Rakesh has brought in a note that amplifies the point Doug made, and I seconded, about the importance of credit allocation as well as credit volumes and transactions in [primary and secondary] markets. It matters greatly who gets access to capital when. This is one of the key insights, perhaps the central one, in Schumpeter's Theory of Economic Development. But the Schump doesn't trump JMK, simply by being first to note that new innovations require financing, and this has to come from transfers or surges within the lending circuits. That is because Schump doesn't see any problem in the functioning of the capital markets; indeed he calls the money market, "the engine room of capitalism" in a memorable phrase in TED. No concern about the possibility of a fire in the engine room, though -- perhaps one might note that he was taking his monetary model from the German / Austrian directed-investment system? Adding some confusion and noise from markets doesn't moot the Schumpeter in Keynes; it is a different tone. The GT is hard to assimilate in part because it has a lot more parts, and they are put together with many different styles, than the model in the Treatise. The GT is written in a sort of short-hand. So when Jim D finds just one sentence on point, _that-s the GT_. Easy to miss things; hard to know where to put the exclamation points. Would just add to Rajesh that one shouldn't get too dewy-eyed about the "technical change" part of Schumpeter's thesis. For JAS, almost any new combination qualifies -- ie, any new combination of factors of production. This seems very sensible indeed. But we shouldn't be imag- ining we'er failing if we don't find a way to have 20 new bio-tech industries every decade. To the contrary; finding sensible ways to bring production and service flows into places that lack these capacities now seems quite good work for us all. I've exceeded my list-limit here, so I'll check out of this thread unless there is something really pressing left to say. Thanks for the good conversation. Gary Dymski
