PKT message, Re: Logical Aspects of the General Theory

There is no doubt that in modern economies

unemployment exists. Nor is there doubt that

things are offered for sale that remain unsold.

Lastly, there is no doubt that things are

desperately needed to reduce hunger, home-

lessness and disease, etc., that are both

not affordable by the needy and, in most

cases, not yet even in existence.

Says Law, in economic theory, suggests that

if things are produced either their production

creates the money to buy them or the money

to buy them is already there or, by implication,

if they are never sold they were never produced

as saleable products--they were outside the

realm of commerce (unneeded and unwanted).

Keynes' insight on unemployment and money

was that unemployment could persist -- but --

it could also be ended if money was spent for

that purpose.

Neither Say nor Keynes offered an algorithm

for creating money to spend to end unemploy-

ment or poverty -- especially an algorithm that

might appeal to those in society who daily

make laws and enjoy great power and wealth.

Gunnar Tomasson's message below about

Keynes' logic in using "demand" where

"monetized demand" may be at issue, does

not address Keynes' insight. Yet, is not his

insight on the persistence of unemployment

in relation to modern uses for money the real

concern we have when we think of Keynes?

John Gelles

----- Original Message -----

From: Gunnar Tomasson

To: pkt@xxxxxxxxxxxxxxxx

Sent: Tuesday, December 17, 2002 10:27 AM

Subject: Logical Aspects of the General Theory

Re. the logical validity of Keynes' attack on Say's Law.

As indicated by Say's Law, it is axiomatic in an analytical view of Entrepreneurial Production that Economic Agents do not forego their property rights in Factor Services by Supplying them to Entrepreneurs for use in the Production Process.

Instead, it is axiomatic that they do so (a) in order to transform one form of property (Factor Services) into a different form of property (Final Output), receiving IOUs from Entrepreneurs in the amount of the agreed "value" of their Factor Services at one end of the Production Process for redemption in terms of Final Output at the other end.

THIS was the axiomatic basis for John Stuart Mill's statement that "Demand for commodities [Final Output] is not demand for labour [Factor Services']".

The contrary axiomatic view is expressed in the General Theory's proposition that "Demand for commodities is demand for labour."

As a matter of logic, this puts the cart before the horse - for it implies that Demand for Final Output is prior (and unrelated) to monetization of Factor Services by means of their Supply to the Production Process.

Gunnar