Gross Substitution and Liquidity

[Harry Veeder <eo200@xxxxxx>]

 On 8/27/99 you [Paul Davidson] wrote to the list:
>>
>>
>>> on page 231 Keynes notes that the second essential property of money is
>>> "it has an elasticity of substitution equal to, or nearly equal to,
>>> zero, which means that as the exchange value of money rises there is
>>> NO tendency to SUBSTITUE some other factor for it". In other words
>>> there is no other thing that is manufactured that is a gross
>>> substitute for money (for liquidity purposes).[Paul Davidson]


Even if no other thing is PRODUCED which is a GROSS substitute for money,
the labour supply,  which is NOT PRODUCED but still a 'thing', may serve as
a GROSS substitute for money.

I must clarify what I mean by the labour supply. I define it as the pool of
human energy ready to be exchanged for money. In this definition, the price
of employment is not a factor.


Harry