|
COG
|
Ownership Discussion |
|||||||||
| |
[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index] OWNERSHIP: Re: the theorem: SAY'S LAW
>> Do you disagree with the standard paraphrase? > > Yes. > --------------------- > ----------------------- > [REPLY] I asked a very simple question: Do you think > "supply creates its own demand" is an appropriate > statement of Say's Law. I happen to think that it > is. Almost everyone else thinks that it is. And I > happen to agree. Are you the exception? If you are, > then let's skip Say's Law, because that is the > proposition that A+B attempts to refute. "I do not think it is, for the reasons given. I do think Keynes misrepresented it. I suppose you can say I am the Galileo on this occasion. A+B supporters might just be fighting something it need not - all due to the mischievousness of that character Keynes?" --------------------- ----------------------- [REPLY] Tim, I don't see how you can read my excerpts together with your excerpts and come to any conclusion other than he is saying: supply creates its own demand. Forget Keynes. He was not the first to use the term. Several economists used it before him, including his mentor, Marshall. The first time I am aware that Keynes used the term was in his 1936 book. He may have used it in his published graduate lectures--I don't remember. Douglas had already argued against it - meaning the proposition that supply creates its own demand - for two decades. If you can't comprehend what Say said, from his own words, then there is no way in the world that you will comprehend the counter argument, which is at a higher level of complexity. And I am not in the least interested in debating what Say may have actually said or may not have actually said. The proposition I am interested in discussing is the proposition that supply creates its own demand. The question you should ask yourself, am I interested in discussing that proposition, or not? If not, then there's no point in discussing A+B. And you're not the Galileo in this, you're the guy who wants to argue how many angels can fit on the head of a pin. As to misrepresenting Say's Law, I should say you grossly misinterpret it. And furthermore, you don't even comprehend the point about Galileo. - "He [Say] is using observation in seeing how wealth occurs in towns vs country, poor areas vs rich, how a highly competitive area can still produce more wealth than one without competition." --------------------- ----------------------- [REPLY] He is doing more than merely observing, he is inferring cause and effect in the absence of evidence. The evidence before him is the testimony of the "adventurers" that he assumes away. - "It is unfair to say he is irrational or unscientific." --------------------- ----------------------- [REPLY] Not irrational, but avoiding the scientific method. The classical economists and their modern descendents are quite rational in that their arguments are structured axiomatically. It's just that they refuse to challenge their axioms, and will insert axioms ad hoc when needed to make their case. - > "Note how Say is clear that if consumption is not > able to absorb production it performs a downward > spiral into poverty - 'the value of the product is > less than the charges of its production'. Is this not > what is said by the A+B Theorem???" > --------------------- > ----------------------- > [REPLY] Well, the answer to the question is, No. Say > is placing the blame on consumers who do not purchase > enough. He is using the classical argument that the > reason they don't purchase enough is that they don't > put sufficient value on what is being produced. "I do not agree with this at all, Bill. If Say states this how come Keynes paraphrases Say to 'supply creates its own demand'???" --------------------- ----------------------- [REPLY] You understand neither what Keynes or Say is saying. Say is imposing a barter/neutral money model. The production of commodities creates their own demand in the form of different commodities in the hands of others in surplus to their needs. >From your excerpt: "And, vice versa, wherever, by reason of the blunders of the nation or its government, production is stationary, or does not keep pace with consumption, the demand gradually declines..." Is he not asserting here that demand declines if production declines? How does this address the "adventurers'" complaint that there was insufficient vent? They were telling him that they had the resources to produce a lot more than they were producing if there were more vent. If Say had been thinking in the manner of a scientist, he would have taken their complaint seriously, and considered the possibility that there was something about a monetary economy that made it act differently than the theoretically pure barter economy, instead of in the manner of the didactic, assuming the complaint away. He would have attempted to construct scenarios, or hypotheses, where supply might not create its own demand. One such scenario is A+B, from the heterodox perspective. There are others from the classical or "neo-classical" perspective, like Mises's theory of the trade-cycle. - > Money does move at a *finite* > velocity that is not an independent variable. How come? Not back to rivers again? --------------------- ----------------------- [REPLY] Tim, I'm not arguing the point, simply presenting the point. How can you understand the point if you don't understand classical economics, which is the counter argument to the point? That you don't understand classical economics is quite evident from your comments regarding Say. If you don't understand classical economics, how do you expect to understand marginalist economics, which is classical economics translated into Latin from the vernacular that you and I speak? You will certainly never understand the counterpoint to that. - > The quantity theory of money with its velocity factor > is simply fallacious. "I think Say accepts this anyhow when he mentions the fact that merchants will get around the limitations to allow transactions to continue, free from the bounds of coin. Still, money, in terms of account balances could now move faster even in Say's time if all it took was a scratch of a quill pen in two sets of ledgers..." --------------------- ----------------------- [REPLY] You're now paraphrasing the translator's interpretation, who is writing some sixty years after Say. And your paraphrase is in my opinion a misinterpretation of the translator's interpretation. The concept of velocity is subtle; you fail to understand even that. The quill pen is creating additional money contractually. The already existing balances are not moving faster. Money moves at a finite velocity because we know it moves. The "velocity" factor from the quantity theory equation is not a measure of how fast it moves. It certainly is not a measure of how fast the arbitrarily defined money in the quantity equation moves. It is simply based on the false assumption that the arbitrarily defined money is the only money, and that therefore, if the volume of transactions is increasing, the velocity of circulation of the arbitrarily defined money must be increasing. The further extension of this fallacious argument is that there cannot be a "shortage" of money because all that has to happen is for the "velocity of money" to increase! Say may well have mentioned the existence of creditary instruments like bills of trade, though I don't remember having seen it. It has been some time since I last opened his book. And I never actually read it completely. But certainly, he would have looked at them as being merely representations for intrinsic metal coin, as opposed to the creditary view that they represent new money. This is the complete sentence, to which both you and the 1880 translator refer: "Should the increase of traffic require more money to facilitate it, the want is easily supplied, and is a strong indication of prosperity a proof that a great abundance of values has been created, which it is wished to exchange for other values. In such cases, merchants know well enough how to find substitutes for the product serving as the medium of exchange or money: [translator's note] and money itself soon pours in, for this reason, that all produce naturally gravitates to that place where it is most in demand." Now let's go through this, clause by clause: "Should the increase of traffic require more money to facilitate it, the want is easily supplied..." But the "adventurers," the practical businessmen, are telling him that from their own experience it's NOT easily supplied! That is the actual evidence in front of him, which he counters with a purely theoretical argument, in effect telling them they don't know what they are talking about. "...and is a strong indication of prosperity a proof that a great abundance of values has been created, which it is wished to exchange for other values." He is here saying that the want of money that is easily supplied is a proof that a great abundance of "values" have been created. This argument is not only based on a false premise, it's circular--a type of post hoc ergo prompter hoc fallacy. "In such cases, merchants know well enough how to find substitutes for the product serving as the medium of exchange or money...[which] soon pours in." But, again, the "adventurers" have already told him they DON'T know "well enough." The 1880 translator's term here is "substitutes." The translation I'm familiar with is from much earlier. I'll have to check that translation at the library, and also consult the original in French, which I can read with great difficulty with the aid of a dictionary. If "substitute" is an appropriate translation, I am quite certain it would be in "substitute" for "money," which subsequently "pours in." More post hoc, ergo prompter hoc. At any rate, the ability of merchants to craft promissory notes to their suppliers is something quite different conceptually than the vent they require from their customers, who are ultimately the consuming public. - I would like to go one or two rounds more with this before moving to the next step in the extrapolation, which will consider double entry accounting. I will await your reply before posting a closing response. - __________________________________________________ Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com To subscribe to this or another of COG's discussion groups register at: http://cog.kent.edu/register.html To unsubscribe from this group send a message to majordomo@cog.kent.edu with a single line in the body of the message that says: unsubscribe ownership
|