Re: Samuelson vs. Keynes on "theory"

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

On Sun, 06 Oct 2002 12:35:35 -0400, Gunnar Tomasson
<gunnar.tomasson@xxxxxxxxxxx> wrote:

>Here is Adam Smith's statement again:

>"It would be too ridiculous to go about seriously to prove that WEALTH does
>NOT consist in MONEY, or in GOLD or SILVER; but in what money purchases, and
>is valuable only for purchasing."

However, money is a financial asset because of there is no better
security in being ABLE to obtain what a given amount of money
purchases at a future date than by holding that amount of money.
This is liquidity.  It is obviously a systemic value: it is not
intrinsic to the thing itself (since, after all, most money in
a modern economy is not a thing at all, but simply an accounting
record in some deposit holding institution somewhere).

So if one wishes to use the term wealth as Smith does, that is
"real wealth", then clearly money is not wealth.  Going from there
to presuming that only "real wealth" has any value, and therefore
concluding that money in and of itself has no value is just playing
with semantics, since the meaning of the term "wealth" is shifting
between the different premises of the argument.

>As for (b), there are only two kinds of "goods" - "economic" and "free".

>While "free" goods - Sunlight, Rain, Money (Gold, Silver, or Paper IOUs),
>etc. - are essential for the production process, the proposition that Income
>accrues only to owner/suppliers of "economic" goods is NOT one with the
>"implicit premise" which is being ascribed to me, namely, that  "Income is a
>category that consists of "economic goods"."

In other words, if you wish to adopt that premise, then in the
terms of the General Theory, all income is in "free goods",
since in a monetary production economy income is contracted for,
earned and received in terms of money.

I hasten to add that I see no reason to adopt the classification above
(all goods classified as "economic" or "free"), except if maintaining
consistency with the neoclassical foundations of mainstream economics
has a higher priority than talking about the economies  that we happen
to live in.

The statement that "Income accrues only to the owner/suppliers of
'economic' goods" implies that the term Income as used needs
qualification and explicit and careful definition, as well as a bit
of justification for a post keynesian list.  In the income-expenditure
loop, the ability to use money received in rent or quasi-rent to
finance further expenditure would seem to be the same as the money
received for work or by the social status of having title to productive
equipment, so the empirical justification for singling out certain
kinds of income as "entitled to call itself Income" and others as
"income like payments that really are not entitled to call themselves
Income" needs to be especially. strong.