Re. Surplus Value or Profit

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

On Sun, 25 Nov 2001 13:13:34 -0500, Gunnar Tómasson
<gunnar.tomasson@xxxxxxxxxxx> wrote:

>> > 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.

> ...
>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.

The second line is not true.  Keynes not only *effectively* but
*explicitly* identifies factor incomes as one source of final
demand and investment as the other.

Given the chain of supply, one entreprenuer's portion of the
$200 might well originate from final demand indirectly
rather than directly, which is to say may come out of
the User Cost of the production of those who directly
satisfied the final demand.

But the profit itself is not paid out to anyone, other than
the portion paid out to the shareholders of a corporate
producer.


>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.

In other words, that $1200 in final demand may represent
$900 in consumption and $300 in investment, with a portion
of that $900 in consumption coming from the factor payments,
and another portion coming from profits income.


--
Dr. Bruce R. McFarling, PhD
Bus. Office 1.72 -- (02) 4348-4078
School of Business
Faculty of the Central Coast
Newcastle University, Ourimbah