Re: General Theory Seminar --Savings and Investment

["Harry Veeder" <veed0001@xxxxxxxxxxxxxxxx>]

----------
>From: Paul Davidson <pdavidson@xxxxxxx>
>To: POST-KEYNESIAN THOUGHT <pkt@xxxxxxxxxxxxxxxx>
>Subject: RE: General Theory Seminar --Savings and Investment
>Date: Fri, Feb 18, 2000, 5:06 pm
>

>At 06:14 PM 2/17/2000 -0500, you wrote:
>>se
>> >
>>         [Clifford Poirot]
>>         The condition as one for equilibrium-the level of employment, income
>>and prices as determined by spending was first developed by Keynes in the
>>GT.  Keynes' use of equilibrium is quite different from the Classical use of
>>the term equilibrium. In Marshallian economics, equilibrium means that
>>markets clear at the individual level.
>
>No -- otherwise unemployment could not be equilibrium in Keynes -- who as a
>student of Marshall used the concept in the same way that Marshall
>did.  Marshall "borrowed" the equilibrium concept from the engineers and
>physicists -- e.g., the swinging  pendulum reaching rest -- when forces
>balanced out.  Clearing may be a sufficient condition but it is not a
>necessary condition. [The partial vs. general clearing condition is a red
>herring as for the difference between Marshall and Walras.]


Strictly speaking this is more a civil engineering view of equilibrium.
Physicists also employ thermodynamic theories of equilibrium which use
probablistic laws to explain the distribution of system states at certain
energies. This is very different from an equilibrium of deterministic
forces in balance.

<snip>

> iT IS ONLY CLASSICAL ECONOMICS WHO CONFUSED THE DESIRE TO ACCUMULATE
>FINANCIAL WEALTH (LIQUIDITY) WITH THE DESIRE TO ACCUMULATE REAL PHYSICAL WEALTH

Classical economists and Keynesians confuse physical wealth with
material wealth. This confusion drives all the airy-fairy debates about
"real" wealth vs "paper" wealth.

Physical wealth can be any form of information.
Some information requires a great deal of energy to produce and is
materially
substantial while other information requires very little energy, is
materially
insubstantial but is cognitively, psychologically and socially taxing to
produce.

Harry Veeder