Re: Surplus Value or Profit

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

At 19:31 23/11/01 -0500, Gunnar Tómasson
<gunnar.tomasson@xxxxxxxxxxx> wrote:

[Quot I]:
>> 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.

>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.

Of course he does not explain *at this point* how effective
demand can exceed the factor cost of A, since he has already
explained that effective demand arises in part from the
fraction of aggregate income devoted to expenditure, and in
part from the creation of purchasing power through finance.
Since it is already clear that only secondary effective
demand is constrained by aggregate income (including both
income to entrepreneurs as well as outlays of entrepreneurs
on other factor incomes), and that primary effective demand
is not constrained by aggregate income, there is no need to
explain how effective demand can exceed factor cost.


Virtually,

Bruce McFarling, Shortland, NSW
ecbm@xxxxxxxxxxxxxxxxxxx