Micro–Macro Integration — A Unified Economic Theory
Learning Objectives
- Explain the fallacy of composition that prevents a simple aggregation of micro production functions into a macroeconomic aggregate
- Describe the conformal mapping from macro CDR space to micro Cobb-Douglas units
- State the global monetary value of production formula integrating CDR with micro production across m countries
Why No Aggregate Production Function Exists
A production function Q=f(K,L) relates physical inputs to physical outputs from a single machine. There can be no macroeconomic production function when inputs are different types of items or outputs are made by different constructs (Cohen & Harcourt, 2003). The CDR model sidesteps this: G=f(C,D,R) is defined at the aggregate without requiring aggregation from micro units. It then maps conformally into micro domains where Cobb-Douglas is valid for each single production unit.
The Integration Formula
For m countries, each with ni micro production units, total global output is:
Brain & Brawn Framework (Figure 2, P4)
The wealth creation diagram distinguishes: BRAIN (conceptual wealth: new human capital ideas + market capitalization C = new + capital stock) from BRAWN (physical production: distribution via fij·Li → micro production process f(kij,Wij) → realized wealth aggregate). CDR G potential (macroeconomic) is the bridge connecting intellectual source to physical output.