Date: Tue, 22 May 2001 10:02:48 -0400
To: Kazuhiro Kurose <kurose@xxxxxxxxxxxxxxxxxxxxxx>
From: paul davidson <pdavidson@xxxxxxx>
Subject: Re: Keynes and competition
At 10:35 AM 5/22/01 , you wrote:
Hello Paul
Thank you for replying.
> This is all nonsense. For the ultimate put down see Keynes's response to
> Dunlop and Tarshis in the 1939 Economic Journal where he specifically
> denies that imperfect competition is a necessary condition for less than
> full employment equilibrium.
Then I would like to ask you whether you think that there is the
disequilibrium (the gap between demand and supply) in goods market in
Keynes' system. If you think that there is no disequilibrium in goods
market, the arguments on imperfect competition has nothing to do with
Keynes' system, and I can satisfy with your opinion that the fault of
neo-classical or new-Keynesian is that they don't think of money as
non-reproducible asset. In this case,
The trouble here is that you are (like most mainstream economists)
confusing market clearing with market equilibrium. As I have written many
times (but no one bothers to read Davidson) Marshall took the term
equilibrium from physics where it means merely a balancing of
forces. Thus a market can be in equilibrium WITHOUT it being
cleared!! Keynes, a good Marshallian followed Marshall's terminology (and
generally accepted "scientific" terminology) -- but it was the
General Equilibrium people who conflated CLEARING with Equilibrium.
Let me say it again Clearing is a suffficient BUT NOT A NECESSARY
CONDITION FOR EQUILIBRIUM!!
therefore, it is only in labor market
that there is the disquilibrium.
NO! NO! NO!. The labor market can be in equilibrium without clearing as
long as all the forces in the labor market are in balance as they are with
Keyners's involuntary unemployment equilibrium -- see Chapter 19 of the
GT. or Davidson POST KEYNESIAN MACROECONOMIC THEORY!!!
However, if you think, like new Keynesian
does, that there is the disquilibrium in goods market, Keynes' system must
be imperfect competition. In this case, therefore, there are disequilibria
in both goods market and labor market.
no ! no ! no!~!!!!!!!!!!!
pLEASE READ MY BOOK post keynesian macroeconomic theory i!!
Paul