Jim, The point about the class differentiation of the structure of final demand is, that different social strata display quite a different pattern and purpose in what they save, invest spend and consume. In the real world, empirically, the Keynesian equations about the relationship between investment, consumption and income simply do not hold true. They can be made true only by aggregations which ignore data inconvenient to the theory. The category of aggregate demand, unexceptionable in itself, therefore plays an ideological role in economic explanations.
I am wel aware, of course, that if you aim to estimate the total net value of new output, you have to deduct intermediate costs from gross sales revenue to avoid double counting of value. In fact I wrote a wiki on it. But this does not mean that the intermediate transactions do not occur in real time, and that therefore this market does not exist. It does exist, and the value of intermediate transactions equals about 45% of the gross output used for input-output analyses. But if e.g. the US imports oil products, this is not part of Keynesian "aggregate demand", even although Americans will kill millions of people to get the oil. In much Keynesian work I have noticed that intermediate demand is not regarded as part of aggregate demand at all, because aggregate demand is by definition made equal to "final demand". Marxists and Keynesians may take a very benign view of regulation, because in their eyes the state can do no wrong. Their big bogey is neoliberalism, and state interventionism is the answer. But I don't believe that sort of reformist ideology at all; I think it is merely another variant of the free trade versus protectionism debate, that has carried on forever and a day. I guess that is also, in part, because I worked for the state for a long time, and delved deeply into the categorization schemes used by public administrators. The business regulation schemes mostly have little net positive effect, because in practice they reward and penalize all the wrong things; the overall effect is, that business costs rise, and that final prices therefore rise too. That is not to say, that state interventionism cannot be very effective. It can be, but it rarely is, since political interests get in the way of doing "what really needs to be done" to improve things. You draw a sharp distinction between public goods and private goods, but in the real world the distinction isn't so sharp at all. Not only are there more or less independent state-owned enterprises and para-state organizations, but also, the implementation of many state functions are subcontracted to private enterprise, which may subcontract them further to other private enterprise. It may be analogous to selling a franchise (the right to operate a business or collect a levy) and need not require funding from tax money at all. Inversely, the state enterprise may formally be fully publicly owned but de facto operate just like any other profit-making business. Public and private functions can also be combined in the same organization, in innumerable different ways. I realise that the real economy and the financial economy, though analytically distinct, are one unit; I was among the first to point this out at the time of the GFC. But the point is that production is nowadays "dominated" by capital finance, as Jan Toporowski for example noted. This has a number of implications which are simply not well-theorized by Keynesian theory, because it fails to distinguish adequately between the economic effects of different subcategories of investment, saving and consumption. Keynes moreover did not live in a world where speculators are actively encouraged to speculate, and richly rewarded for their speculation even it involves shorting on an economic downturn. If you really think that the state knows better how to allocate capital that businesses do themselves (i.e. state capitalism), then workers self-management is also a pipedream. But as a matter of fact businesses are very aware of macro-effects. It is not that they invest according to private self-interest because they lack a macro vision, but because they lack any motive to pursue an interest other than private self-interest. Oddly, most of the chiefs of the government departments are people drawn from private enterprise! The point about Keynes's "euthanasia of the rentier" is that he wished ideally to "throw the money-changers out of the economy" because they did not belong there, and that he had a vision of the optimal allocation of scarce resources where interest income would be zero. Modern economics cannot even agree what an optimal allocation is any more. It is not just that the Greeny economists argued for zero growth or sustainable development, but that people cannot agree about what kind of growth is beneficial. The ideology is that the market provides what is best for all, and therefore any disagreement must be due to a misunderstanding of the market. Jurriaan _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
