Re: Case solved, at last! (Was Re: Monetary production ...)

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

Re. the following:

> See: anachronistic introduction of the core neoclassical
> concept into classical economic theory and the General
> Theory.

Comment:

What is your non-anachronistic construction of Say's Law?

Gunnar



----- Original Message -----
From: "Bruce McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Tuesday, December 11, 2001 2:21 AM
Subject: Case solved, at last! (Was Re: Monetary production ...)


> Now Gunnar says,
>
> >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.
>
> See: anachronistic introduction of the core neoclassical
> concept into classical economic theory and the General
> Theory.
>
> A moment reflection ought to suffice ... but it doesn't,
> or a lot of misdirected effort would have been avoided ...
> to establish that a model in which all the decision are
> maximising decisions is an incomplete model of economic
> decision making.  Ergo, while it may be appropriate in
> some microeconomic questions, it cannot be appropriate
> as the sole foundation for a effective macroeconomic
> model.  Business operators know that they do not know
> enough to make it universally sensible to devote all
> resources to the best possible use based on currently
> available information, so that some business decisions
> will be regular in a way that differs from maximising
> decision making.
>
> Boulding argued that where this type of decision making
> is obscured is in beginning from the income statement
> instead of the position statement ... that is, as I
> interpret it, having decided what and how much to devote
> to precautionary purposes and whether, what, and how
> much to devote to speculative purposes, the amount
> devoted to pursuit of opportunities based on known
> information might be modelled using maximising models
> (though, of course, there are arguments regarding the
> strengths and weaknesses of maximising models even
> here).  However, the decision of what portion should
> be allocated to those three different purposes cannot
> conceivably be modelled using a maximising approach,
> since two of the three sets of costs and benefits are
> by definition unknown when the decision is being made.
>
> Since proper consideration of this allocation problem
> is included in the General Theory, and is the foundation
> of an important part of the system (albeit in the area
> of money and financial assets and not in the theory of
> production in general), then the statement:
>
> >the maximizing attributes of Homo Economicus which
> >underlies all of Economic Science.
>
> finally pins down a specific premise being added to the
> reading of the General Theory (as well as explaining
> Bentham as the representative of classical economic
> theory!) which is resulting in the gross distortions
> that have resulted.  Define economic science as that
> which is based on the foundation of your particular
> borrowing from an earlier physics, and then anyone
> who explores beyond the constraints of that foundation
> is not engaged in "Economic Science"!
>
> I'm happy that that is cleared up, through disappointed
> that it is such a mundane trained incapacity at work.
> If you want to fight the "Washington Consensus" by
> working on improved macroeconomic theory, first you
> have to untie the hand you've tied behind your back and
> drop the requirement of a maximising foundation in order
> to qualify as "Economic Science".
>
> Virtually,
>
> Bruce McFarling, Shortland, NSW
> ecbm@xxxxxxxxxxxxxxxxxxx
>
>