Subjective Certitude
Tautologies or truisms are logical certitudes. My three fundamental theorems are cases in point. The total return truism is a classical example. Since growth is creation less net outflow, creation is growth plus net outflow. This gives unqualified certitude to the doctrine that output, or creation of value, is growth of value plus
cash flow (net outflow of value).
The other two fundamental theorems are certitudes in a subjective sense. What they predict infallibly is intentions. The present value rule must give capital value as we see it individually. Only under the convergence axioms does it predict observed market equilibria. The same is true of the maximand rule. This rested on the same
axioms and the one that a population acts to satisfy tastes (in the sense of aims).
There are schools of thought, including Popperians and deconstructionists, which disapprove of logical certitude on grounds not clear to me. They are wrong. A rose is a rose. Nor are all examples as inane as that one from Gertrude Stein. All of math is derived as logical certitude. Its proof comes from analysis, not experiment. Proof of Fermat’s last theorem eluded some of the finest minds in the world for three centuries until Andrew Wiles published the solution in 1995. Philosophy is precisely a search for hidden truisms or tautologies. Economics is philosophy when it does the same. The pay rule shows that their inferences can be startling. Age-wage profiles are technically illustration, not proof, of the proposition that human depreciation is expected to be recovered in pay. That follows from definitions and
needs no evidence in proof.
The pay rule is not wholly logical certitude because it also proposes that maintenance consumption is not recovered in pay. Rather I argue that from the biological imperative: maintenance is exhausted in satisfying our taste for adult survival. The fact that few can have doubted this since the physiocrats has nothing
to do with proof. The shock, anyhow, is in the expected recovery of human
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