Re: Keynes and competition

[Warren Mosler <mosler@xxxxxxxx>]

I agree with Paul, and to expound,
from 'Full Employment AND Price Stability' at www.mosler.org :

"Unemployment can therefore be summarized as follows:

          Involuntary unemployment is evidence that the desired H(nfa) of the private sector
          exceeds the actual H(nfa) allowed by government fiscal policy.

          To be blunt, involuntary unemployment exists because the federal budget deficit is too
          small.

          Furthermore, if an agent wants to sell any real goods, and thereby increase his H(nfa),
          this too can only be accommodated by another agent decreasing his H(nfa). If the
          desired H(nfa) is greater than the actual H(nfa), the evidence is involuntary inventory
          accumulation and a contractionary bias. "
 

The desire for 'liquidity' is shown to be the desire to net save the unit of account with
todays floating exchange rates.  The only source of this 'stuff' is the issuer of the currency.
Falling wages can only do the trick if they somehow reduce the net desire to save the
unit of account.  The paper goes into a lot more detail.

w
 
 
 

Paul Davidson wrote:

At 04:46 PM 5/25/01 +1000, you wrote:
 

Copy and paste here my preceding remarks on the distinction between
degree of competition and perfect competition, and the argument that
degrees of competition refers to the degree to which it involves
pure competition.  It doesn't make much sense to talk about perfect
competition in the technical sense with reference to the GT, because
the GT rules out the possibility of perfect information on all
matters of importance to a market decision.

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
 

I would say that impure competition indicates all market institutions
outside a certain narrowly defined group.  If the narrowly defined
group of (very nearly) purely competitive market structures imply that
the markets must clear, then the opposite SUFFICES to identify the
institutions as "non-pure 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).
 
 
 
 

 you cannot infer further
that being "non-pure competition" implies non market clearing.

Nonsense! MUST have product market clearing to have point of effective demand-- therefore if effective demand means anything in "any degree of competition , it is just as relevant (and therefore product market clearing) for any degree of competition.
 

Under impure competition, BOTH non-market clearing and the role of
money can lead to unemployment.

No 1 Only the need for money and liquidity demands can result in unemployment equilibrium as even Frank Hahn recognized and demonstrated in his 1977  article that I cited earlier.
 

  This is why Keynes had to insist
that his theory applied to whatever degree of competition, to make
clear that pursuing a higher and higher degree of competition is no
cure-all to "the unemployment problem".

More importantly any degree of competition is neither a necessary or sufficient condition for involuntary unemployment.
 

So rather than, "either/or", its non-market clearing IN ADDITION TO
the role of money.

No!
 

(Of course, if a government was fighting a WAR on unemployment, it
could offer a job to anyone willing to work at prevailing wages
but unable to find work, "and declare victory in time for tea.")

Government does not have to hire all the unemployed -- because the multiplier will assure some additional workers will be hired by private sector.

Paul
 
 
 
 Paul DavidsonEditor, JOURNAL OF POST KEYNESIAN ECONOMICSHolly Chair of Excellence in Political EconomyEconomics Department - University of Tennessee523 SMCKnoxville, Tennessee 37996-0550work phone: (865) 974-4221fax: (865) 974-4601/  (865) 974-1686home phone and  fax: (865) 692-0802