Re: Sweden - Monetary Policy - Bentham

["Gunnar Tomasson" <tomasson@xxxxxxxx>]

Re. the following:

> It could be that the earth should be the center of the
> universe but facts are facts and printing more money does
> not add to the value of anything. A tautological certainty
> is a tautological certainty no matter what Mill, Ricardo,
> Bentham or even Gunnar may claim.

A "tautological certainty" is such with respect to some given set of
axiomatic premises - thus, a "tautological certainty" in Euclidean Geometry
is not such in non-Euclidean Geometry.

In the present case, the proposition that "printing more money does not to
the value of anything" is predicated on a set of axiomatic premises
analogous to those listed by Bentham under II below.

Under the alternative set of axiomatic premises listed by Bentham under I,
the opposite is true - the following is an extract from a 1988 working note
on related issues:

Bentham's essay entitled "Institute of Political Economy" contains a formal
definition of its subject matter similar in essence to Keynes' concept of
the "Theory of Economics" and its application in the real world:

"Political economy," Bentham wrote, "is at once a science and an art.  The
value of the science has for its efficient cause and measure the subserving
the art."

 Or, less formally, economic science must be rigorous in its analytical
aspects, or it is not deserving of that name.  Economic science must be
applied with imagination in the real world, or it is a waste of time and
money.

 In "The Institute of Political Economy," Bentham also outlined in summary
form the essence of the ideas on the analytical links between "fresh" money,
employment, output, and prices, whose "propriety" James Mill had questioned:

I. "If the fresh money, on the occasion of the first employment or
expenditure made of it, is employed in purchases, the immediate effect of
which is to make an immediate addition to the mass of really productive
capital, it then makes by the amount of such purchase a clear addition to
the growing mass of real wealth, beyond what would have existed otherwise."

II. "If the fresh money, on the occasion of the first employment or
expenditure made of it, is employed in purchases, the immediate effect of
which is not to make any immediate addition to the mass of really productive
capital, it then makes no addition to the growing mass of real wealth."

 III. "No sooner, however, does it ["fresh money"] pass on from this its
primary destination (that of adding to real capital) to the other, viz. that
of adding to unproductive consumption, than its power of producing an
addition to the mass of the matter of real wealth is at an end:
thenceforward and for ever it keeps on contributing by its whole amount to
the encrease of prices, in the same manner as if from the mines it had come
in the first instance into an unproductive hand without passing through any
productive one."

End of extract.

Gunnar


----- Original Message -----
From: "John O'Donnell" <jackodonnell@xxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Saturday, April 28, 2001 4:47 PM
Subject: Re: Sweden - Monetary Policy


> Gunnar Tomasson wrote:
> >
> > > First, monetary policy can and should be used solely to
> > > maintain the value of the currency. The fable that it can
> > > "prime the pump" or any other such nonsense purporting to
> > > overcome the tautological certainty that printing money only
> > > rearranges the chairs; it doesn't and can't actually cause
> > > economic production.
> >
> > Fiddlesticks!
> >
> > This is the viewpoint of James Mill and David Ricardo, whose trashing of
the
> > contrary view stated by Jeremy Bentham in the early 1800s has - or
should -
> > long since have been assigned to the dustbin of history.
>
> It could be that the earth should be the center of the
> universe but facts are facts and printing more money does
> not add to the value of anything. A tautological certainty
> is a tautological certainty no matter what Mill, Ricardo,
> Bentham or even Gunnar may claim.
>
> >
> > Gunnar
> >
> > ----- Original Message -----
> > From: "John O'Donnell" <jackodonnell@xxxxxxxx>
> > To: <pkt@xxxxxxxxxxxxxxxx>; "Sven R Larson" <larson@xxxxxx>
> > Sent: Friday, April 27, 2001 9:13 PM
> > Subject: Re: Sweden
> >
> > > Sven R Larson wrote:
> > > >
> > > > I get the feeling that there might be more interest in Sweden
following
> > > > the postings about the EU demonstrations, and since the mere topic
> > > > "Sweden" makes my stomach turn upside down I'll make one and only
one
> > > > contribution. After this one I don't want to have anything to do
with
> > > > that topic anymore. So please excuse me for writing a long one here.
> > >
> > > Why is it that economists insist there are only two sides to
> > > economics? Give a little thought to a third way.
> > >
> > > First, monetary policy can and should be used solely to
> > > maintain the value of the currency. The fable that it can
> > > "prime the pump" or any other such nonsense purporting to
> > > overcome the tautological certainty that printing money only
> > > rearranges the chairs; it doesn't and can't actually cause
> > > economic production. For a fuller explanation of this
> > > tautological certainty see _Supply and demand, Again_ at:
> > > http://www.geocities.com/jackodonnell.geo/chap13r3.html
> > >
> > > Second, the FORM of taxes is as important or more so than
> > > the amount of taxes. Taxes that resolve to "variable costs
> > > of production" ALL create a wedge between buyer and seller
> > > that reduces the point of maximum profit for producers while
> > > taxes that resolve to "fixed costs of production" do not.
> > > For a further explanation of this truth see _Taxing
> > > Monopoly_ at:
> > > http://www.geocities.com/jackodonnell.geo/c03r5a.html with
> > > further explanation in _Sharing Nature_ at:
> > > http://www.geocities.com/jackodonnell.geo/c04r4a.html
> > >
> > > Thirdly, recognize that the burden placed on welfare
> > > recipients trying to enter the workforce is typically
> > > greater than that placed on any other members of society.
> > > However, a grant to ALL citizens without any conditions of
> > > income will tend to reduce the wage level that increases
> > > variable costs of production while it concurrently increases
> > > the standard of living. The tale continues in part 2 of
> > > _Sharing Nature_ at:
> > > http://www.geocities.com/jackodonnell.geo/c04r4p2a.html
> > >
> > > <SNIP>>
> > > --
> > > -- jbod
> > >
> > > Tax Privilege, Not People
> > > ___________________________________________________
> > > Come visit and see a new economic perspective --
> > >        http://www.geocities.com/CapitolHill/1067
> > >            Comments/arguments welcome.
> > > .
> > >
> > >
>
> --
> -- jbod
>
> Tax Privilege, Not People
> ___________________________________________________
> Come visit and see a new economic perspective --
>        http://www.geocities.com/CapitolHill/1067
>            Comments/arguments welcome.
> .
>
>