Re: Savings fallacy redux (was Re: Method)

["Dr. Bruce McFarling" <ecbm@xxxxxxxxxxxxxxxxxxx>]

Gunnar Tomasson <gunnar.tomasson@xxxxxxxxxxx> wrote,
on Sat, 31 Aug 2002 08:54:53 -0400


> At the time, I took Patinkin's feigned ignorance of the "banana

> plantation" parable to imply that he was not prepared to engage

> in debate on the subject matter.

Yes, the fact that he had obviously come across it and looked
into it a bit does make it strange.  On possibility is that
he had actually forgotten the banana parable and needed a
refresher to prompt him.  Another is that someone have him
the heads up and said "if that fellow over there asks a
question, feign ignorance".


> And why might that be so?

> A possible explanation occurred to me when I read Patinkin's book on the
> evolution of Keynes' monetary thought, where he explicitly acknowledged
> that, as I recall it, he could not make sense of a key aspect of Keynes'
> definition of the Aggregate Supply Function and made some comments to the
> effect that he would like to ignore the point at issue.

> If Patinkin had been open to debate on the "banana plantation"

> parable, I would have started out by asking the following question:


> What, if any, is the essential difference between Production in Keynes'
> "banana plantation" and modern Entrepreneurial Market Economies insofar

> as the technically appropriate definition of Money is concerned?

Since it is so clearly a leading question, what would be your response?
Is it safe to say from the follow up, no essential difference? Because
if there is an essential difference, then the follow up question is not
talking about a modern monetary production economy.


> And, to follow up:

> What, if any, is the essential role of the Money Rate of Interest in the
> context of Keynes' "banana plantation"?



> Which would bring to light the fact that modern Keynesians have no answer -
> other than silence - to Schumpeter's long-standing and much-derided
> contention that Interest on Production Credit is a socio-economic phenomenon
> and NOT a technically essential attribute of Money insofar as Production in
> Entrepreneurial Market Economies is concerned.


But it must be a tremendous re-assurance to you that so many Post
Keynesians would agree that the technical features of rates enters
only into the spreads between rates of interest and the base rate
on money deposits is a largely conventional value ... that is,
just as with "natural rates of unemployment", any notion of the
"natural rate of interest" is just a fiction.