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This Wiki is a 'work in progress', and is consequently not only incomplete but also, no doubt, incorrect or inaccurate in places. Note also that the application is now called Obson, not MicroSim.

What is Obson?

Obson is a micro-economic modelling program. It takes the ideas of SimX — essentially a macro-economic modelling system built around the sectoral analytic approach of MMT (Modern Modern Theory) — and extends them into a dynamic micro-economic system of interacting economic agents.

See Overview for more information.

Motivation, History and Purpose

Modern Money Theory (AKA MMT, AKA Modern Monetary Theory) is a powerful tool for describing what goes on in a sovereign economy at the macro level. It does this by regarding the economy as consisting of financially disjoint sectors. Each sector maintains a balance, which may be positive or negative, and which is determined by flows of funds into and out of the sector.

Although simple, the MMT perspective highlights a number of aspects of sovereign economies that are poorly understood by commentators, policy makers, and (even) many economists. Some of its most important conclusions are:

  1. Government expenditure pays for taxation, not the other way around.
  2. A sovereign nation cannot become bankrupt in its own currency.
  3. The so-called 'National Debt' is not a liability in the sense of being a burden on current or future generations.

MMT also has some striking political implications. For example, it is easy to show that 'austerity' is precisely the wrong way to deal with a recession. Further, MMT fails to show any direct causal link between government spending and inflation — rather, it suggests that the limit to non-inflationary spending is primarily determined by the productive capacity of the economy.

Some time ago (2016) I wrote a computer program that modelled the structure of a sovereign economy as seen from an MMT perspective (the program was called SimX), and used the model to explore how a sovereign economy would behave under various conditions. The results were documented in my paper Comprehensible Macro-Economics.

However, it was evident that while MMT is a powerful tool in the description and analysis of an economy at the macro level, it has little to say at the micro level: it is concerned with wealth creation, not wealth distribution.

It can be argued that there is little point in producing wealth if it only accrues to the already wealthy, and that the huge disparities in wealth that are the norm in many advanced capitalist societies are absurd, or even obscene. Accordingly, I decided to take the principles of MMT and to incorporate them into a 'value-free' economic model that would function at a much finer-grained — i.e. micro — level. Rather than simply representing interactions between sectors, it would represent interactions between the individual agents that make up those sectors. It might then be possible to explore some of the drivers and causes of inequality, and perhaps even to get some ideas as to how it might be reduced.

Getting Started

Possibly the best way to find out what can be done with Obson is to start by reading the Overview and then Using Obson.