Re: Price vs. Value Theory

[Warren Mosler <mosler@xxxxxxxxxxxxxx>]

Gunnar,

IMHO, your responses totally miss the points I
presented, and I have no better way to state them.
Seems a case of 'talking past each other.'

Thanks for reading it.

Warren

--- Gunnar Tomasson <gunnar.tomasson@xxxxxxxxxxx>
wrote:
> Warren:
>
> I am inserting (blunt) comments below to
> introductory paragraphs in your
> paper:
>
> Both Post Keynesian and Circulation Approaches
> accept the widely held view
> that modern money is not commodity money but rather
> token (or fiat) money
> (see, e.g., Moore, 1988; Graziani, 1988). But they
> criticize conventional
> theory for continuing to utilize a framework that
> treats modern money as
> though it were still a commodity money. This paper
> begins with two comments
> on this fundamental point. First, while modern money
> does not derive its
> value from its status as a commodity, once a token
> is declared necessary for
> the payment of taxes it can be analyzed like any
> other commodity. Second,
> absent from most Post Keynesian and Circuit analyses
> is the institutional
> process by which a token obtains its value (becomes
> money). Many analyses
> "add in" government spending and taxation, and the
> central bank, after an
> initial investigation of the operation of a private
> money-using economy
> (see, e.g., Lavoie, 1992, pp. 151-69).
> Comment:
>
> There is NO substantive difference between the
> Conventional and Chartalist
> approaches - for, given their common modus operandi,
> namely, analyzing money
> "like any other commodity", it is a matter of
> indifference WHY advocates of
> the two approaches have made common cause insofar as
> the methodology of
> their monetary analysis is concerned.
>
> *******
>
> Analyses of the circuit that begin with banks
> financing firms' production
> (or households' purchases) and end with firms (or
> households) paying back
> their loans leave unanswered the question of why
> anyone would initially sell
> real goods or services for the unit of account. The
> "common-sense" reply,
> "because they can use the funds to buy other goods
> and services" is not a
> satisfying one, for the further 'infinite regress'
> question remains the
> same: "why do those sellers want the unit of
> account?" What is missing is
> the process by which the unit of account is endowed
> with value.
>
> Comment:
>
> This argument mixes analytical apples and empirical
> oranges and, as such, it
> mirrors Keynes' make-belief in the General Theory
> that classical economists
> of first rank EVER viewed Say's Law as an empirical
> as distinct from
> analytical proposition.
>
> The fact that some/many/most? Post-Keynesians do NOT
> recognize/acknowledge
> the distinction between the two - a distinction akin
> to that between
> analytic and applied geometry - does not render it
> immaterial.
>
> Nor does it accord with Keynes' modus operandi in
> parts of the General
> Theory, as indicated in recent exchanges between
> Harry Weeder and myself on
> Paul Samuelson's 1939 paper on 'The Rate of Interest
> Under IDEAL
> Conditions'.
>
> *******
>
> This paper takes the position that the question
> remains unanswered because
> it cannot be (adequately) answered unless the State
> is incorporated from the
> very beginning of the analysis. "Money is a Creature
> of the State" (Lerner),
> and thus a "monetary" analysis cannot be conducted
> prior to the introduction
> of the State. Interestingly, the Chartalist view of
> a tax driven currency
> can be found in the writings of Keynes (not to
> mention Adam Smith!), the
> Post Keynesians, and the Circulation theorists, yet
> it is almost always
> presented as an aside, with the implications
> remaining unexplored (see Wray,
> 1998, on Smith, Keynes, and Post Keynesians such as
> Minsky; for the
> Circulationists, see Graziani, 1988).
>
> Comment:
>
> In the context of ANALYTICAL monetary economics of
> the kind engaged in by
> Keynes in parts of the General Theory and Samuelson
> in his 1939 paper, the
> question makes NO sense in the first place.
>
> *******
>
> In the Chartalist view, the State, desirous of
> moving various goods and
> services from the private sector to the public
> domain, first levies a tax.
> The State currency unit is defined as that which is
> acceptable for the
> payment of taxes. The imperative to pay taxes thus
> becomes the force driving
> the monetary circuit. The present paper seeks to
> refine the concept of the
> monetary circuit using a multidimensional model
> designed to reveal and
> illuminate the workings of a tax- driven currency.
> It will also be shown
> that this same model lends itself to the analysis of
> any commodity. In an
> adaptation of Moore's (1988) terminology, the model
> includes "horizontal"
> and "vertical" components of the monetary circuit.
> Following outline and
> discussion of the model, it will be utilized to
> dispel the myth that
> deficits imply future taxation, as well as to
> briefly analyze the 1997 Asian
> Financial Crisis.
>
> Comment:
>
> Here one can stand the "infinite regress" argument
> on its head - for ABSENT
> a pre-existing "circuit" whereby Owner/Suppliers of
> Factor Services and
> Entrepreneurs transform Factor Inputs into Final
> Output within some
> appropriate Creditary/Monetary framework, there
> cannot exist ANY "goods and
> services" for the State to "move from the private
> sector to the public
> domain" through taxation.
>
> Why, then, do some economic scholars subscribe to
> the Chartalist View of
> Money?
>
> It attempts to RATIONALIZE the IRRATIONAL notion
> that Money which possesses
> NO commodity value can still be treated AS IF it
> possessed such value - a
> rationalization which permits such scholars to
> practice make-believe
> monetary 'analysis'.
>
> Gunnar
>
>
>
>
> ----- Original Message -----
> From: "Warren Mosler" <mosler@xxxxxxxxxxxxxx>
> To: <pkt@xxxxxxxxxxxxxxxx>
> Sent: Tuesday, March 25, 2003 9:22 PM
> Subject: Re: Price vs. Value Theory
>
>
> > The $US, for example, is a public monopoly.
> > The govt. (or its designated agents) as sole
> supplier
> > of that which it demands
> > for payment of taxes it levies is 'price setter.'
> >
> > see 'A General Framework for the Analysis of
> > Currencies and Other Commodities at www.mosler.org
> >
> > Warren Mosler
> >
> > --- Gunnar Tomasson <gunnar.tomasson@xxxxxxxxxxx>
> > wrote:
> > >
> > > The following Gang8 exchange of today's date may
> be
> > > of interest.
> > >
> > > Gunnar
> > >
> > > ********
> > >
> > > Geoffrey Gardiner:
> > >
> > > The value of dollars and the value of gold are
> both
> > > concepts of the human mind. They have no reality
> in
> > > nature.
> > >
> > > Gunnar:
> > >
> > > Economic Scholars will respond to - "refute" in
> > > their vocabulary - your point as follows:
> > >
> > > People would not hoard Dollars/Gold at Fort Knox
> > > UNLESS it gave them PSYCHOLOGICAL satisfaction
> to do
> > > so.
> > >
> > > As Economic Scholars, we have no business
> belittling
> > > the psychological quirks that make people do
> what
> > > they do.
> > >
> > > By their own lights, such Economic Scholars are
> not
> > > being dumb - their viewpoint is an integral part
> of
> > > the Price-Theoretic approach developed by
> > > mathematical economists in the last third of the
> > > nineteenth century as substitute for that of
> > > Classical Value Theory.
> > >
> > >
> >
> >
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> >
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> >
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>
>
>


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