Re: A Tired response

[ECAS@xxxxxxxxxxxxxxxxxxx id <01HPVKJB9JEE8XGJ59@xxxxxxxxxxxxxxxxxxx>; Fri, 28 Apr 1995 15:24:15 +1000]

To Ajit: How can a monetary economy analysis "Could be conducted in real
terms without recourse to money" as you claim?  Only if you have as an
axiom that money is neutral in both the short-run and the long-run. Then
money does not affect the real variables.  But if money is not neutral,
then as Keynes noted in his 1935 article "A Monetary Theory of
Production" money affects real outcomes and nothing can be said about the
real economy until one talks about money and its short-term and long-term
effects.  Sorry Ajit you are just accepting as a universal truth that
Money is always neutral.  No wonder you agree with Steve and Barkley,
they go to the same axiomatic church as you do. I go to a different
axiomatic church.  We can be friends but don't try to convert one or
another -- unless you think the other side will give up what they have
always believed is a universal truth.

A General theory permits both neutral and non-neutral money cases.

Also Ajit see -- my earlier comments to Bill on K/L ratios and
unemployment in an entrepreneurial economy.
                                           Paul D.
________________________

Paul! I'm not your torturer. I hate torture. Of course "money" is neutral in
the arguments I'm making. My point has been that there can be unemployment even
in a world of "neutral" money. You seem to deny it, as your comment to Bill
Mitchell suggests. But then you don't provide any refutation to Ricardo's
machinery chapter or Marx's theory of "reserve army of labor". In these
theories unemployment does not mean that wages would necessarily fall or that
there is necessarily a substitution between "capital" and labor with respect
to changes in relative "factor" prices. You seem to be assuming that all the
theories that hold "neutral" money assumption must be neo-classical theory. But
that is simply not true--and I'm quite sure you know that.

Cheers, ajit sinha