RE: General Theory Seminar --Savings and Investment

[Clifford Poirot <cpoirot@xxxxxxxxxxx>]

No! Y is total Income (Net factor payments + profits). It is what people
earn. It does not go into the hands of those who "receive" it, necessarily,
since some of it is taxed. Disposable income is what people earn, less
taxes. This is just an identity, given the definition of the terms.

> -----Original Message-----
> From:	William B.Ryan [SMTP:william_b_ryan@xxxxxxx]
> Sent:	Friday, February 18, 2000 8:41 PM
> To:	POST-KEYNESIAN THOUGHT
> Subject:	Re: General Theory Seminar --Savings and Investment
>
> Replying to: http://csf.colorado.edu/forums/pkt/2000/msg00602.html
>
> "In equilibrium Y = AE (aggregate spending) = C + I..."
>
> This cannot be correct if Y is defined to be factor income in terms of
> cash flow, that is to say, in terms of purchasing power placed into
> the hands of final consumers.
>
> [Clifford Poirot]
> This definition *must* be true, or you simply disagree with the
> terms as defined and understood in common usage among economists. That is
> to
> say, you do not accept standard and conventional forms of national income
> accounts. A critique of national income accounting would certainly be
> relevant, but I feel that the burden is on you to specify how and why you
> develop this critique.
> ----------
>
> A point of clarification:  I take it from this that you accept that
> the statement "Y is defined to be factor income in terms of cash
> flow, that is to say, in terms of purchasing power placed into
> the hands of final consumers" is correct.
>
> Yes?
> ----------
>
> [Clifford Poirot]
> ...To Keynes, equilibrium was a condition where all the incentives
> were to continue on.
> ----------
>
> Whatever that means.  You said before that "in equilibrium" Y = AE, Y
> = C + I, S = I, etc.
>
> If, however, investing and saving are actually two totally different
> processes, it would be expected that they could never be equal even in
> the financial sense, expect by pure chance.  If they are two different
> processes, they cannot be countervailing forces within the same
> process.  I think it is a fallacy to regard them as such.
>
> I tried to show that in the financial (cash flow) sense the
> instantaneous difference between increasing firms sector spending
> (which might be termed investment) and the reflux from that spending
> is accumulation to debt, not savings.  It is true that difference also
> equals accumulation to cash balances.  But if those balances are
> needed to conduct day to day transactions between paychecks, for
> example, it can hardly be said that they "equal" savings in the sense
> that the process of saving is defined in ordinary dictionaries.  It
> is simply the mechanical consequence of spending.
>
> There are also accumulating cash balances within the firms sector
> itself that must be accounted for, which represent funds that were
> never disbursed to consumers.
>
> Keynes did not use ordinary dictionary definitions when he constructed
> his page 63 syllogism.
>
> Bill Ryan
> william_b_ryan@xxxxxxxxxxx
> http://www.geocities.com/CapitolHill/Senate/7018
>
>
>
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