Structuralizing Economics in Plain Terms: Separating the Real and the Financial Economy

Introduction: A Philosophical Lens for the Economy’s “Why?”

“Why do stock prices rise when the economy is weak?” “Why do firms go bankrupt even though their books show a profit?”

Every time we hear such headlines, we’re puzzled by the gap between lived reality and the numbers. A key to this modern “why?” lies in a philosophical approach called structuralism.

In this essay, using the universal language of double-entry bookkeeping, we reframe the economy as a two-layer structure: ① the “real economy,” where goods and services move, and ② the “financial economy,” where money circulates as data (records). These two worlds map, respectively, onto the philosophical stances of realism and structuralism.

Put on this new pair of lenses, and the seemingly paradoxical surface of the economy becomes strikingly clear.

1. Which Comes First—“Things” or “Relations”? Realism vs. Structuralism

Much of our confusion arises from unconsciously mixing two viewpoints: realism and structuralism.

Realism: Individual things (points)—an apple, a person—exist first; relations are added later. This is intuitive and commonsense.
Structuralism: Before particular things, there is a system of relations (lines) that constitutes them. It is not that a person is first a “king”; rather, a relational system (“king–subjects”) makes someone a king.

Modern mathematics and logic have grown by incorporating this structuralist view. And economics—especially the financial economy—reveals its essence most clearly when seen structurally.

2. From Money to the Economy: Double-Entry Bookkeeping as “Structure”

In earlier writing, I explained why modern money (credit money) is structuralist: the moment a bank lends, the borrower’s “deposit” and the bank’s “loan” arise simultaneously. This is mandated by the relations imposed by double-entry bookkeeping.

Extend this insight to the whole economy. Central banks, commercial banks, firms, households—all keep books under a common rule: double entry. When you pay someone, the same amount is recorded at the same time in both your ledger and theirs.

Thus, the financial economy can be read as “a vast network of nodes (economic agents) interconnected by a common rule (double entry).”

3. Why Textbooks Postpone “Money”: The Classical Dichotomy

Strikingly, many macro textbooks avoid money and banking in their opening chapters. This follows the classical dichotomy: the idea that we can separate the economy into a real sector (production/exchange of goods and services) and a monetary sector (money and prices). From this flows money neutrality: in the long run, money affects nominal prices but not real quantities like output.

This reveals a longstanding habit of putting the real economy (a realist world of things) at center stage, while treating money and banking as auxiliary functions. But what if we reverse the casting and make the financial economy (a structural world of records and symbols) the protagonist? What new patterns emerge?

4. The Perfect World of Double Entry… and Its “Trap”

At the heart of the financial economy is an uncompromising rule: the books must balance—Assets = Liabilities + Equity.

This identity does not falter, whether cash burns in a fire, a debtor defaults, or a global panic erupts. It holds because it is a rule of symbols designed to balance. In the limit, if all positions in the world were settled, the ledgers would net to zero. A closed, elegant world indeed.

And yet, here lies the trap.

The harmony of this symbolic world guarantees nothing about the prosperity or stability of the real economy in which we live. In fact, the very perfection of the accounting world can widen the decoupling from reality.

5. Why Does “Decoupling” Occur? Misalignments Between Two Worlds

The rules of ledgers differ from the rules of lived reality; the gap surfaces as economic contradictions.

Asset bubbles
Real economy: corporate profits and wages barely rise.
Financial economy: prices (equities, land) inflate via self-reinforcing expectations.
Equity rallies without growth
Real economy: profits fail to fuel capex or wages; activity stagnates.
Financial economy: surplus liquidity chases equities; buybacks lift prices.
Bankruptcy despite profits
Real economy: cash needed for payments is missing; operations fail.
Financial economy: the books balance and show positive net worth.

In short, “double-entry always balances, but that does not guarantee jobs or well-being.” The coherence of finance and the welfare of the real economy must be assessed on separate axes.

Conclusion: Structuralism as a Portfolio of Choices

We instinctively read the economy from a single angle—the real—which makes “rising stocks in a slump” or “bankruptcy with profits” look paradoxical. Add the financial angle—the structural, ledger-based view—and these become rational decouplings between two rule-bound worlds.

Structuralism is not an arcane doctrine. It is a practical tool that frees us from a single viewpoint and gives us a higher-resolution lens. Whether judging policy or managing one’s assets, this binocular perspective is the first sure step toward expanding our freedom of choice about the future.