Re: PKT and The Washington Consensus

[Gunnar Tómasson <gunnar.tomasson@xxxxxxxxxxx>]

Paul:

Let me answer your points one by one.

1.  > 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.

Ad hominem argument.

2.  > 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.

Ad hominem argument.

3.  > 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".

The concept of NON-AVAILABLE INCOME is an oxymoron - one that Keynes
struggled with in the Treatise and, having failed to clear his mind on the
subject matter, pushed it into the background in the General Theory under
the pretext that "whilst it is found that money enters into the economic
scheme in an essential and peculiar manner, [he chose to let] technical
monetary detail fall[] into the background."

For surely ALL Factor Income generated in the Production Process is
"available" to Factor Income Recipients in the first instance - their
disposition of such Income is another matter.

4.  > 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.

The point at issue concerns Keynes himself - not Samuelson, Solow, or
Davidson.

Hence, my submission stands unchallenged on substantive grounds.

Gunnar


----- Original Message -----
From: "pdavidso" <pdavidso@xxxxxxx>
To: "Gunnar Tómasson" <gunnar.tomasson@xxxxxxxxxxx>
Cc: <pkt@xxxxxxxxxxxxxxxx>
Sent: Friday, February 27, 2004 1:34 PM
Subject: RE: PKT and The Washington Consensus


> >===== 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
>