Re: PKT and The Washington Consensus

[pdavidso <pdavidso@xxxxxxx>]

>===== Original Message From Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>
>"Credit in some form is ALWAYS required when command over "resources" is
shifted from Non-Entrepreneurial Owner/Suppliers OUTSIDE the Production
Process to Entrepreneurs for use WITHIN the Production Process.
I guess Gunnar never heard of consumer credit -- or households refinancing
their residents when the market value rises and he equity taken out is used to
buy consumrt goods.
>
>"This foundational concept of Creditary Economics is rooted in elementary
logic.  Yet, Keynes disregarded it in The General Theory with results which
have bedeviled all subsequent mainstream, monetarist, and post-Keynesian
monetary economics through the identification of "saving" for "financing"

You would not make such a mistake Gunnar if you read Keynes's amendment to the
GT in the EJ in1937 -- on the finance motive.

>[Here is Keynes on the subject matter at the outset of Ch. 7  "So far as I
know, everyone agrees in meaning by Saving the excess of income over what is
spent on consumption.  It would certainly be very inconvenient and misleading
not to mean this.  Nor is there any difference of opinion as to what is meant
by expenditure on consumption.  Thus the differences of usage arise either out
of the definition of Investment or out of that of Income. [...] broadly
speaking, new investment, as distinguished from reinvestment, means the
purchase of a capital asset of any kind out of income."]
>
>"This mis-identification of the concept of "saving" lies at the very heart of
The Washington Consensus - for if "productive investment" requires "saving"
out of the income stream, then the interest rate mechanism has a crucial role
to play in ensuring an adequate supply of "saving".

This has nothing to do weth the ex post definition of savings -- Keynes might
have been better off if he had stuck to the TREATISE definition where
everything produced was either AVAILABLE INCOME [Consumption in the GT] or NON
AVAILABLE INCOME [ investment in the GT].. It would then be absolutely clear
that anything classified as NON AVAILABLE income can not be consumed in the
current accounting period -- and therefore must be "saved".

>I submit that PKT economists cannot in principle take reasoned exception to
The Washington Consensus view on the role of the interest rate mechanism as
outlined above so long as they acquiesce in, and perpetuate, Keynes'
mis-identification of the concept of "saving" in the context of
Entrepreneurial Market Economies.


Your submission is rejected -- on the grounds that you are fighting the
Neoclassical synthesis Keynesians such as Samuelson and Solow and not Keynes
of American Post Keynesians.

Paul

Paul Davidson
Editor, Journal of Post Keynesian Economics
University of Tennessee
SMC 503
Knoxville, Tennessee 37996-0550
office phone #;(865)974-3303; office fax#(865)974-4601
home phone and fax # (561)369-1951
email pdavidson@xxxxxxx
http://econ.bus.utk.edu/Davidson.html