Re: Article in the Chronicle of Higher Education

[John Vertegaal <vertegaa@xxxxxxxxx>]

Ted Winslow wrote:

>How can the idea of individuals as able in certain circumstances to
>become "scared so stiff as to be unable to move" be taken account of by
>an approach that axiomatically fixes their identities.

However way you look at it, the above reasoning is based on the premise
(axiom) that individuals are trapped; either within a system of their own
making (an impossibility in my book), or find themselves locked within
a system imposed on them by a higher power.  Which is it Ted?

Why can't we just assume that the economy is entirely man-made, with
boundaries outside of which economic values are meaningless.  Then, the
(non-)pursuit of utility originated exogenously in its own terms, may or
may not coincide with beneficial economic health, understood to be full
employment with minimum waste.

Or to look at it differently: the economic institutions put in place by
the powers that be, to facilitate the distribution of output, may very
well be impedimental to the value of the system as a whole; because, as
economic agents, these powers are trapped within the system.  And as such
they are unable to determine the "ideal" systematic outcome.
  In other words their profits may occur at the cost of losses elsewhere,
resulting in less than full employment and/or an increase in waste; and
thus are non-conforming to the ideal.

It is therefore most important to make a clear distinction between what
individuals think to be the outcome of their "economic" activities,
because their institutions (inherently unable to know) apparently tell
them so; and the actual result of those decisions with respect to the
systematic outcome.
  By placing the emphasis as he did on the demand side, Keynes got
himself at least half way to his goal of full economic understanding.
However your interpretation of him as a Marshallian, putting demand back
on the same level as supply, is a major step backwards in my opinion.

John V