Keynes' Legacy

[John Vertegaal <vertegaa@xxxxxxxxx>]

Gunnar Tomasson wrote:

>I like the following:

>*Capital is nothing but resolvable debt*

>It is a succinct restatement of (a) classical "value" theory, and (b)
>Keynes' thinking in those parts of the 'General Theory' where he
>reasoned (correctly) that change in the "value" of the economy's work
>in progress is always and necessarily commensurate with change in the
>net factor content of such work in progress.

Gunnar:

You and I have already been over this a number of times in the past.
But since you bring it up again, I will once more try to get past that
mental block you seem to have developed.  Nowhere in the GT that I'm
aware of, does Keynes concern himself with an economy that is 'ideal',
an "axiomatic construct", or "cooperative venture"; to use a number of
expressions you have used in the past, as underpinning of what you are
saying in (b).  Instead, Keynes was more than anything else interested
in how the economy of the real world behaved, and centred his entire
theory around the latter.

The same goes for my post-Sismondian circuitist theory.  It examines how
and when, under real world conditions, a dynamic equilibrium remains a
viable potential.  And I'm sure it doesn't come as a surprise to you that
in the real world we encounter profits and interest; factors, you seem
hellbent to eliminate from your analysis.  Now if there were a logical
reason, or even if you could make a compelling ideological case for doing
so, I might go along with it; but at least so far, you haven't tried to
come up with one.

But the whole point is, that it is neither elucidating nor necessary to
eliminate profits (or interest) from a sensible axiomatic construct; no
matter how 'unfair' these may appear to be.  This is because the economy
is not pushed, it is pulled.  And as soon as one fully comprehends what
that means, it becomes clear that although socio-economic powers may set
'rates' exogenously; only the final benefactors of those powers are able
to "determine" them endogenously, through countless feedback loops. (thus
non-linearly, at least initially)

Economic costs are resolvable in units of account by those who obtained
income as a result of charged costs; and profits are resolvable only by
those having received profit income (or their proxies).  But the reason
for including profits in one's analysis is even more compelling: because
the economy grows naturally, and (contrary to the resolution of costs)
the continual resolution of profits is a horizontal phenomenon; profits
are indispensable for the market clearing of growth, as otherwise there
never could be enough aggregate income to do so.
  Since there are not, nor can there be, separate "units of account" for
costs and profits; profits are often determined at the cost of losses
elsewhere, but this brings us into a dynamic disequilibrium realm, and
that is beyond the scope of this post.

John V