Re: A Future Economics

[Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx>]

Gunnar,

>
> Re. the following:
>
>> As a starting point I have suggested that we begin with the assumptions
>> that income =/= output and that saving =/= investment.
>
> Comment:
>
> The proposition that income =/= output begs a Question -
>
> Whence Income if NOT from Supply of the Factor Content of Output?
>
> - which Keynes must have considered before writing in 'A Treatise on Money':
>
> "Income. - We propose to mean identically the same thing by the three
> expressions:
>
> (1)  the community's money income;
>
> (2)  the earnings of the factors of production; and
>
> (3)  the cost of production;
>
> and we reserve the term _profits_ for the difference between the cost of
> production of the current output and its actual sale-proceeds, so that
> profits are NOT part of the community's income as thus defined."
> (Vol I, Ch. 9, 'Certain Definitions')
>
> In other words, Keynes' implicit Answer is that Income =/= Output makes NO
> sense.
>
> The contrary case is routinely asserted, implicitly or explicitly, by PKT
> economists -
>
> but, to the best of my knowledge, never actually SHOWN to be intelligible.
>

If an economy has a beginning then income=output cannot be true, since
income=output implies a catch 22: no output without income; no income
without output.

The assumption that income=/=output does not have to be defended by
explaining the origins of income. It is only necessary to explain why income
must differ from output.

Harry


>
> ----- Original Message -----
> From: "Harry Veeder" <eo200@xxxxxxxxxxxxxxxxxxx>
> To: "post keynesian thought" <pkt@xxxxxxxxxxxxxxxx>
> Sent: Saturday, November 01, 2003 6:39 AM
> Subject: Re: A Future Economics
>
>
>>
>>
>>> From: Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>
>>> Date: Thu, 30 Oct 2003 11:40:27 -0500
>>> To: post keynesian thought <pkt@xxxxxxxxxxxxxxxx>
>>> Subject: Re: A Future Economics
>>>
>>> Re. the following:
>>>
>>>> If Say's law refers to a closed (ideal) system, then isn't about time
> to
>>>> draft the laws of an open (real) system?
>>>
>>> Comment:
>>>
>>> Economists have tried to do just that since the 1930s - so far without
>>> success.
>>
>> As a starting point I have suggested that we begin with the assumptions
> that
>> income =/= output and that saving =/= investment.
>>
>> If the current relations are given by:
>>
>> 1.1)    Output = Consumption + Investment
>>
>> 1.2)    Consumption = Output - Investment
>>
>> and by:
>>
>> 2.1)    Saving = Income - Consumption
>>
>> 2.2)    Consumption = Income - Saving
>>
>>
>> Qualify 1.2 as consumption directed by investors (Ci) and
>> 2.2 as consumption directed by savers (Cs).
>>
>> When the inflation rate is zero, consumption directed by investors is
> equal
>> and opposite to consumption directed by savers:
>>
>> Ci + Cs = 0
>>
>>
>> When the inflation rate is greater than zero, consumption directed by
>> investors is greater than the consumption directed by savers:
>>
>> Ci + Cs > 0
>>
>>
>> When the inflation rate is less than zero, consumption directed
>> by investors is less than the consumption directed by savers:
>>
>> Ci + Cs < 0
>>
>>
>> Comments welcomed.
>>
>> Harry