PKT message, Re: Monetary production versus monetary exchange economies

Re. the following:

> Only a trained incapacity to think about questions such as
> these without reliance on a fictitious mega-market for
> factor services would find such a hypothetical mega-market
> in this statement. IOW, it is during the suggested moment's
> reflection that this ficitious mega-market is being retroduced
> into the above quote.

Comment:

At issue is that aspect of Analytical Economics 101 which Keynes finessed in Ch. 2 of the General Theory as follows:

"From the time of Say and Ricardo the classical economists have taught that supply creates its own demand; - meaning by this in some significant, but not clearly defined, sense that the whole of the costs of production must necessarily be spent in the aggregate, directly or indirectly, on purchasing the product."

In fact, there is nothing mysterious about Say's Law - it restates in terms of Supply in the Factor Market and Demand in the Market for Final Ouput the logical implications of the maximizing attributes of Homo Economicus which underlies all of Economic Science.

Given those maximizing attributes, the idea that the IOUs received by Economic Agents in exchange for their supply of Factor Services to Entrepreneurs must be held to represent a means to the end which is their subsequent exchange for commensurate share in Final Output is an elementary proposition in Economic Logic 101.

Gunnar

----- Original Message -----

From: "Bruce McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>

To: <pkt@xxxxxxxxxxxxxxxx>

Sent: Sunday, December 09, 2001 11:37 PM

Subject: Re: Monetary production versus monetary exchange economies

> On Sat, 08 Dec 2001 12:18:30 -0500, Gunnar Tómasson
> <gunnar.tomasson@xxxxxxxxxxx> writing regarding his
> reading of the General Theory, says, regarding my
> observation that:
>
> >>there just aint not single macroeconomic "factor market" in
> >>sight in the passage that you quote [so that]
> >>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
>
> Says that this:
>
> >is - as a moment's reflection should make clear - wholly
> >inconsistent with Bentham's statement ...
>
> >"If the fresh money, on the occasion of the first employment
> >or expenditure made of it, is employed in purchases, the
> >immediate effect of which is to make an immediate addition to
> >the mass of really productive capital, it then makes by the
> >amount of such purchase a clear addition to the growing mass
> >of real wealth, beyond what would have existed otherwise."
>
> Only a trained incapacity to think about questions such as
> these without reliance on a fictitious mega-market for
> factor services would find such a hypothetical mega-market
> in this statement. IOW, it is during the suggested moment's
> reflection that this ficitious mega-market is being retroduced
> into the above quote.
>
> There is nothing in the above statement at all inconsistent
> with a variety of transactions taking place under a variety
> of specific institutions, some market institutions and some
> otherwise, with the whole system NOT acting "as if" it was a
> single fictitious mega-market.
>
> In other words, you can't even find it without the same
> process of reading your own premises into the work when
> quoting from BENTHAM, who would surely be the richest
> source of material for this sort of anachronistic reading
> of neoclassical theory in classical works ... certainly
> richer than Smith, Ricardo, or Mill.
>
>
> Virtually,
>
> Bruce McFarling, Shortland, NSW
> ecbm@xxxxxxxxxxxxxxxxxxx
>
>