the golden ratio conjugate, whereas both the intensity of consumption and the sales-costs of production ratio are equal to the golden ratio itself, also called the divine proportion. This result brings us back to the theological grounds of Adam Smith’s works; it gives a new view on his idea of natural rates of both wages and profit and confirms the assumption that his ‘man’ is not the ‘economic man’ the neoclassical theory is speaking about. It really can be argued that there was a good reason to apply the natural theology approach to the analysis of exchange at times of the ‘Wealth of Nations’.
Keywords
- golden ratio,
- invisible hand,
- divine proportion,
- general competitive equilibrium
Disciplines
Publication Date
Fall October 22, 2021
DOI
10.17835/2076-6297.2022.14.1.036-054
Comments
This paper represents the abridged version of the article “Divine Proportion of Invisible Hand: a new look at Adam Smith’s natural theology”, published by the Journal of Institutional Studies. 2022, 14, 1,36-45.
(http://hjournal.ru/files/JIS_14_1/JIS_14.1_3.pdf)
Citation Information
Sergey V. Malakhov. "Golden Ratio of General Competitive Equilibrium: the work of Invisible hand under wage and price dispersion" Economics D11, D63, D83 (2021) Available at: http://works.bepress.com/sergey_malakhov/30/