Re: demand management

[Brett Haselton <haselton@xxxxxxxx>]

Paul,
With all of this talk of the Austrian economy you would think that Prof
Davidsin is leaving Keynes and beginning to follow Hayek in the "vacuum"
that is the Austrian school of thought..




-----Original Message-----
From: pkt-owner@xxxxxxxxxxxxxxxx [mailto:pkt-owner@xxxxxxxxxxxxxxxx] On
Behalf Of pdavidso
Sent: Tuesday, October 21, 2003 2:00 PM
To: Rakesh Bhandari
Cc: pkt@xxxxxxxxxxxxxxxx
Subject: Re: demand management


>===== Original Message From Rakesh Bhandari <rakeshb@xxxxxxxxxxxx>
>=====
>>
>
>Prof Davidson wrote:
>
>
>
>>If you read FINANCIAL MARKETS MONEY AND THE REAL WORLD -- or take
>>Keynes's "animal spirits" discussion seriously, you will find that the

>>mec is a subjective concept depending on "non rational expectations
>>(vs. rational expectations in the Lucas sense).
>>
>
>It seems that Keynes' balked at turning his system into the bastard
>child of subjective Austrian economics;


if you read chapter 3 of my FINANCIAL MARKETS, MONEY AND THE REAL WORLD
you
will find out that the Austrian economics is dependent on an ergodic
stochastic system -- so that reality is objectively determined.-- not
subjectively determined as in Keynes.


 after he realized that mec
>was not a completely subjective concept, e.g.: "The disillusion comes
>because doubts suddenly arise concerning the reliability of the
>prospective yield, perhaps because the current yield shows signs of
>falling off" (GT, p.317)

All this means is that expectations can be wrong in a nonergodic
system---
whereas in the Austrian system , even though individuals face an
uncertain
future in the sense they do not have the computing power to divine the
future
based on the past samples of data, the market has sufficient computing
power
to reliably forecast the ergodic future.

Paul

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
office phone #;(865)974-4221; office fax#(865)974-4601
home phone and fax # (865)692-0802
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/Davidson.html