Re: Monetary production versus monetary exchange economies

[Bruce McFarling <ecbm@xxxxxxxxxxxxxxxxxxx>]

>It is a fiction of long standing in analytical economics - in
>Wealth of Nations, the fiction is reflected, inter alia, in
>the following passage in Book II, Ch. 1:
>
>"Money, therefore, the great wheel of circulation, the great
>instrument of commerce, like all other instruments of trade,
>though it makes a part and very valuable part of the capital,
>makes no part of the revenue of the society to which it belongs;
>and though the metal pieces of which it is composed, in the
>course of their annual circulation, DISTRIBUTE TO EVERY MAN THE
>REVENUE WHICH PROPERLY BELONGS TO HIM, they make themselves no
>part of that revenue."

You *are* joking, aren't you?  Where, in the quote, is the
gigantic X inside an L which in the style of "macroeconomics"
simply treats aggregate relations as a single market REPLACES
the annual circulation described herein?

It is certainly a century-old device to retroduce neoclassical
analytical devices into classical work that preceded it, but
there just aint not single macroeconomic "factor market" in
sight in the passage that you quote.  Indeed, the passage
that you quote is entirely compatible with positive profit
being recieved as a residual of revenues after making
explicit factor payments and purchases of intermediate
inputs.  Unless of course you ADD the premise that such
a residual would not be earned, impute that premise to
Smith, and then read the "distribute the revenue as
properly belongs to him" as not including profits.  But
then it is not the quote that is leading to the conclusion,
but the newly admitted premise, drawn from the neoclassical
school of twentieth century economics rather than the
classical school of the preceding century and more.




Virtually,

Bruce McFarling, Shortland, NSW
ecbm@xxxxxxxxxxxxxxxxxxx