Re: Sismondi and Keynes

[John Vertegaal <vertegaa@xxxxxxxxx>]

Esteban Perez wrote:

>Keynes definition of income starts with the gross receipts of the
>firm (GT. P. 52) and subtracts the purchases of other firms (A1)
>eliminating the money value of intermediate inputs. Then he
>adjusts for the changes in the value of capital equipment.:
>¨deduct a certain sum, to represent that part which has been
>contributed by the equipment inherited from the previous
>period¨(p.52).  Changes in value may be charged to the capital or
>income account.
>Unforeseen changes belong to the capital account not decisions to
>use the equipment, user cost. ¨User cost constitutes one of the
>links between the present and the future. For in deciding his
>scale of production an entrepreneur has to exercise a choice
>between using his equipment now and preserving it to use at a
>later date...¨GT, p.70. Agrégate income is equal to the value of
>output (A) minus the user cost of A (U). ....Effective demand is
>simply the agrégate income (or proceeds) which the entrepreneurs
>expect to receive...the effective demand is the point on the
>agrégate demand function which becomes effective, becuase taken
>into conjunction with the conditions of supply, it corresponds to
>the level of employment which maximizes the entrepreneur´s
>expectation of profit¨.p.55

>Income is expressed in money terms, incorporates expectations, and
>distinguishes between income and capital accounts. Value added
>does not equal agregarte production of final commodities.

>Can you explain in more detail Sismondi´s concept of income.

I tried but Sismondi's is much more verbose.  The best I can do is
refer you back to the message I sent to this list last Nov 16.
I'm afraid I could never duplicate the succinctness with which you
were able to expose Keynes' theory of equilibrium income in the
above paragraph.


>Isn´t based on real factors, not expressed in value terms?

You may be left with that impression after reading Sismondi's
introduction in which he asserts that society as a whole ought to
function as a solitary being would naturally.  But even there value
very much enters the discussion.


>Doesn´t it arise out of a simple process of aggregation that has
>nothing to do with expenditure categories?

Sismondi constantly harks about the differences between the capital
and income accounts and how not heeding the distinction between the
two has so often lead to economic crises.

Sismondi uses the following terms in Richesse Commerciale:

P = Production in the current period [= Yt]
N = Supply price of labour in the previous period [= Wt-1]
X = Difference betw. N and the same in the present [= (Wt-Wt-1)]
D = Aggregate expenditures by capitalists [= (Ct+It)-Wt]
R = Revenue [= Rt]
E = Savings [= St]

They look pretty (Post)Keynesian to me.  But to come to terms with
the scope of his concept of income, you should read at least Book
II of N.P.  Then you can either dismiss my claim or we can discuss
it further.

John V