PKT message, Re. Surplus Value or Profit

Hi Claude:

Thanks for you message - let me comment briefly on the following:

> > However, you may ask how entrepreneurs in the aggregate can get, say
$1200
> > when the pay $1000 for factor cost. But this is a non-issue. In the real
> > world, just as Keynes explained in his 1937 articles, individual
> production
> > processes are simultaneously underway which take more or less time and
> > overlap one another. So, any entrepreneur is able to get a profit from
> sales
> > and so are entrepreneurs in the whole.

My argument concerns what, in the second paragraph of Ch. 2, Keynes termed
"the *pure* theory of what determines the *actual employment* of the
available resources."

This was also the case for Schumpeter - for, as Haberler noted in a memorial
article on him, Schumpeter never questioned the existence of interest on
prodution credit/profit on invested capital in the real world.

In the above real-world case, Keynes effectively continues to identify
factor incomes as the *sole* source of final demand - thus, aggregate
entrepreneurial profit of $200 = $200 payments by entrepreneurs to suppliers
of factor services in a given period for production of final output to be
sold in a future period.

In other words, the $200 represents factor income counterpart to *net*
investment by entrepreneurs in their work in process - and, other things
being equal, when such work in process is offered for sale as final output
in a future period, available nominal purchasing power will fall short by
$200 of the factor cost of such final output.

Thus, one period's *profit* of $200 would be offset by another period's
*loss* of $200.

Hence my conclusion that, as a matter of *pure* theory, non-zero aggregate
entrepreneurial profit must always be the product of what I have termed
"final demand inflation" - that is to say, injection of newly-created
nominal purchasing power into the market for final output whereby total
demand for final output is raised above its factor supply cost in the amount
of profit.

In the real world, such newly-created nominal purchasing power routinely
takes the form of (i) consumer credit, and (ii) fiscal deficits.

Gunnar