A Marxist/Keynesian critique of Say's Law

Economics Economics Questions
141

so you think Say is saying that shoemakers production of shoes and consumption of shoes will be equal ? excluded

or that shoemakers production of shoes and consumption of bread and stuff (not shoes)will be equal? you are saying this one, in which case you are wrong, that combinatino of words is meaningless.

the shoemakers production of shoes is his MEANS to consuming bread and other stuff, its not EQUAL to anything other than his production of shoes. this is because A = A and “things that arent A” != A

142

Even if you don’t accept the AD=AS proposition (which i think it is and I demonstrated why in that post). The rest of the propositions are from Say. Half of them are word for word exact copies of Say. How could that possibly be a strawman? Do you want me to quote each individual parapgraph from Say that those porpositions come from?

I find it hard to understand that you criticism me for not directly citing Say and yet you cite from the same person a proposition which almost an extension of my first proposition. It doesn’t take any leap of faith to derive "an identitywhich points out how more production leads to more consumption" from “When someone demands something, they will produce a commodity.”.

Any ways I’m off to bed as I have work tomorrow. I’ll continue this discussion when I next get a chance, which could be in the next few days. Thank for the discussion nonetheless. Night.

143

i would be happy to play a game with you.

we can go straight to source. http://www.econlib.org/library/Say/sayT15.html#Bk.I,Ch.XV

read paragraph by paragraph. numbering as we go. you can give them pass or fail grades. if you think Say has made a mistake point it out by failing him on that paragraph. I will then see if this is due to a misunderstanding or wheter you are correct and Say is incorrect. and perhaps after all the paragraphs of that chapter have been assessed we will find out if you agree or disagree with Say, and more to the point we will see if you feel Steve Keen’s arguments to have any force, in light of our joint research… ?

I will be honest that I have not read Say in the original in this way previous, and that my understanding of the basic principle that is Say’s Law, that consumption is only possible due to prior production has come from other sources that used Say’s law (principle). I feel we should call Say’s conclusions about possibilities of market-wide gluts some other name, since the principle should be distinguishable from conclusions therefore derived.

144

You state when people engage in a M-C-M+ circuit then Says law doesn’t hold. Of course Say’s law doesn’t hold in that condition, M-C-M+ can only exist with violent coercion, an exception that Say himself noted. M-C-M+ doesn’t exist in a free market as a long lasting stable entity for two reason: Profit seeking entrepreneurs compete with each other and every producer is also a consumer. M-C-M+ is what every person is seeking, but cannot attain for long, its not a refutation of anything.

145

Goods are paid for with other goods. In a society with money, the money simply facilitiates the determining of exchange rates between goods.

JayJay, has already included a very appropriate Mills quote.

“It is, however, of the utmost importance to observe that excess of all commodities, in the only sense in which it is possible, means only a temporary fall in their value relatively to money. To suppose that the markets for all commodities could, in any other sense than this, be overstocked, involves the absurdity that commodities may fall in value relatively to themselves.”

146

mash,

Lots of good ideas in your post.

EDIT: Austrian theory doesn’t explicitly place specific emphasis upon “certainty” and “uncertainty”. However, analysis demonstrates clearly that “mainstream” Austrian theory, if you will, indeed takes full account of uncertainty. Shackle and Lachmann, as you are likely aware, believe otherwise. Several of the sources listed below discuss this issue in detail. END EDIT

On “certainty” and “uncertainty” in Austrian economics, I would be well out of my depth in directly addressing this issue. However, a little digging reveals what appear to be several excellent sources on the subject.

In no particular order:

“An Interview with G.L.S. Shackle”, The Austrian Economics Newsletter, Spring 1983

“Praxeology and Understanding: An Analysis of the Controversy in Austrian Economics”, George A. Selgin, 1990

Time, Uncertainty, and Disequilibrium: Exploration of Austrian Themes, Mario J. Rizzo (ed.), 1979

“Austrians and Post Keynesians: The Questions of Ignorance and Uncertainty”, Gregory M. Dempster, 1996

“On Certainty and Uncertainty, Or: How Rational Can Our Expectations Be?”, Hans-Hermann Hoppe, Review of Austrian Economics 10, no. 1 (1997): 49-78

Method, Process, and Austrian Economics, Israel M. Kirzner (ed.), 1982

Economic Science and the Austrian Method, Hans-Herman Hoppe, 1995

I would like to comment on some of your other concerns, but don’t immediately have the time.

147

I found this discussion… interesting. Wonder if the response will ever be forth coming?

[:)]

148

Damn. The behavior of discussants in this thread makes me ashamed to have any association with modern Austrian economics at all… what a wasted opportunity.

149

I disagree ?

150

No.

151

No to the fact that he disagrees? Anyway, wasted opportunity for what, pray tell?

152

What opportunity? Mr. Keen was never particularly forthcoming in discussion. The truth of the matter being, his critique of Say’s Law was flawed.

Last I checked, you were named AnarchomarxistLibertarian and you weren’t associated with modern Austrian economics at all.

153

I.XV.3

A man who applies his labour to the investing of objects with value by the creation of utility of some sort, can not expect such a value to be appreciated and paid for, unless where other men have the means of purchasing it. Now, of what do these means consist? Of other values of other products, likewise the fruits of industry, capital, and land. Which leads us to a conclusion that may at first sight appear paradoxical, namely, that it is production which opens a demand for products.

– But he can expect the objects of value to be taken by force, stolen, by those who want or need them badly enough. The wealth moves to those strongest groups militarily. The weaker groups are killed, die out, or are ‘farmed’ by the local elite. It is this basic human behaviour that manifests itself as different types of social structure such as police forces, dictatorships, bureacracies and so on.

The human animal seems to be driven by a fairly basic set of behaviours; eating, reproducing, caring for those of similar genetic makeup, signalling one’s ability to reproduce, eat and care - acquiring social status. The human animal goes about his day meeting those obligations according to all kinds of irrational ‘cognitive biases.’ In some cases he will kill and steal to get what he needs, and in others he will not. Out of this primordial soup of basic human instinct evolves a society: a hierarchical structure of monkeys, replete with police force, military and legal institutions that provide the basis for ‘markets’ to operate.

He talks about production opening a demand for products. The extent of this depends on the level of automation, and how much the employees are inclined to save of course. But the more basic truth is that production would not take place at all without some kind of protection of the production plant from attack and/or theft. So production first has to overcome the cost of police protection, or local gang protection, or to whomever the protection must be paid. In those basic situations the entrepeneur is either the police/military itself, driving others to production for its own ends, or it is a trusted ally of the military/police/gang leadership.

I.XV.5

Thus, to say that sales are dull, owing to the scarcity of money, is to mistake the means for the cause;

Of course, if those involved in production are the beneficiaries of production, then more production should benefit all… on the whole. But is the system stable? Will increasing production continue to increase, plateau or drop off till it stops? What role does money play? We all know, I am sure, the history of the Spanish, and how their gluttony for Silver shattered their economy, the understanding of which later gave rise to careful central banking.

People tend to invest for their future (even if misguidedly). Saving behaviour takes money out of the system. There is the overhead of a part of the population being involved in organisation and policing of the system (a necessary and emergent property of societies). On the whole, something needs to compensate for this to avoid systemic failure…

154

Can you explain to me how in response to my (1st) post on this site above, the following came to be in my email inbox?:

This is both offensive and abusive, not to mention an abuse of access to my email inbox by a moderator - which is supposed to be private. I had assumed that the Ludvig von Mises institute might have been able to offer something less puerile. This is my second and final post on this site.

My future recommendations to others will be to avoid the LvM website as it is little more than an AOL/IRC style mudslinging board. I would recommend that nigrahamUK have moderator status removed, and be banned from the site.

Re: A Marxist/Keynesian critique of Say’s Law
By nirgrahamUK in Economics Questions

FrankSz:
– But he can expect the objects of value to be taken by force, stolen, by those who want or need them badly enough. The wealth moves to those strongest groups militarily. The weaker groups are killed, die out, or are ‘farmed’ by the local elite. It is this basic human behaviour that manifests itself as different types of social structure such as police forces, dictatorships, bureacracies and so on.

Im sorry your parents and friends molest you so horribly.

poor fellow knows no peace…

155

it was a rhetorical device. you were reciting a lament on the UNIVERSALITY of human cruelty, of man against man as being an inescapable omnipresent feature. it made me feel sympathetic to you as someone who must never have felt kindness or existed in peace with someone voluntarily.

of course, i dont actually think you were mistreated. but you conveniently forgot the counter examples to your over-egged rant.

156

People who moan on and on about being horribly offended and avoiding LvMI need to grow a pair. Are you going to hide in a hole and pout for the rest of your life all because little things happen sometimes that you don’t like? Reminds me of when I was 6 years old.

157

What precisely came to be in your e-mail box?