Degree in the Basic Identity: Savings = Investment

Net availabilities of second-degree money and working capital, i.e. those pertaining to the real economy, complement and confer meaning on the fundamental equation, savings equal investment (S = I), thereby completing its validation.

These availabilities were discovered in the year 1916 by Germán Bernácer (Alicante, Spain 1883-1965) in his book Society and Happiness. An Essay in Social Mechanics, a book that laid the foundations of modern macroeconomics.

The sources of funding in dynamic equilibrium in investment and production are savings and new money. Production, therefore, is equal to investment and second-degree working capital. This reveals its dynamic nature, thereby overturning the static incomplete concept enshrined in the identity savings equals investment.

In view of the importance of this discovery, the first part of this study will focus on explaining the nature of net availabilities and second-degree working capital, while the second part will incorporate these findings in the fundamental equation.