Re: A Circular Argument

["Alan G. Isaac" <aisaac@xxxxxxxxxxxx>]

No John,

As I said, you have simply confused the simultaneous
determination of two quantities with circularity of
an argument. Sraffa's point was quite different.
The idea was roughly that you cannot invoke the
value of the aggregate capital stock to determine the
interest rate as a marginal product of capital,
because the value of the aggregate capital stock
depends on the interest rate.
In fact this is not a circularity either, unless you
want to qualify all question begging as circular.

Since you seem not to have understood my point
about IS-LM, take one market at a time.

Alan



John Tyler wrote:

> You seem to be confusing an argument with a diagram.  And it seems that you
> don't understand the diagram.  No way can it be said that interest depends
> on income and income depends on interest.  They are jointly determined by
> the intersection of the IS and LM schedules.
>
> By the way, Sraffa made a very similar argument against aggregate capital.
> The many participants in the Cambridge capital controversy would be quite
> surprised to hear that he didn't know what he was talking about.
>
> John Tyler
>
> >From: "Alan G. Isaac" <aisaac@xxxxxxxxxxxx>
> >Reply-To: pkt@xxxxxxxxxxxxxxxx
> >To: POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
> >Subject: Re: A Circular Argument
> >Date: Sat, 24 Jul 1999 11:26:56 -0400
> >
> >If so, you certainly haven't demonstrated it.
> >You simply talked about the simultaneous
> >determination of two measures that are
> >mutually dependent. You might as well
> >say the IS-LM model involves a `circular'
> >argument because interest rates depend on
> >income and income depends on the interest
> >rate.