Model 0 presents economic dynamics as the replenishment of assets being expended in current production. This raises some troublesome matters of interpretation in respect to labor/leisure sectors because the temporal nature of their product is such that it cannot be held in inventory. A moment of time perishes at the instant of its creation. If a person who is willing and able to work cannot find a market for his services, then the time in which he might have been productive is lost forever.
Industrial sectors’ ‘stocks’ of the household output must therefore bear interpretation as something like a habituation among a segment of the population to report to work at a given place, their training for the work to be done there, and the worker’s being domiciled near their place of work. Assets such as these tend to be reported as ‘goodwill’ or the value that an enterprise has as a growing concern. The labor/leisure ‘commodity’s’ turnover fraction VL would then be interpreted as controlling the delay associated with attracting workers to a different employer, a different locale, or a different profession.
Our discussion of the ambiguous nature of the household product established that households’ ‘production’ of leisure time determines labor availability as the residual of leisure with a household sector LK’s total experience of time tLK — which is not an item of economic computation. All these considerations dictate certain peculiarities regarding households’ intake of their own product:
At stasis, RLLK receives a labor/leisure sector’s production of leisure -YLK. When sector LK’s labor is in short supply then labor’s availability tLK+YLK is rationed among the other sectors demanding it, and RLLK is once again -YLK.
But when the demand for labor falls short of tLK+YLK, some amount of leisure in excess of -YLK is involuntary and must be forced into RLLK. This is accomplished by redefining the household RLLK as simply the residual of every RILK in column L (including XLK) with the -tLK at R0LK.Formalization of the household cost curve presents dividends as a residual of wages with consumption. And our discussion of leverage and the investment term represented dividends eLK as a distribution of industrial profits through a network of financial state variables over which households have little control beyond their commitments of new savings.
All a household can control is the relationship between its appetite for consumption and its desire for leisure; and it should be self-evident that a household will adjust this relation until it is satisfied with its passive income from investments (or, as the case may be, with its level of indebtedness). Working more and consuming less in order to save more or reduce debt instantiates a household’s recasting of the utility function by which it is made visible to economic science. SFEcon’s monetary variables, as formulated into the marginal value of money cLK, suffice for an elementary expression of this truism.