Re: Keynes and competition

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

At 14:49 26/05/01 -0500, Paul Davidson
wrote:

>yes but pure competition where P =MC is not ruled out by GT --
>and in fact that is what Keynes says in his response to Dunlop
>and Tarshis in the 1939 EJ.  Also in chapter 19 he indicates
>that flexible market prices cannot  per se AUTOMATICALLY PRODUCE
>FULL EMPLOYMENT

Yes, that what I said before ... Keynes cannot have been
referring to Perfect Competition as presently defined,
so that it must be "pure" competition that he talks
about with respect to degrees of competition.

Many seem to explicitly or implicitly define imperfect
competition as anything with a downward sloping demand
curve, and ignore the fact that this leave a gap in
their typology, where any existing purely competitive
market structures fall into the gap, since of course
no existing market structure can have all of the
attributes of perfect ompetition.  Maybe this comes
from experiences in teaching economics in the
classroom, where students often balk at a "benchmark"
that cannot actually ever be made on any real
world bench, but do not have the sophistication to
discern the shell game when pure competition
examples are used as example of perfect competition.

>Clearing of the product market, given profit making
>expectations leading to Marshallian supply prices will
>occur in either pure competition or impure competition
>(your terminology, not mine).

I'm not going to argue that point right now.

I need some double and triple checking for
generic statements about all actual market
structures.  Without time to research why you
and the New Keynesians say things that sound
like there is a disagreement on market clearing
in the normal markets structures (the range
from monopolistic through oligopolistic through
to monopolistically competitive), I'm going to
be agnostic on the question right now.

However, it is true that as I wrote the message
that Paul is replying to, it reads as if I am
accepting the non-market clearing argument as
valid, rather than accepting it for the sake
of argument.  So the "if and also" ought to
read,

Even if we accept the characterisation of
(some) non-purely-competitive market structures
as non-market-clearing, for the sake of argument,
then instead of this being a question being
EITHER private unemployment under pure competition
due to the role of money, OR private unemployment
under any other market structures due to
non-market-clearing, it is a question of
private unemployment under any real world market
structure due to the role of money, and in
any market structures that might involve
non-market-clearing, any additional private
unemployment that might arise from that.

Virtually,

Bruce McFarling, Shortland, NSW
ecbm@xxxxxxxxxxxxxxxxxxx