Re: Surplus Value or Profit

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

On Mon, 19 Nov 2001 13:53:55 -0500, Gunnar Tómasson
<gunnar.tomasson@xxxxxxxxxxx> wrote:

>The proposition that 'surplus value or profit' can, in
>principle, arise within a Closed System - a system where
>endogenous nominal purchasing power arises in the form of
>factor incomes - is logically incoherent.

The question, of course, is what does the phrase
"endogenous nominal purchasing power" mean.  IOW,
given that the system concept in use is an abstract
system, the boundary of the system is to a certain
extent arbitrary, and without delineation of the system,
the phrase "endogenous to the system" is itself
ambiguous.

In the conventional discussion of this question, the
system under consideration is the income-expenditure
loop.  Under that reading, the flaw with the above
statement is that a system where "endogenous" nominal
purchasing power arises in the form of factor incomes
is only closed if ALL purchasing power is endogenous.
And as we all know, this is not true of Keynes' system,
since primary effective demand (D1) is generated by
financial arrangements that do not depend upon the prior
receipt of income ... only secondary effective demand
(D2) is generated in that way.

Any argument that in a system in which D1=0 and D2=Y,
this or that cannot take place because the system is
a closed system has nothing to do either with a
monetary production economy or with the general theory
model.

Virtually,

Bruce McFarling, Shortland, NSW
ecbm@xxxxxxxxxxxxxxxxxxx