Re: Keynes' Legacy

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

John:

You write:

> 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.

Here are the first three sentences of Keynes' preface:

"This book is chiefly addressed to my fellow economists.  I hope it will be
intelligible to others.  But its main purpose is to deal with difficult
questions of theory, and only in the second place with its application of
this theory to practice."

This does not square with your statement that "Keynes was more than anything
else interested in how the economy of the real world behaved..."

Gunnar


----- Original Message -----
From: "John Vertegaal" <vertegaa@xxxxxxxxx>
To: "Gunnar Tomasson" <gunnar.tomasson@xxxxxxxxxxx>
Cc: "POST KEYNESIAN THOUGHT" <pkt@xxxxxxxxxxxxxxxx>
Sent: Friday, May 16, 2003 8:02 PM
Subject: Keynes' Legacy


>
> 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
>
>