Re: The Axiom of Gross Substitution

[pdavidso <pdavidso@xxxxxxx>]

>===== Original Message From Harry Veeder <eo200@xxxxxx> =====
>>Paul:
>> I can not believe you are so wrong Harry.  All I said is that the gross
>> substitution axiom implies everything is a substitute for everything else
--
>> whether it be in production, co9nsumption, finance, etc..  Accordingly, all
>> one has to do is to point to any sector where things are not gross
>> substitutes.
>
>Harry:
>I agree, although I would say it differently.  The gross substitution axiom
>says everything may POTENTIALLY be used as a substitute for everything else.
>It does not require that everything is CURRENTLY being used as substitute
>for everything else.
>


>>Paul:
>> This does not mean that other things can NOT be substitutes harry -- after
all
>> no one will deny that coffee and tea are substitutes, or bonds are
substitutes
>> for money (and stocks) for liquidity purposes.
>
>Harry:
>Sorry, I am not very good at expressing myself in words.
>Let me say... even when something produced does not serve as a substitute
>for money, there always other another thing, another valuable,  which is not
>produced and does serve as substitute for money. e.g. land and labour are
>often regarded as substitutes for money.

No labour cannot be used as a store of value -- unless you are talking about
slaves.  But both labour and land have high carrying costs and hence in a word
where there are financial assets with low carrying costs-- land and slave
labour is not a good substitute for money.

Paul

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
phone # (561)369-1951; fax #(561)369-1951;
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/davidsonextra/Davidson.html