Re: Samuelson vs. Keynes on "theory"

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

On Thursday, October 03, 2002 1:00 PM, William B. Ryan wrote:

>  Certainly the source of profit is an interesting question.

>  This is from Louis-Philippe Rochon's dissertation:

>  "...This is the familiar debate over the existence of profits, or in
>Marx's terminology, how can M become M'.  As Saccareccia...asks, 'How can
>firms collect more money revenues than the amount that economic agents are
>willing to borrow collectively from the banking system?'  Similarly, Nell
>and Deleplace...also ask, 'How firms who borrow a given sum can reimburse
>it and pay the interest, if all money comes from bank credit?'  Even
>Schumpeter...asked this question.  Consider the following reference:
>'Within the circular flow...it is impossible with a given money sum to
>obtain a greater money sum.'"

>  The question is nonsensical within the definitions of double-entry
>accounting, for within those definitions profit is not contingent on
>firms collecting "more money revenues than the amount that economic
>agents are willing to borrow collectively from the banking system."

To be a bit more precise, the question is nonsensensical given
that interest is an income while oustanding credit obligations
is a stock.  The question assumes a velocity of money of one
between the time it is created and the time the obligation is
satisfied and the money is destroyed, which is a silly assumption.
Depending on the term of the credit obligation, the credit-money
may have participated in the income-expenditure loop a number of
times before it is exinguished in the repayment of principle.

Being casual about the dimensions of the terms that you are talking
about ($ versus $/period, in this case) often leads into fallacies
when the same term can be used to refer values of different
dimension.