M-C-M' fallacy

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

This is well and fine as to the "only function" of the entrepreneurial firm, except it has not been applicable to capitalism for the past several hundred years, since the development of modern creditary mechanisms, particularly banking.  These mechanisms have enabled our industrial civilization.

What the accountant calls "profit" is not accretion to "cash" but "capital" or "net worth."

The entrepreneurial firm, as a matter of statistics in a normally growing economy, is always spending, in terms of cash disbursement, more than it is receiving.  At any given point in time, it will have spent more than it has received, for the totality of its past.  Yet it has and is booking a "profit."

This is true of the statistical firm as well as the firms sector in its relationship to consumers.

What is important to the entrepreneur is that his sales curve is, over time, increasing proportionately to his costs curve.

If it is, or can prospectively be made to be so, then he will be able to fulfill his commitments, contractual or otherwise, to his investors, financiers, and himself.

----- Original Message -----
From: Paul Davidson <pdavidson@xxxxxxx>
Date: Sat, 20 Apr 2002 09:24:35 -0400
To: "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>
Subject: Re: Globalization and its Discontents


> At 04:10 PM 4/19/2002 -0400, you wrote:
> >      With regard to _The Commanding Heights_, I
> >   But the idea that his [Keynes's] views resembled
> >those of either Marx or Lenin are fairly ridiculous in general,
> >although much of his analytical framework can be found in
> >Marx, not a point recognized openly by Keynes himself.
>
> Not true at all! In his lectures leading up to the GT, Keynes specifically
> indicated that in the entrepreneurial system, the only function of the
> enterprise is to end up with more money than it started the production
> process with . Keynes then specifically indicated this was equivalent to
> the Marx 's
>   M-C-M' claim.
>
> \
>
> >And,
> >given the strong evidence that the spread of Keynesian policies
> >of various sorts has played a major role in stabilizing somewhat
> >macroeconomies in the post WW II era, the general thesis
> >of the series (and the book) that "Keynes was wrong and
> >Hayek and Friedman are right" is way overdone.
>
>
>
> And like most of Barkley's writings this is an understatement ---)!
>
> Paul
>
>

--

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