Re: Surplus Value or Profit

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

On Sun, 25 Nov 2001 13:08:05 -0500, Gunnar Tómasson
<gunnar.tomasson@xxxxxxxxxxx> wrote:

>Bruce:

>With respect to the key point at issue, you wrote earlier:

>> 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.
>
>And I noted the following:
>
>A brief cursory look through Chs. 1-6 did not reveal any passage
>in which Keynes 'explains' that "effective demand arises in part...
>from the creation of purchasing power through finance."

I did not say that I took that description from a single
passage.   I said that he has already explained how effective
demand arises in part from income, and in part from finance

*****************************

29: (3) The amount of labour N which the entrepreneurs decide
to employ depends on the sum (D) of _two_ quantities, namely
D_1, the amount which the community is expected to spend on
consumption, and D_2, the amount which it is expected to devote
to new investment.  D is what we have called above the
_effective demand_.

28: (1) In a given situation of technique, resources, and
costs, income depends on the volume of employment N.

(2) ... consumption will depend on the level of aggregate income
and, therefore, on the level of employment N, except where
there is some change to the propensity to consume.

27: The amount of current investment will depend, in turn,
on what we shall call the inducement to invest; and the
inducement to invest will be found to depend on the relation
between the marginal efficiency of capital and the complex
of interest rates on loans of various maturities and risks.

*****************************

So, Effective demand rests in part on the portion of income
devoted to expenditure, D_1, and in part on the portion of
expenditure on investment that is due to the creation of
purchasing power through finance, D_2.

Of course, you have recently specified that you do not
define investment as the acquisition of assets but in
some other way, but as Keynes does specify that he is
using the term "investment" in its ordinary sense, with
the only peculiarities arising from the ordinary cancelling
out consequences of looking at investment in the aggregate,
you surely will be using Keynes' semantics rather than
your own when reading Chapter 3.


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