Re: Price vs. Value Theory

["Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>]

Warren:

Sorry about that!

I am very familiar with your points through Randy Wray's book.

And, while my counter-points may not be familiar to them, some of our fellow
PKTers may find them germane.

Gunnar




----- Original Message -----
From: "Warren Mosler" <mosler@xxxxxxxxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Cc: "Gang8" <gang8@xxxxxxxxxxxxxxx>
Sent: Friday, March 28, 2003 8:10 AM
Subject: Re: Price vs. Value Theory


> 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.
> > > >
> > > >
> > >
> > >
> > > =====
> > > http://www.mosler.org
> > >       http://www.moslerauto.com
> > >
> > > Primary email contact:  wmosler@xxxxxxxxxx
> > >
> > > __________________________________________________
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> >
> >
> >
>
>
> =====
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