Financial Circulation

We use the 4th Law of value for finance by matching:

• γ with the velocity of money in the Quantity Theory of Money
• k with Markup Pricing

Fourth Law: V_l4,t = k · P_t · γ_t

1. Velocity of money (This is displacement)

Fisher’s Equation of Exchange: M • V = P • Q

• M = money supply
• V = velocity of money (how fast money circulates)
• P = price level
• Q = quantity of real output (real GDP)

2. Markup Pricing (Cost-Plus Pricing) Theory (This is spin)

P = MC × (1 + μ) (or P = MC / (1 - μ))

• P = price
• MC = marginal cost
• μ = markup ratio (over cost)

This is the standard microeconomics/industrial-organization model of firm pricing, used heavily in monopolistic competition and oligopoly theory (associated with economists like Kalecki, who built entire macro models around “markup pricing” as more realistic than pure competitive pricing). Your k plays the same structural role as μ — a multiplier applied to a “true” cost/value base to get the actual charged price.