Advances in Management and Applied Economics

The Way out of the Labyrinth of Misconceptions in Economic Sciences: The Managerial Economics Theory

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• Abstract

  Contemporary mainstream economists have modeled the economic science as a machine, a perpetuum mobile, working perfectly in the interest of both the individual and the society. This brought about the hypothesis of economic imperialism. However, we believe that this machine often tends to break down due to the built-in faulty circuits that occasionally block the internal dynamics which are caused by an overlook that, unlike technical systems, all social, and thus economic systems, imply nonlinear dynamics and an integrating philosophy. The contemporary economic crisis, as well as the divergent views of prominent economists on the economic reality, seems to refute, rather than vindicate, economic imperialism. In this paper, the authors outline a new economic theory based on a new concept of capital and entrepreneurship which is adjusted to the current time. The new understanding of capital and entrepreneurship eliminates the dichotomy between labor and capital by differentiating between the roles of real and financial capital in the production and distribution of added economic value, thus creating conditions for a continued sustainable development of the social welfare economy.