Jurriaan Bendien wrote: > 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.
Jurriaan, you've switched from talking about "aggregate demand" to " the Keynesian equations about the relationship between investment, consumption and income." I don't know which equations you're talking about. Is it perhaps the consumption function that Keynesian folks such as Joan Robinson and Nicholas Kaldor used? This is consumer purchases = C = cw*W = cr*R where cw = the marginal propensity to consume out of wage income (W), which approximately equals 1 and cr = the marginal propensity to consume out of property income (R), where cr is significantly lower than cw (but not negative). In any event, there's a lot of empirical work on consumer spending that suggests various Keynesian consumption functions fit the data "pretty well" (i.e., suffer from random error but not extreme amounts). Since there are no theories which fit empirical reality exactly, the fact that these theories do not fit it exactly is not a mark of shame. Rather, it's a matter of which model fits the data _best_. > 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. ... 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. _Of course_ the purchase of intermediate inputs or the market for them exists. No-one said anything different! Among other things, that's why economics students learn about input-output analysis. > 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". Even a superficial knowledge of macroeconomics indicates the US imports of oil products have never been described as part of US aggregate expenditure (except perhaps in some oversimplified models). By definition, total expenditure on US production equals (consumer expenditure) + (private domestic investment expenditure) + (government purchases) + US exports _minus_ US imports. And then, no economist has ever said that the role of US imports (of any sort) is irrelevant to either the US or to the rest of the world. Keynesian economics doesn't talk about imperialism and its wars, but that's because, like most theories, it's not designed to talk about all topics. Keynesian economics also doesn't talk about racism, sexism, or heterosexism. It really says nothing about either Dada or Surrealism, either. > Marxists and Keynesians may take a very benign [!!] view of regulation, > because > in their eyes the state can do no wrong. That's BS, Jurriaan. Marxists have never said that the _capitalist_ state (i.e., the one we live under) "can do no wrong." Some benighted Marxists have mistakenly seen the states they define as "socialist" as "benign," but that's different from talking about "the" state as some sort of historically transcendent entity the way you do here. The > big bogey [of these unnamed miscreants] is neoliberalism, > and state interventionism is the answer.... It's VERY easy to set up a straw man (unnamed "Marxists" and "Keynesians") who are statists and then knock it down. Crucially, not everyone thinks in either/or (black/white) terms. It's not all a matter of "two legs bad, four legs good," where just because someone thinks that because neoliberalism is horrible that means that statist capitalism (e.g., social democracy, New Deal liberalism, Japan, Mussolini's Italy, or Nazi Germany, going from left to right) is a good thing. I'm sure that there are _some_ people who think this way, but it's not everyone. Elementary Marxist analysis tells us that the capitalist state (whether it's neoliberal or statist in orientation) is always in league with the capitalist class -- unless there is mass mobilization of workers and other "out" groups to counteract that alliance. > You draw a sharp distinction between public goods and private goods, but in > the real world the distinction isn't so sharp at all. I _never_ made such a "sharp distinction." In order to make _any_ distinction between concept X and concept Y, it's necessary to initially ignore the real-world "shades of gray." In fact, if we don't abstract from shades of gray, it's impossible to tell what they are "intermediate cases" between. > 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. This is really irritating. I hate being told about stuff I already know (based on the assumption, it seems, that I am an ignoramus). In any case, to economists "public" and "private" goods (and the intermediate cases between them, of course) refer to the type of "goods," not to the way in which they are provided. > I realise that the real economy and the financial economy, though > analytically distinct, are one unit; ... 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. In what way? please be specific. > 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. This world didn't exist in 1929? > If you really think that the state knows better how to allocate capital that > businesses do themselves (i.e. state capitalism), I do NOT think that "the state knows better how to allocate capital [than] businesses do themselves." You clearly did not read what I said. >... 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. Of course: business invest according to private self-interest because that's what they're set up to do. I never said anything different. >Oddly, most > of the chiefs of the government departments are people drawn from private > enterprise! That's a total _non sequitur_. > 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... Let's agree to disagree on that one. I think arguments about what dead people "really" believed are sterile. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
