walras

["William B. Ryan" <william_b_ryan@xxxxxxxxx>]

"Once the equilibrium has been established in principle, exchange can take place immediately. Production, however, requires a certain lapse of time. We shall resolve the second difficulty purely and simply by ignoring the time element at this point."

(Léon Walras, Elements of Pure Economics, 1874, p.242)
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This quotation reinforces my conjecture that Douglas was well read in economics, but took its assumptions one-by-one and assumed the opposite.  If conventional theory assumes scarcity, he would assume abundancy.  If conventional theory assumes equilibrium, he would assume disequilibrium.  If conventional theory factors time out of the equation, he would factor time into the equation.  If conventional theory is a theory of exchange only, with production factored out, he would factor production in.  If conventional theory assumes stasis, he would assume growth.  If conventional theory assumes that money is some sort of tangible quantifiable thing, he would assume it is credit which is unquantifiable.  If conventional theory assumes that supply creates its own demand, he would assume that it does not.  If conventional theory sets its goal as being full employment, he would assume that the goal should be leisure.

Douglas' theory in principle could be reverse engineered from scratch--although A + B is a true work of genius and would be difficult to independently duplicate--by going down the list of conventional postulates (and extrapolates) one by one and assuming the opposite in their entirety.

You know my working hypothesis is that Douglas' thought is the unacknowledged inspiration for many twentieth century economists*, including Friedman, for that matter.  Friedman's earlier work, especially, where, even though he had his Ph.D., he was not yet very well read in the economics corpus, therefore was comparatively unprejudiced by it.  His proposals for monetary reform and the negative income tax stem from that early period, from which he has never deviated throughout his life.  The "earned income tax credit" is the result, which has benefited millions in the lower income brackets.

Just as Douglas is erased from the family tree, something similar appears to be happening to Kelso.  Jeff Gate's latest book never once mentions Kelso by name, although there is no doubt whatsoever that Kelso has influenced his thought and his book.  It is an interesting phenomenon.

* James Meade is the exception in that he openly acknowledged Douglas' influence to his early thought, before he was formally trained in economics.  See his Nobel autobiographical note.




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