Re: Surplus Value or Profit

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

Re. the following:

> It seems to me that the logical inconsistencies that you detect
> are likely to vanish if you would abandon the effort to modify
> the general theory to introduce a surplus value of profit theory
> of profit ... because that particular modification seems to be
> the source of the inconsistencies that you detect.
>
> IOW, its seems highly likely that you are actually finding
> logical inconsistencies, but that's a rabbit you are putting
> into the hat yourself.

Comment:

Consider the following two passages in Ch. 6:

First.

"The amount paid out by the entrepreneur to the other factors of production
in return for their services, which from their point of view is their
income, we will call the *factor cost* of A.  The sum of the factor cost F
and the user cost U we shall call the *prime cost* of the output A.

"We can then define the *income* of the entrepreneur as being the excess of
the value of his finished output sold during the period over his prime
cost."

Second.

"Furthermore, the *effective demand* is simply the aggregate income (or
proceeds) which the entrepreneurs expect to receive, inclusive of the
incomes which they will hand on to the other factors of production, from the
amount of current employment which they decide to give."

At issue is what purports to be a *General Theory* - while Keynes does NOT
explain how, in principle, *effective demand* can exceed the *factor cost*
of A for any given "amount of current employment which [entrepreneurs]
decide to give," yet he reasons AS IF it is not problematic how the 'surplus
value or profit' rabbit can be pulled out of the hat.

In this respect, the thrust of my argument is of the "no ticket, no laundry"
kind - that is to say, IF the rabbit has not been put into the hat, THEN it
cannot be conjured out of the hat.

Gunnar


----- Original Message -----
From: "Bruce McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Thursday, November 22, 2001 9:05 PM
Subject: Re: Surplus Value or Profit


> On Wed, 21 Nov 2001 11:58:39 -0500, Gunnar Tómasson
> <gunnar.tomasson@xxxxxxxxxxx> wrote:
> [Quoth I]:
> >> 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.
>
> First, a bounded system is only closed if there is nothing passing
> over the boundary.  By contrast, the system, Y=D1+D2, D2=f(Y)
> is not closed, with D1 passing over the boundary in one direction,
> and (Y-D2) passing over the boundary in the other direction.
>
> Second, there is no such effort.  There is no surplus value of
> profit theory, but rather profit as a residual of of obligation
> incurred at the beginning of the production process deducated
> from receipts from sales at the end of the process -- that is,
> what Keynes called a model of a monetary production economy.
> It seems to me that the logical inconsistencies that you detect
> are likely to vanish if you would abandon the effort to modify
> the general theory to introduce a surplus value of profit theory
> of profit ... because that particular modification seems to be
> the source of the inconsistencies that you detect.
>
> IOW, its seems highly likely that you are actually finding
> logical inconsistencies, but that's a rabbit you are putting
> into the hat yourself.
>
>
> --
> Dr. Bruce R. McFarling, PhD
> Bus. Office 1.72 -- (02) 4348-4078
> School of Business
> Faculty of the Central Coast
> Newcastle University, Ourimbah
>
>