Re: Surplus Value or Profit

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

I am inserting some comments below:

----- Original Message -----
From: "Bruce McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Tuesday, November 20, 2001 9:50 PM
Subject: Re: Surplus Value or Profit


> 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.

*******
Agree - Keynes effectively delineated the 'boundary' of the 'system' in
question with the following summary statement in Ch. 4 of the General
Theory:

"In dealing with the theory of employment I propose, therefore, to make use
of only two fundamental units of quantity, namely, quantities of money-value
and quantities of employment."

IF "quantities of money-value" (Factor Income/Final Demand) mirror
"quantities of employment" (Productive Investment/Final Output), the
'system' is Closed.

IF not, the 'system' is Open.
*******
> 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.

*******
IF theorists who propose to 'deal with the theory of employment' in terms of
"only two fundamental units of quantity, namely, quantities of money-value
and quantities of employment" MUST operate within the 'boundary' of a Closed
System, THEN it remains to be shown how "the conventional discussion of this
question" can be accommodated within such a Closed System.
*******

> 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.

*******
Hence my contention that, in Chs. 4 and 6, Keynes sets out to sketch the
'boundary' of a Closed System and, by virtue of his attempt to accommodate
non-zero 'surplus value of profit' therein, ends up with "inconsistent
hotch-potch" - a Closed/Open System.
*******

> 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
>
>