tag:blogger.com,1999:blog-6245381193993153721.post5556335270955295873..comments2024-03-28T17:08:15.784-07:00Comments on Social Democracy for the 21st Century: A Realist Alternative to the Modern Left: Vulgar Austrians do not Understand Austrian Price TheoryLord Keyneshttp://www.blogger.com/profile/06556863604205200159noreply@blogger.comBlogger24125tag:blogger.com,1999:blog-6245381193993153721.post-71448002605408050102013-11-20T00:02:18.233-08:002013-11-20T00:02:18.233-08:00Just remembered that you recently linked to a pape...Just remembered that you recently linked to a paper in the quantum economics / monetary emissions tradition yourself. And reviewed it quite favourably, too. <br /><br />http://socialdemocracy21stcentury.blogspot.ch/2013/05/review-of-keynesian-economics-on.html<br /><br />They deduce their version of Say's Law from macroeconomic accounting identities, starting with income = output (as an identity as opposed to an equilibrium condition). It's more of an analytical tool for developing an understanding of productive vs. non-productive (rentier) elements in an economy, as far as I've understood. Some of it's a bit strange to me, I admit, but other parts are quite brilliant, I find.Olivernoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-31025578390641434082013-11-15T08:27:38.486-08:002013-11-15T08:27:38.486-08:00Sorry, it wasn't directed at your post, but mo...Sorry, it wasn't directed at your post, but more at the discussion on Steve Keen above. Should have clarified. <br />Anyway, they consider themselves part of the Post Keynesian tradition. There's a good indtrodution in Sawyer / Arestis' 'A Handbook of Alternative Montary Economics' (which one can download from somewhere, I recall). The framework takes some getting used to, but in many ways their definitions are clearer and crisper than most others I've come across. In any case, it's not what one might think it is at first sight, coming from standard PK or even MMT.Olivernoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-51816829649457877542013-11-15T08:15:31.027-08:002013-11-15T08:15:31.027-08:00I am not sure how this comment is relevant to the ...I am not sure how this comment is relevant to the original post, but, anyway, I've not heard of "quantum economics" before, and the rest of the Wikipedia page does not inspire any confidence in it:<br /><br /><i>Léon Walras’s view of money as a purely numerical, adimensional object („Le mot franc est le nom d'une chose qui n'existe pas“[4])is another intuition espoused by quantum economists. They also revive Jean-Baptiste Say’s Law, although in a slightly different sense than usually retained.</i><br /><br />It looks like support some form of Say's law and the mistaken notion that money is a mere neutral numéraire.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-22529462125403532442013-11-15T08:02:56.434-08:002013-11-15T08:02:56.434-08:00From Wiki
The law of the identity between global ...From Wiki<br /><br /><b>The law of the identity between global demand and global supply</b><br /> <br />Since output finds its economic measure in the payment of wages and since income is initially formed by this same payment, quantum economists hold that global supply and demand are jointly determined as the two aspects of one and the same reality. They maintain that global or macroeconomic demand is defined, irrespective of economic agents’ behaviour, by the amount of income available within a given economy, and that global or macroeconomic supply is determined by the economic measure of produced output. Both terms of the equation D = S being measured by the same amount of wages, quantum economists conclude that their relationship is necessarily that of an identity and that the present economic disequilibria have to be explained starting from and consistently with this identity.Olivernoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-82948665255113120892013-11-10T09:54:55.501-08:002013-11-10T09:54:55.501-08:00Steve has another surprise up his sleeve for us, i...Steve has another surprise up his sleeve for us, if I can find the next article in this series. It would be #5 (I cited 3 and 4 above)<br /><br />Great. But I grit my teeth and gave it a go. And got the surprise that I’ll detail in the next post in this (ever-lenghtening!) series.Neil M Tokarnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-73953734148192627662013-11-09T21:18:38.085-08:002013-11-09T21:18:38.085-08:00"But it felt like it. Having spent four decad..."But it felt like it. Having spent four decades railing against Neoclassical thinking, it felt like a defeat to start from “let’s assume prices adjust to supply and demand”"<br /><br />LOL. If the shoe fits…...Edwardnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-87984160187837295132013-11-09T13:27:52.569-08:002013-11-09T13:27:52.569-08:00Lord Keynes,
I think it might be this article:
...Lord Keynes, <br /><br />I think it might be this article:<br /><br />http://debunkingeconomics.com/2013/06/is-capitalism-inherently-unstable-4/<br /><br />If I were Neoclassical, I would have shoved in a “marginal cost equals price” (Freshwater) or “marginal cost equals marginal revenue” (Saltwater) assumption here—both of which are empirically and logically false. As a Post Keynesian, I could have shoved in a markup pricing equation, but that felt like a fudge: I preferred to try deriving the pricing equation from model itself.<br /><br />Here I found myself in a bind. The one way I could do that was to argue that the price level would adjust under the pressure from the flow of monetary demand on one side, and the pressure of physical supply on the other. This isn’t the same as Neoclassical supply and demand—which wrongly assumes that the “supply curve” is given by (marginal) costs and the “demand curve” by (marginal) revenue, and it imagines that prices are set in either a timeless equilibrium (Freshwater) or a friction-delayed convergence to “marginal cost equals marginal revenue” (Saltwater).<br /><br />But it felt like it. Having spent four decades railing against Neoclassical thinking, it felt like a defeat to start from “let’s assume prices adjust to supply and demand”. <br />Neil M Tokarnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-65293606921180513282013-11-09T10:33:41.540-08:002013-11-09T10:33:41.540-08:00I hope he doesn't mean what he says here. Fina...I hope he doesn't mean what he says here. Financial markets are flexi-price market to only some extent. Can the economy be thought of as being based on the interaction of the "twin blades" at a macro-level? That would be the standard AS-AD model. That model is extremely problematic. I hope Keen is not going down that route...Philip Pilkingtonhttp://fixingtheeconomists.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-75400651786687189752013-11-09T10:27:58.824-08:002013-11-09T10:27:58.824-08:00If I find it, I'll let you know.If I find it, I'll let you know. Neil M Tokarnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-68526516293775537332013-11-09T10:17:56.758-08:002013-11-09T10:17:56.758-08:00I'm not sure what he means by that final remar...I'm not sure what he means by that final remark, but he says:<br /><br /><i>"That’s the opinion I held, until a crucial step in generalising my model of Minsky’s Financial Instability Hypothesis implied that, at a macro level, the two models are identical. I’ll get on to that – and the role of prices in economic instability – <b>in the next post in this series."</b></i><br /><br />Presumably the answer lies in the next post on that site. Unfortunately, I couldn't locate it in my quick look through the page.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-37482017041203128672013-11-09T10:00:16.321-08:002013-11-09T10:00:16.321-08:00Administered prices aren't "frictions&quo...Administered prices aren't "frictions", they're just how prices are set in many cases. Describing them as "frictions" assumes that neoclassical price theory is the correct underlying model, but that some things get in the way of it working smoothly, for a while. That's BS.Philippenoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-80935499501504040642013-11-09T09:48:51.096-08:002013-11-09T09:48:51.096-08:00Lord Keynes,
I was wondering what do you think o...Lord Keynes, <br /><br />I was wondering what do you think of Steve Keen's comment in his article, "Seductive Supermodels of Supply and Demand."<br /><br />He concludes at first that you are correct, that real world prices are set by cost mark up. <br /><br />But then he throws a curve ball at the end, but fails to explain what he means. So I was curious if you knew the answer? Do you have the "follow up" article that Keen's mentions, because I can't find it. <br /><br />Keen: "But it does seem to decide the case in favour of the classicals for the real world: prices must be set by a mark-up on costs, rather than by the ‘twin blades’ supply and demand."<br /><br />But then Keen adds: "That’s the opinion I held, until a crucial step in generalising my model of Minsky’s Financial Instability Hypothesis implied that, at a macro level, the two models are identical."<br /><br /> http://www.businessspectator.com.au/article/2013/5/20/economy/seductive-supermodels-supply-and-demand#comment-300661Neil M Tokarnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-10089684801942029752013-11-09T05:36:05.803-08:002013-11-09T05:36:05.803-08:00Of interest...
http://www.youtube.com/watch?v=-RR...Of interest...<br /><br />http://www.youtube.com/watch?v=-RRa0lkhy4E&feature=c4-overview&list=UUPSFjkA3jc_U2mdcSLb4bhQPhilip Pilkingtonhttp://fixingtheeconomists.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-41143513431390631892013-11-08T06:30:34.802-08:002013-11-08T06:30:34.802-08:00So 1920's. Not even wrong, just outdated.So 1920's. Not even wrong, just outdated.Anonymoushttps://www.blogger.com/profile/13978734648230292076noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-88908400672416696782013-11-08T03:47:30.591-08:002013-11-08T03:47:30.591-08:00Denial and sheer pigheaded ignorance, I would say!...Denial and sheer pigheaded ignorance, I would say!Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-39343657816419467512013-11-08T03:46:20.909-08:002013-11-08T03:46:20.909-08:00I did not mean to say that individuals do not matt...I did not mean to say that individuals do not matter in any sense. Of course their tastes, preferences and demand matter and are important for businesses. <br /><br />I said that one individual is unlikely to be able to change an administer price. You pay it or you can't have that good.<br />Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-58448593098018347312013-11-07T11:43:01.893-08:002013-11-07T11:43:01.893-08:00But an individual can affect the price at….
you gu... But an individual can affect the price at….<br />you guessed it, the MARGIN.<br /><br />Any way, massive sellers try and get as many customers as possible, individuals have many common preferences, and consumers as a GROUP have long run veto power over the decisions of these administered price producers, so whats the BFD? (big freaking deal) about administered prices versus prices set in a two-way auction? I find it odd that you spend so much time on this in your blog, given that even the most conservative neoclassical (i can't speak for the Austrians) will admit to administered prices and monopolistic imperfect competition. (The entire New Keynesians project is about adding real world frictions like these!)<br /><br />A question for you. If individuals don't matter, why have companies recently been trolling social media sites for opinions about their products.<br /><br />(By the way, no business will get very far if it has the psychological mindset that even one customer doesn't matter)Edwardnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-70776123035507568252013-11-07T11:01:58.297-08:002013-11-07T11:01:58.297-08:00LK,
it's obvious that those idiots over at Mu...LK,<br /><br />it's obvious that those idiots over at Murphy's blog are in a state of denial.<br /><br />Denial:<br /><br />"in psychiatry, a defense mechanism in which the existence of unpleasant internal or external realities is kept out of conscious awareness. By keeping the stressors out of consciousness, they are prevented from causing anxiety".<br /><br />"An unconscious defense mechanism characterized by refusal to acknowledge painful realities, thoughts, or feelings."<br /><br />"An unconscious defense mechanism used to allay anxiety by denying the existence of important conflicts."<br /><br />http://medical-dictionary.thefreedictionary.com/Denial+(psychology)Philippenoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-27426939221672969172013-11-07T09:36:48.688-08:002013-11-07T09:36:48.688-08:00But this isn't refuting anything about adminis...But this isn't refuting anything about administered prices. Yes, a consumer needs to think they will subjectively value a good to want to buy it. <br /><br />But that doesn't mean an individual can affect the price! Market power is firmly in the hands of the administered price producers: you take their price or you can't have the product.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-11087138662495030962013-11-07T09:28:52.475-08:002013-11-07T09:28:52.475-08:00Economics has a lot of short run long run dichotom...Economics has a lot of short run long run dichotomies.<br /><br />Far be it from me to defend the Austrians, whom i spend a great deal of time attacking, but here goes.<br /><br />I dont defend them in the short run. No one denies the central truth of how prices are set by a seller. This is not a two-way auction market like the financial markets. But if consumers won't buy, then the prices massive sellers set will have little meaning. First their inventories will pile up, then they will slash employment. If that doesn't work, they'll slash production. Finally, if THAT doesn't work they'll eventually as a last resort cut prices, to get rid of massive unsold inventory. (typically they'll have temporary sales, massive price cuts for a limited time ONLY!, what Keynes referenced in the General Theory as cutting prices in the present relative to the future, which he agrees will work in the absence of debt deflation)<br /><br />Sellers set prices through a central administrative cost plus mark up in the short run (BFD?) but they will make money in the long run only if consumers hit those pricesEdwardnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-42206767038340910262013-11-07T09:21:09.575-08:002013-11-07T09:21:09.575-08:00"but what I was highlighting is that Rothbard...<i>"but what I was highlighting is that Rothbard does not assume that this price is found instantly and at all times."</i><br /><br />And I never said he did. So at that point nothing substantive is left of your original criticisms.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-23355539993746023942013-11-07T08:57:52.901-08:002013-11-07T08:57:52.901-08:00I'm not claiming that Rothbard was a closet Po...I'm not claiming that Rothbard was a closet Post-Keynsian but just that his analysis is more subtle that the caricature that you present - even judged on the basis of your selective quotes.<br /><br />On "they are simply speculating on an imminent rise in market prices". Of course Rothbard's underlying assumption is of a market clearing price that needs to be found - but what I was highlighting is that Rothbard does not assume that this price is found instantly and at all times. Sometimes businesses will accumulate stock rather reducing prices.Rob Rawlingsnoreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-23455395565271879152013-11-07T08:20:03.516-08:002013-11-07T08:20:03.516-08:00(1) " Rothbard (2008) goes on to say "If...(1) <i>" Rothbard (2008) goes on to say "If businessmen choose to keep prices up, they are simply speculating on an imminent rise in market prices; they are, in short, voluntarily investing in inventory".</i><br /><br />Yes, indeed he does, but with respect to administered price firms, what Rothbard says there is still absurd. <br /><br />Why? Because the product prices of administered price firms are hardly going to be subject to an "imminent rise" for the very reason that they are ALREADY fixed by price administration. Rothbard is just assuming flexible prices fluctuating in response to demand and supply.<br /><br />(2) <i>"Isn't this close to what Post-Keynsians also believe albeit stated in rather different terms ? "</i><br /><br />Not at all. The firms that add goods to inventory are not "speculating on an imminent rise in market prices". They are cutting production and employment in response to demand falls and selling their product at the same price.<br /><br />(3) And, finally, Rothbard shows not the slightest understanding of administered prices.<br /><br />If you can point to a passage in his writings where he does so, then cite it.Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-6245381193993153721.post-21139553443000719392013-11-07T07:30:54.829-08:002013-11-07T07:30:54.829-08:00After the bit you highlight Rothbard (2008) goes o...After the bit you highlight Rothbard (2008) goes on to say "If businessmen choose to keep prices up, they are simply speculating on an imminent rise in market prices; they are, in short, voluntarily investing in inventory".<br /><br />Isn't this close to what Post-Keynsians also believe albeit stated in rather different terms ? Businesses targeting price+markup have a model where they will increase inventories rather that lower prices in the face of lower demand. I assume that Post-Keynesian do accept that if businesses did actually lower prices then the sales of physical goods would increase ? <br /><br /> Interestingly Rothbard appears to be making a point more subtle than just "lower prices will always clear the market" as he goes onto say "But won’t they then suffer losses? Of course, but now the discussion has shifted to a different plane" which implies he did understand some of the complexities of market-clearing prices and why businesses might have models that were not always flex-price.Rob Rawlingsnoreply@blogger.com