Comment on Peter May on ‘A communist manifesto for money?’
Blog-Reference and Blog-Reference and Blog-Reference
Peter May recaps: “Marx is saying that money ― a monetary production economy ― is the basis for capitalism since capitalists use money to produce goods for sale for more money ― investment is for return, that is, profit. The profit comes from the wage being less than the market price of commodities produced by wage labor. The end-in-view is not to provide a rationale for abolishing money but rather for terminating the extraction of economic rent in the form of ‘surplus value,’ profit accruing from unpaid labor time.”
Marx’s definition of profit is ultimately based on the Labour Theory of Value which does not relate to the economy as a whole.#1 But Marx applied also macroeconomic reasoning: “How can they continually draw 600 p. st. out of circulation, when they continually throw only 500 p. st. into it? From nothing comes nothing. The capitalist class as a whole cannot draw out of circulation what was not previously in it.”
This, indeed, is the crux of Profit Theory. To come to the point, Marx got the answer wrong.#2 Here is the short proof.#3
(i) The objectively given and most elementary systemic configuration of the economy consists of the household and the business sector which in turn consists initially of one giant fully integrated firm.
(ii) The elementary production-consumption economy is defined by three macroeconomic axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
(iii) The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e. X=O.
(iv) The monetary profit of the business sector is defined as Q≡C−Yw,
(v) The monetary saving of the household sector is defined as S≡Yw−C.
(vi) Ergo Q+S=0 or Q=−S.
The balances add up to zero. The counterpart of household sector saving S is business sector loss −Q. The counterpart of household sector dissaving -S is business sector profit Q.
For a start, the household sector’s budget is balanced, i.e. C=Yw. From this follows that macroeconomic profit is zero. The market clearing price is given by P=W/R and from this follows W/P=R, i.e. the real wage is equal to the productivity. The workers get the whole product.
Now, the owner of the single macroeconomics firm can do what he wants, i.e. lengthen the labor time or cut wages, nothing happens to profit and the real wage.#4 In Marx’s impeccable logic: “From nothing comes nothing. The capitalist class cannot draw more out of circulation than they throw into it.” They throw Yw in and get C out and because of C=Yw macroeconomic profit is zero.
The business sector can only get more out of the circulation if the household sector throws more in, that is, if the household sector deficit-spends/dissaves. This is what the most elementary version of the Profit Law says, i.e. Q=−S. The logical minimum condition of deficit spending is a banking system that lends money to the households.
So, profit does NOT come from exploitation but, in the most elementary case, from the growth of the household sector’s debt. And this, in turn, means that Capitalism does not end with a revolution of the exploited workers but as soon as the growth of private and public debt ends.#5
Egmont Kakarot-Handtke
#1 Basics of Value Theory
#2 Profit for Marxists
#3 Profit Theory in less than 5 minutes
#4 Capitalism, poverty, exploitation, and cross-over exploitation
#5 MMTers make capitalism work
Related 'Karl Marx, fake scientist' and 'MMT and Marxism ― blather as immunizing stratagem' and 'Marx’s bicentennial ― nothing to discuss, nothing to celebrate' and 'Here is the long overdue scientific death certificate for Marx and Marxists' and 'Marx and the curious coexistence of provably false economic theories' and 'Confounding sociology and economics' and 'Marxism is one of four instances of Derponomics'.
February 20, 2019
February 18, 2019
Misrepresenting MMT
Comment on Dirk Ehnts on ‘The Economist misrepresents MMT’
Blog-Reference and Blog-Reference
Dirk Ehnts complains about The Economist: “I am not happy with the reporting, which includes false statements in general and also misrepresentations of what MMT is.” and then continues: “In my own book on ‘Modern Monetary Theory and European Macroeconomics’, which was published by Routledge in 2017, I discuss the balance sheet approach to macroeconomics that MMT truly is.”
On page 151 under the heading Sectoral balances one reads (Sp−I)+(T−G)+(IM−EX)=0. This sectoral balances equation is false because it lacks the most important balance of the market economy, i.e. the profit of the business sector.#1, #2, #3
The false MMT balances equation can be traced back to Keynes. Keynes NEVER understood the foundational magnitude of economics, i.e. profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
The correct balances equation reads (S−I)+(T−G)+(IM−EX)−(Yd−Q)=0 with Q as monetary profit and Yd as distributed profit income.
Neither Post-Keynesians nor Anti-Keynesians nor MMTers, though, have realized/rectified Keynes’ foundational blunder to this day.#4 Economists are simply too stupid for the elementary mathematics that underlies macroeconomics.
In his self-delusion, Dirk Ehnts cites John Maynard Keynes approvingly: “I give you the toast of the Royal Economic Society, of economics and economists, who are the trustees not of civilization, but of the possibility of civilization”.
This contrasts with historical reality as summarized by Napoleon: “Late in life … he claimed that he had always believed that if an empire were made of granite the ideas of economists if listened to, would suffice to reduce it to dust.” (Viner)
In their utter scientific incompetence, economists are the demolition men of civilization.#5
Egmont Kakarot-Handtke
#1 Rectification of MMT macro accounting
#2 Wikipedia and the promotion of economists’ idiotism (II)
#3 MMT and the magical profit disappearance
#4 Keynesians ― terminally stupid or worse?
#5 Econogenics in action
Related 'Free the academy from economics' and 'Trust in economics as a science?' and 'MMT: The fusion of Wall Street and Academia' and 'MMT: A free lunch for the Oligarchy'. For the full-spectrum refutation of MMT see cross-references MMT.
Blog-Reference and Blog-Reference
Dirk Ehnts complains about The Economist: “I am not happy with the reporting, which includes false statements in general and also misrepresentations of what MMT is.” and then continues: “In my own book on ‘Modern Monetary Theory and European Macroeconomics’, which was published by Routledge in 2017, I discuss the balance sheet approach to macroeconomics that MMT truly is.”
On page 151 under the heading Sectoral balances one reads (Sp−I)+(T−G)+(IM−EX)=0. This sectoral balances equation is false because it lacks the most important balance of the market economy, i.e. the profit of the business sector.#1, #2, #3
The false MMT balances equation can be traced back to Keynes. Keynes NEVER understood the foundational magnitude of economics, i.e. profit: “His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
The correct balances equation reads (S−I)+(T−G)+(IM−EX)−(Yd−Q)=0 with Q as monetary profit and Yd as distributed profit income.
Neither Post-Keynesians nor Anti-Keynesians nor MMTers, though, have realized/rectified Keynes’ foundational blunder to this day.#4 Economists are simply too stupid for the elementary mathematics that underlies macroeconomics.
In his self-delusion, Dirk Ehnts cites John Maynard Keynes approvingly: “I give you the toast of the Royal Economic Society, of economics and economists, who are the trustees not of civilization, but of the possibility of civilization”.
This contrasts with historical reality as summarized by Napoleon: “Late in life … he claimed that he had always believed that if an empire were made of granite the ideas of economists if listened to, would suffice to reduce it to dust.” (Viner)
In their utter scientific incompetence, economists are the demolition men of civilization.#5
Egmont Kakarot-Handtke
#1 Rectification of MMT macro accounting
#2 Wikipedia and the promotion of economists’ idiotism (II)
#3 MMT and the magical profit disappearance
#4 Keynesians ― terminally stupid or worse?
#5 Econogenics in action
Related 'Free the academy from economics' and 'Trust in economics as a science?' and 'MMT: The fusion of Wall Street and Academia' and 'MMT: A free lunch for the Oligarchy'. For the full-spectrum refutation of MMT see cross-references MMT.
Some nasty MMT surprises behind the time horizon
Comment on Eric Tymoigne on ‘“What You Need To Know About The $22 Trillion National Debt”: The Alternative Interview’*
Blog-Reference and Blog-Reference
To the question, how are you going to pay for it? MMTers have a simple answer: deficit-spending/money creation.
To the question, how are you going to repay the public debt? MMTers have a simple answer: “In terms of tax rates, the public debt will never be repaid. We have not been burdened with higher tax rates to repay the public debt created at the time of our grandparents; our children and grandchildren won’t be burdened by higher tax rates to repay the public debt created today. We may raise tax rates in the future but not with the goal of repaying the public debt. There is no reason to do so, and doing so would be harmful to the finances of households, banks, firms and other for the reasons I just provided. The public debt will keep piling up to accommodate the needs of our growing economy and the US government will keep paying it on time. The US government does not, has never, and ought not to, manage the public debt in the same way you and I manage our private debts.”
MMTers simply shove the answer beyond the time horizon. The public-debt rabbit is put into the cylinder and then is gone out of sight. Everybody is well aware that this is a trick. The question is how does it work?
The process goes schematically as follows:#1, #2
(i) The initial economic configuration is the elementary production-consumption economy. The initial state is characterized by budget-balancing of the household sector C=Yw, i.e. consumption expenditures C are equal to wage income Yw, and zero profit of the business sector Q=C−Yw=0.
(ii) The government deficit spends. Deficit D is defined as public spending G minus taxes T, i.e. D=G−T. T is set to 0. Deficit spending on current production causes a one-off price hike (NO inflation) and the business sector ends up with macroeconomic profit Q=G.
(iii) The business sector fully distributes profit. The distributed profit Yd goes to the Oligarchy and takes initially the form of deposits at the central bank. The CB’s balance sheet shows government overdrafts on the asset side and the Oligarchy’s deposits on the liability side. Both sides are equal to the penny.
(iv) The government normally consolidates overdrafts by selling interest-bearing bonds. The bonds are bought by the Oligarchy and paid for with the deposits. The CB’s balance sheet shrinks again. The Oligarchy’s portfolio consists of bonds and money = deposits at the CB.
(v) Here, we ignore step (iv) and assume that zero-interest deposits/overdrafts are simply accumulated. Suffice it to note that interest on public debt has redistributive effects.
(vi) Steps (i) to (iii) are repeated for an indefinite time. Accordingly, public debt in the form of overdrafts grows. On the other side of the CB’s balance sheet, the Oligarchy’s deposits grow in lockstep.
(vii) As a matter of pure logic, this process can go on to infinity. Thus far, MMTers are right.
(viii) The concept of debt, though, logically entails repayment in finite time. So, in some period t the question arises how to reverse the process of debt build-up. Simple answer: the stock of deposits is revalued to zero uno actu with the government’s debt. Subsequently, things go on with a new currency.
(ix) Step (viii) is a bad surprise for the Oligarchy’s grandchildren. The alternative is taxing away the deposits. In this case, there is tax T but no government spending G, i.e. a budget surplus, and both sides of the CB’s balance sheet go to zero.
(x) Step (ix) is also a bad surprise for the Oligarchy’s grandchildren. So, let us tax WeThePeople instead. Accordingly, consumption expenditures are reduced to C=Yw−T. Government spending G is zero, so there is a budget surplus and the government’s overdrafts are reduced. However, the business sector now makes a loss Q=−T and its overdrafts increase by the same amount. On the CB’s balance sheet only the composition of overdrafts on the asset side changes.
(xi) The logical end of (x) is a complete replacement of public debt by business sector’s debt. However, before this happens the economy breaks down because of the continuous losses of the business sector. Step (x) is a bad surprise for ALL grandchildren.
MMTers tell everyone that all is fine for “our” grandchildren because, after all, they owe the public debt to themselves. True, all is fine for someone who falls from a skyscraper until they pass the first floor.
MMTers are fraudsters. They deceive WeThePeople first about the profit-effect of deficit-spending/money-creation#3, then about the redistributive effect of interest on public debt, and finally about the nasty surprises behind the time horizon. The rest of economists either understands nothing or is complicit.#4
Egmont Kakarot-Handtke
* New Economic Perspectives
#1 The new macroeconomic paradigm
#2 From MMT misunderstandings to the true Theory of Money
#3 Why the MMT benefactors of humanity never talk about profit
#4 There is NO such thing as “smart, honest, honorable economists”
Blog-Reference and Blog-Reference
To the question, how are you going to pay for it? MMTers have a simple answer: deficit-spending/money creation.
To the question, how are you going to repay the public debt? MMTers have a simple answer: “In terms of tax rates, the public debt will never be repaid. We have not been burdened with higher tax rates to repay the public debt created at the time of our grandparents; our children and grandchildren won’t be burdened by higher tax rates to repay the public debt created today. We may raise tax rates in the future but not with the goal of repaying the public debt. There is no reason to do so, and doing so would be harmful to the finances of households, banks, firms and other for the reasons I just provided. The public debt will keep piling up to accommodate the needs of our growing economy and the US government will keep paying it on time. The US government does not, has never, and ought not to, manage the public debt in the same way you and I manage our private debts.”
MMTers simply shove the answer beyond the time horizon. The public-debt rabbit is put into the cylinder and then is gone out of sight. Everybody is well aware that this is a trick. The question is how does it work?
The process goes schematically as follows:#1, #2
(i) The initial economic configuration is the elementary production-consumption economy. The initial state is characterized by budget-balancing of the household sector C=Yw, i.e. consumption expenditures C are equal to wage income Yw, and zero profit of the business sector Q=C−Yw=0.
(ii) The government deficit spends. Deficit D is defined as public spending G minus taxes T, i.e. D=G−T. T is set to 0. Deficit spending on current production causes a one-off price hike (NO inflation) and the business sector ends up with macroeconomic profit Q=G.
(iii) The business sector fully distributes profit. The distributed profit Yd goes to the Oligarchy and takes initially the form of deposits at the central bank. The CB’s balance sheet shows government overdrafts on the asset side and the Oligarchy’s deposits on the liability side. Both sides are equal to the penny.
(iv) The government normally consolidates overdrafts by selling interest-bearing bonds. The bonds are bought by the Oligarchy and paid for with the deposits. The CB’s balance sheet shrinks again. The Oligarchy’s portfolio consists of bonds and money = deposits at the CB.
(v) Here, we ignore step (iv) and assume that zero-interest deposits/overdrafts are simply accumulated. Suffice it to note that interest on public debt has redistributive effects.
(vi) Steps (i) to (iii) are repeated for an indefinite time. Accordingly, public debt in the form of overdrafts grows. On the other side of the CB’s balance sheet, the Oligarchy’s deposits grow in lockstep.
(vii) As a matter of pure logic, this process can go on to infinity. Thus far, MMTers are right.
(viii) The concept of debt, though, logically entails repayment in finite time. So, in some period t the question arises how to reverse the process of debt build-up. Simple answer: the stock of deposits is revalued to zero uno actu with the government’s debt. Subsequently, things go on with a new currency.
(ix) Step (viii) is a bad surprise for the Oligarchy’s grandchildren. The alternative is taxing away the deposits. In this case, there is tax T but no government spending G, i.e. a budget surplus, and both sides of the CB’s balance sheet go to zero.
(x) Step (ix) is also a bad surprise for the Oligarchy’s grandchildren. So, let us tax WeThePeople instead. Accordingly, consumption expenditures are reduced to C=Yw−T. Government spending G is zero, so there is a budget surplus and the government’s overdrafts are reduced. However, the business sector now makes a loss Q=−T and its overdrafts increase by the same amount. On the CB’s balance sheet only the composition of overdrafts on the asset side changes.
(xi) The logical end of (x) is a complete replacement of public debt by business sector’s debt. However, before this happens the economy breaks down because of the continuous losses of the business sector. Step (x) is a bad surprise for ALL grandchildren.
MMTers tell everyone that all is fine for “our” grandchildren because, after all, they owe the public debt to themselves. True, all is fine for someone who falls from a skyscraper until they pass the first floor.
MMTers are fraudsters. They deceive WeThePeople first about the profit-effect of deficit-spending/money-creation#3, then about the redistributive effect of interest on public debt, and finally about the nasty surprises behind the time horizon. The rest of economists either understands nothing or is complicit.#4
Egmont Kakarot-Handtke
* New Economic Perspectives
#1 The new macroeconomic paradigm
#2 From MMT misunderstandings to the true Theory of Money
#3 Why the MMT benefactors of humanity never talk about profit
#4 There is NO such thing as “smart, honest, honorable economists”
February 17, 2019
Still beyond the reach of economists: The Holy Grail of Science
Comment on Lars Syll on ‘The vain search for The Holy Grail of Science’
Blog-Reference and Blog-Reference
Forget the Holy Grail of Science, economists are too stupid for the elementary mathematics that underlies macroeconomics.
“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)
Economists lack the true theory to this day. Take Keynes as an example.
“Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Keynes, like his academic colleagues, NEVER understood what profit is and thus ended with I=S ― one of the worst blunders in the history of modern science. After-Keynesians, though, have NOT realized anything in the last 80+ years.#1, #2
Just for the record: the axiomatically correct macroeconomic relations are given by Q=−S for the elementary production-consumption economy and Q=I−S for the elementary investment economy with Q business sector’s monetary profit, S household sector’s monetary saving, business sector’s I investment expenditures. From this follows that all I=S/IS-LM models and their derivatives are scientifically worthless.
Economists are still in the proto-scientific gutter#3 with the Holy Grail of Science, i.e. material/formal consistency, far beyond their reach. However, from the fact that neither orthodox nor heterodox economists could reach the Grail does not follow that it does not exist. It follows only that economists are scientifically incompetent.
Egmont Kakarot-Handtke
#1 How Keynes got macro wrong and Allais got it right
#2 Krugman vs MMT ― like the blind talking about colors
#3 Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems
Related 'Krugman vs MMT ― like the blind talking about colors' and 'MMT and the single most stupid physicist'.
REPLY to Robert Locke, Frank Salter on Feb 19
Short proof that you, like Lars Syll and the rest of Heterodoxy, are too stupid to put 2 and 2 together.
(i) The elementary production-consumption economy is given by three macroeconomic axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
(ii) The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e. X=O.
(iii) The monetary profit of the business sector is defined as Q≡C−Yw,
(iv) The monetary saving of the household sector is defined as S≡Yw−C.
(v) Ergo Q+S=0 or Q=−S.
The balances add up to zero. The counterpart of household sector saving S is business sector loss −Q. The counterpart of household sector dissaving -S is business sector profit Q. Both Q and S are measurable with the precision of two decimal places.
From (v) follows that saving is NEVER equal to investment, that is, Keynes’ I=S is false.#1 By consequence, the rest of Keynesianism, Post-Keynesianism, New Keynesianism etcetera is false.
End of proof.
You, like Lars Syll and the rest of Heterodoxy, are too stupid for the elementary mathematics that underlies macroeconomics. This is why the Holy Grail of Science is forever beyond your reach.
#1 “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63). The blunder is in the premise Income = value of output. Loss/profit is NOT income.
Blog-Reference and Blog-Reference
Forget the Holy Grail of Science, economists are too stupid for the elementary mathematics that underlies macroeconomics.
“In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)
Economists lack the true theory to this day. Take Keynes as an example.
“Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63)
“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Keynes, like his academic colleagues, NEVER understood what profit is and thus ended with I=S ― one of the worst blunders in the history of modern science. After-Keynesians, though, have NOT realized anything in the last 80+ years.#1, #2
Just for the record: the axiomatically correct macroeconomic relations are given by Q=−S for the elementary production-consumption economy and Q=I−S for the elementary investment economy with Q business sector’s monetary profit, S household sector’s monetary saving, business sector’s I investment expenditures. From this follows that all I=S/IS-LM models and their derivatives are scientifically worthless.
Economists are still in the proto-scientific gutter#3 with the Holy Grail of Science, i.e. material/formal consistency, far beyond their reach. However, from the fact that neither orthodox nor heterodox economists could reach the Grail does not follow that it does not exist. It follows only that economists are scientifically incompetent.
Egmont Kakarot-Handtke
#1 How Keynes got macro wrong and Allais got it right
#2 Krugman vs MMT ― like the blind talking about colors
#3 Opinion, conversation, interpretation, blather: the economist’s major immunizing stratagems
Related 'Krugman vs MMT ― like the blind talking about colors' and 'MMT and the single most stupid physicist'.
***
Short proof that you, like Lars Syll and the rest of Heterodoxy, are too stupid to put 2 and 2 together.
(i) The elementary production-consumption economy is given by three macroeconomic axioms: (A1) Yw=WL wage income Yw is equal to wage rate W times working hours. L, (A2) O=RL output O is equal to productivity R times working hours L, (A3) C=PX consumption expenditure C is equal to price P times quantity bought/sold X.
(ii) The focus is here on the nominal/monetary balances. For the time being, real balances are excluded, i.e. X=O.
(iii) The monetary profit of the business sector is defined as Q≡C−Yw,
(iv) The monetary saving of the household sector is defined as S≡Yw−C.
(v) Ergo Q+S=0 or Q=−S.
The balances add up to zero. The counterpart of household sector saving S is business sector loss −Q. The counterpart of household sector dissaving -S is business sector profit Q. Both Q and S are measurable with the precision of two decimal places.
From (v) follows that saving is NEVER equal to investment, that is, Keynes’ I=S is false.#1 By consequence, the rest of Keynesianism, Post-Keynesianism, New Keynesianism etcetera is false.
End of proof.
You, like Lars Syll and the rest of Heterodoxy, are too stupid for the elementary mathematics that underlies macroeconomics. This is why the Holy Grail of Science is forever beyond your reach.
#1 “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (GT, p. 63). The blunder is in the premise Income = value of output. Loss/profit is NOT income.
February 15, 2019
Who is really a scientist?
Comment on Barkley Rosser on ‘Who Is Really A Socialist?’
Blog-Reference
Forget the whole Capitalism/Socialism thing. Neither left-wing nor right-wing economists know how the economy works.
Because economists have to this day NO scientifically valid Profit-, Money-, Distribution- or Employment Theory, economic policy guidance from left-wing to right-wing has NEVER been more than brain dead agenda pushing.
Economics is a failed science. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/ formally inconsistent, and all got the foundational concept of the subject matter ― profit ― wrong.
As a result, since Adam Smith/Karl Marx economic policy guidance NEVER had sound scientific foundations.#1 This, of course, holds also for Marxism and its derivatives.
Marxians are scientifically incompetent just like non-Marxians and all together are only employable as clowns and useful idiots in the political Circus Maximus.
Forget the whole Capitalism/Socialism thing. Economists’ contributions to the development of the Good Society were just as helpful as those of Flat-Earthers.#6 All real progress in the last 200+ years has come from real scientists, not from political soapbox blatherers.
Egmont Kakarot-Handtke
#1 Karl Marx, fake scientist
#2 Profit for Marxists
#3 Capitalism, poverty, exploitation, and cross-over exploitation
#4 If we only had classes
#5 Economists simply don’t get it
#6 Econogenics in action
The so-called Russian Revolution was neither Russian nor a Revolution. It was a quite ordinary coup d’état engineered by foreign powers. It is well known that Lenin was sent with some starting capital in a sealed train from Zurich to Sweden/Russia courtesy of the Generalstab. The plan worked fine until the Peace of Brest-Litovsk.#1
All this had NOTHING AT ALL to do with Marx’s economic theory. This theory is proto-scientific garbage. However, it provides a justification for taking over the “commanding heights” of the state. Clearly, Marxism was used by Lenin as a pretext much like religion was used in the old days as a pretext for conquest.
Since Smith/Marx, the whole Capitalism/Socialism debate has NOTHING to do with science, that is, with the materially/formally consistent theory about how the economy works, but with brain dead agenda pushing.
So, your question Who is really a Socialist? has as much economic/scientific content as Who murdered Mr. Khashoggi?
#1 "The Treaty of Brest-Litovsk was a peace treaty signed on March 3, 1918 between the new Bolshevik government of Russia and the Central Powers (German Empire, Austria-Hungary, Bulgaria, and the Ottoman Empire), that ended Russia’s participation in World War I.” (Wikipedia)
You say: “… most economists think it is a big deal whether or not an economy is run as a command socialist system or a market capitalist system. They tend to behave very differently in well known ways.”
Capitalism and Socialism are (i) political belief systems (ii) economic theories. As political belief systems, they are on the same level with religious belief systems, that is, they are literary fabrications and storytelling or, as Marx called it, ideologies. The subject matter of ideologies are NONENTITIES (God, paradise, classes, world spirit, etcetera) but despite the fact that ideologies have no reality content, they are a big deal for most people.
Ideologies are the subject matter of Psychology, Sociology, Political Science, History etcetera. The well-known problem with History is that it is for the greater part literary fiction.
Economics, on the other hand, is a system science and deals with how the actual economy works. Science materializes itself as true theory, with truth well-defined as material and formal consistency. Theory is different from storytelling. Theory has ninety-nine percent reality content, storytelling one percent.
Capitalism and Socialism are allegedly underpinned by true theory. This, though, is a bad joke. General Equilibrium Theory and Marxianism is proto-scientific garbage. So Capitalism and Socialism are ultimately vacuous belief systems.
The fact of the matter is that the monetary economy can be described by economic laws, the Profit Law for example. It is given as Q=Yd+(X−M)+(G−T)+(I−S) and it holds for the USA, for Russia, and China and it is absolutely independent of the ownership of the firms or from the self-identification as capitalistic or socialistic, or from the agenda pushers that occupy the political commanding heights.
For the past 200+ years, economists were so much occupied with political propaganda and agenda pushing that they had no time for genuine scientific work. This is why Walrasianism, Keynesianism, Marxianism, Austrianism are mutually contradictory, axiomatically false, and materially/formally inconsistent. Economics is a failed science, economists are not scientists but storytellers and useful political idiots.
Blog-Reference
Forget the whole Capitalism/Socialism thing. Neither left-wing nor right-wing economists know how the economy works.
Because economists have to this day NO scientifically valid Profit-, Money-, Distribution- or Employment Theory, economic policy guidance from left-wing to right-wing has NEVER been more than brain dead agenda pushing.
Economics is a failed science. The four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― are mutually contradictory, axiomatically false, materially/ formally inconsistent, and all got the foundational concept of the subject matter ― profit ― wrong.
As a result, since Adam Smith/Karl Marx economic policy guidance NEVER had sound scientific foundations.#1 This, of course, holds also for Marxism and its derivatives.
- Marx’s profit theory is provably false.#2
- By consequence, the concepts of exploitation and classes are false.
- Marx lacks the concept of cross-over exploitation.#3, #4
- Because the foundational concepts are false, Marx’s whole analytical superstructure is false.
- Because the theory is defective, Marxian economic policy guidance was bound to fail from the very beginning.
- After-Marxians have not spotted Marx’s foundational blunder to this day.#5
Marxians are scientifically incompetent just like non-Marxians and all together are only employable as clowns and useful idiots in the political Circus Maximus.
Forget the whole Capitalism/Socialism thing. Economists’ contributions to the development of the Good Society were just as helpful as those of Flat-Earthers.#6 All real progress in the last 200+ years has come from real scientists, not from political soapbox blatherers.
Egmont Kakarot-Handtke
#1 Karl Marx, fake scientist
#2 Profit for Marxists
#3 Capitalism, poverty, exploitation, and cross-over exploitation
#4 If we only had classes
#5 Economists simply don’t get it
#6 Econogenics in action
***
REPLY to Barkley Rosser on Feb 19The so-called Russian Revolution was neither Russian nor a Revolution. It was a quite ordinary coup d’état engineered by foreign powers. It is well known that Lenin was sent with some starting capital in a sealed train from Zurich to Sweden/Russia courtesy of the Generalstab. The plan worked fine until the Peace of Brest-Litovsk.#1
All this had NOTHING AT ALL to do with Marx’s economic theory. This theory is proto-scientific garbage. However, it provides a justification for taking over the “commanding heights” of the state. Clearly, Marxism was used by Lenin as a pretext much like religion was used in the old days as a pretext for conquest.
Since Smith/Marx, the whole Capitalism/Socialism debate has NOTHING to do with science, that is, with the materially/formally consistent theory about how the economy works, but with brain dead agenda pushing.
So, your question Who is really a Socialist? has as much economic/scientific content as Who murdered Mr. Khashoggi?
#1 "The Treaty of Brest-Litovsk was a peace treaty signed on March 3, 1918 between the new Bolshevik government of Russia and the Central Powers (German Empire, Austria-Hungary, Bulgaria, and the Ottoman Empire), that ended Russia’s participation in World War I.” (Wikipedia)
***
REPLY to Barkley Rosser on Feb 20You say: “… most economists think it is a big deal whether or not an economy is run as a command socialist system or a market capitalist system. They tend to behave very differently in well known ways.”
Capitalism and Socialism are (i) political belief systems (ii) economic theories. As political belief systems, they are on the same level with religious belief systems, that is, they are literary fabrications and storytelling or, as Marx called it, ideologies. The subject matter of ideologies are NONENTITIES (God, paradise, classes, world spirit, etcetera) but despite the fact that ideologies have no reality content, they are a big deal for most people.
Ideologies are the subject matter of Psychology, Sociology, Political Science, History etcetera. The well-known problem with History is that it is for the greater part literary fiction.
Economics, on the other hand, is a system science and deals with how the actual economy works. Science materializes itself as true theory, with truth well-defined as material and formal consistency. Theory is different from storytelling. Theory has ninety-nine percent reality content, storytelling one percent.
Capitalism and Socialism are allegedly underpinned by true theory. This, though, is a bad joke. General Equilibrium Theory and Marxianism is proto-scientific garbage. So Capitalism and Socialism are ultimately vacuous belief systems.
The fact of the matter is that the monetary economy can be described by economic laws, the Profit Law for example. It is given as Q=Yd+(X−M)+(G−T)+(I−S) and it holds for the USA, for Russia, and China and it is absolutely independent of the ownership of the firms or from the self-identification as capitalistic or socialistic, or from the agenda pushers that occupy the political commanding heights.
For the past 200+ years, economists were so much occupied with political propaganda and agenda pushing that they had no time for genuine scientific work. This is why Walrasianism, Keynesianism, Marxianism, Austrianism are mutually contradictory, axiomatically false, and materially/formally inconsistent. Economics is a failed science, economists are not scientists but storytellers and useful political idiots.
Dear idiots, government deficits do NOT cause inflation
Comment on Michael Lebowitz on ‘Modern Monetary Theory and its Fictional Discipline’*
Blog-Reference and Blog-Reference
It’s a Pavlovian Reflex among economists and laypersons alike: when they hear an MMTer talking about deficit-spending/money-creation, some cretin shouts Weimar or Zimbabwe. This reflex is as old as the Quantity Theory of Money.#1
The problem is, of course, that economists and laypersons alike have no idea how the monetary economy works. This is excusable for laypersons but not for economists. Fact is, in methodological terms, that economists lack the true theory. Fact is that economist do not know after 200+ years what profit is.
Because the Profit Theory is false, the whole analytical superstructure is false including, of course, Money Theory, Distribution Theory, and Employment Theory. This prevents to this day the understanding of the effects of public deficit-spending/money-creation.
The process goes schematically as follows:#2, #3
(i) The initial economic configuration is the elementary production-consumption economy. The initial state is characterized by market clearing and budget-balancing of the household sector C=Yw, i.e. the households fully spend their wage income Yw on consumption goods, and zero profit of the business sector Q=C−Yw=0.
(ii) Now, the government deficit spends. Deficit D is defined as public spending G minus taxes T, i.e. D=G−T. T is set to 0. Deficit spending on current output causes a price hike and the business sector ends up with macroeconomic profit Q=G. Note well, a one-off price hike is NOT inflation.
(iii) The business sector fully distributes profit. The distributed profit Yd goes to the Oligarchy and takes initially the form of deposits at the central bank. The CB’s balance sheet shows government overdrafts on the asset side and the Oligarchy’s deposits on the liability side. Both sides are equal to the penny. In a fiat money regime, deposits at the CB are money. Government deficit-spending increases the quantity of money.
(iv) The government consolidates overdrafts by selling interest-bearing bonds. The bonds are bought by the Oligarchy and paid for with the deposits. The CB’s balance sheet shrinks. The Oligarchy’s portfolio consists of bonds and money. In the limiting case, both overdrafts and deposits reduce to zero, that is, the quantity of money is back at its initial level.
(v) This process can be identically repeated again and again. There is no further price hike and NO inflation. What happens is that the financial wealth of the Oligarchy grows in lockstep with the public debt ($22 trillion). And this is an observable fact. All relevant economic magnitudes are measurable with the precision of two decimal places.
Dear Quantity Theory retards, get it: the lethal effect of MMT deficit-spending/money-creation policy is NOT on inflation but on distribution.
Egmont Kakarot-Handtke
* SEE IT market
#1 Wikipedia, Quantity theory of money
#2 From MMT misunderstandings to the true Theory of Money
#3 Deficit-spending, public debt, and macroeconomic profit/loss
Related 'MMT: Distribution is the drawback NOT Inflation' and 'Economics as tireless production of proto-scientific toilet paper: inflation theory as an example' and 'MMT was right all along: Gov-Deficits do NOT cause inflation'.
You say: “Sectoral balances assume that money is a limited physical resource and as such are complexity irrelevent.”
Sectoral balances “assume” nothing about money. Q+S=0, for instance, says that the balance of the business sector Q and the balance of the household sector S always add up to zero. This simple fact, though, is beyond the comprehension of people who call themselves economists.
You can assume that I have demonstrated the relationship between balances and money somewhere and I assume that you know how to google it.
Blog-Reference and Blog-Reference
It’s a Pavlovian Reflex among economists and laypersons alike: when they hear an MMTer talking about deficit-spending/money-creation, some cretin shouts Weimar or Zimbabwe. This reflex is as old as the Quantity Theory of Money.#1
The problem is, of course, that economists and laypersons alike have no idea how the monetary economy works. This is excusable for laypersons but not for economists. Fact is, in methodological terms, that economists lack the true theory. Fact is that economist do not know after 200+ years what profit is.
Because the Profit Theory is false, the whole analytical superstructure is false including, of course, Money Theory, Distribution Theory, and Employment Theory. This prevents to this day the understanding of the effects of public deficit-spending/money-creation.
The process goes schematically as follows:#2, #3
(i) The initial economic configuration is the elementary production-consumption economy. The initial state is characterized by market clearing and budget-balancing of the household sector C=Yw, i.e. the households fully spend their wage income Yw on consumption goods, and zero profit of the business sector Q=C−Yw=0.
(ii) Now, the government deficit spends. Deficit D is defined as public spending G minus taxes T, i.e. D=G−T. T is set to 0. Deficit spending on current output causes a price hike and the business sector ends up with macroeconomic profit Q=G. Note well, a one-off price hike is NOT inflation.
(iii) The business sector fully distributes profit. The distributed profit Yd goes to the Oligarchy and takes initially the form of deposits at the central bank. The CB’s balance sheet shows government overdrafts on the asset side and the Oligarchy’s deposits on the liability side. Both sides are equal to the penny. In a fiat money regime, deposits at the CB are money. Government deficit-spending increases the quantity of money.
(iv) The government consolidates overdrafts by selling interest-bearing bonds. The bonds are bought by the Oligarchy and paid for with the deposits. The CB’s balance sheet shrinks. The Oligarchy’s portfolio consists of bonds and money. In the limiting case, both overdrafts and deposits reduce to zero, that is, the quantity of money is back at its initial level.
(v) This process can be identically repeated again and again. There is no further price hike and NO inflation. What happens is that the financial wealth of the Oligarchy grows in lockstep with the public debt ($22 trillion). And this is an observable fact. All relevant economic magnitudes are measurable with the precision of two decimal places.
Dear Quantity Theory retards, get it: the lethal effect of MMT deficit-spending/money-creation policy is NOT on inflation but on distribution.
Egmont Kakarot-Handtke
* SEE IT market
#1 Wikipedia, Quantity theory of money
#2 From MMT misunderstandings to the true Theory of Money
#3 Deficit-spending, public debt, and macroeconomic profit/loss
Related 'MMT: Distribution is the drawback NOT Inflation' and 'Economics as tireless production of proto-scientific toilet paper: inflation theory as an example' and 'MMT was right all along: Gov-Deficits do NOT cause inflation'.
***
REPLY to Noah Way on Feb 16You say: “Sectoral balances assume that money is a limited physical resource and as such are complexity irrelevent.”
Sectoral balances “assume” nothing about money. Q+S=0, for instance, says that the balance of the business sector Q and the balance of the household sector S always add up to zero. This simple fact, though, is beyond the comprehension of people who call themselves economists.
You can assume that I have demonstrated the relationship between balances and money somewhere and I assume that you know how to google it.
February 14, 2019
Krugman vs MMT ― like the blind talking about colors
Comment on Brian Romanchuk on ‘Functional Finance Versus New Keynesian Economics, Krugman Edition’*
Blog-Reference and Blog-Reference and Blog-Reference on Feb 16 adapted to context and Blog-Reference on Feb 18
The characteristic of economic debates is to talk about everything except the point at issue.
Krugman starts the talk show with: “Well, it looks as if policy debates over the next couple of years will be at least somewhat affected by the doctrine of Modern Monetary Theory, …” Then he realizes that he is not up-to-date but this does not matter because: “The good news is that MMT seems to be pretty much the same thing as Abba Lerner’s ‘functional finance’ doctrine from 1943.” And off he goes parroting the worn-out stuff about inflation and crowding-out with the finale: “The bottom line is that while functional finance has a lot going for it, it’s not the kind of axiomatically true doctrine that Lerner ― and, I think, modern MMTers ― imagined it to be.”
No word about that MMT is just proto-scientific garbage. And, of course, no state-of-art refutation of the MMT approach, no proof of material/formal inconsistency.
Brian Romanchuk’s answer remains on the same low level and consists of pointing out that Krugman himself clings to a rather crappy approach: “The fundamental problem with the New Keynesian approach of Paul Krugman, Brad DeLong, Simon Wren-Lewis, etc., is that the model is fundamentally neoclassical rather than Keynesian., only departing somewhat in assumptions but not methodology. This methodology falls into the class formal (mathematical) rather than empirically based and it ignores the role of institutions and operations.”
Both parties are spot on in their critique of the other approach. The irony is that both approaches share a common blunder. Krugman refers via the IS-LM model back to Keynes and MMT via the sectoral balances equation, i.e. via (I−S)+(G−T)+(X−M)=0 which boils down to I=S when the public sector and the foreign sector are taken out of the picture for a moment.
The common blunder can be exactly located in the GT: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Keynes, like his academic colleagues, NEVER understood what profit is and thus ended with I=S ― one of the greatest blunders in the history of modern science. Neither New Keynesians nor MMTers, though, have realized anything for 80+ years.#1 Both are too stupid for the elementary mathematics that underlies macroeconomics.
The correct macroeconomic relations are given by Q=−S for the elementary production-consumption economy and Q=I−S for the elementary investment economy with Q business sector’s monetary profit, S household sector’s monetary saving, business sector’s I investment expenditures. From this follows that all I=S/IS-LM models and their derivatives are scientifically worthless.#2
Both New Keynesianism and MMT are provably false.#3 By consequence, the economic policy arguments of both sides have NO scientifically valid foundations. What Krugman advertises as wonkish is just the usual brain-dead blather of failed/fake scientists.
Egmont Kakarot-Handtke
* NYT, Paul Krugman, What’s Wrong With Functional Finance? (Wonkish)
#1 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#2 For details see cross-references Refutation of I=S
#3 See cross-references Keynesianism and cross-references MMT
Related '#DrainTheScientificSwamp' and 'Macroeconomics: Drain the scientific swamp'.
You say: “You’re defining profits wrong.”
Macroeconomic profit is defined for the most elementary case as Q≡C−Yw.
Stop waffling, just write down your definition with 6 or 7 characters. This is what a real mathematician would do.
Just write down YOUR definition with 6 or 7 characters.
You say: “The cost of goods sold is itself complicated, since it depends on the valuation of inventory. … Depreciation is also based on the historical cost of capital. In summary, way more complex than the junk you blather on about.”
The alleged complexity is merely a projection of your own confusion.
(i) Total macroeconomic profit Q is composed of monetary profit Qm and nonmonetary profit Qn.
(ii) Nonmonetary profit Qn is the sum of all positive/negative changes of valuation including depreciation.
(iii) Qn has been dealt with elsewhere and is taken out of the picture for a moment.
(iv) Monetary profit Qm for the one-fully-integrated-macroeconomic firm is defined as Qm≡C−Yw. In your words: Qm is “sales revenue” C minus “cost of goods sold” Yw in the most elementary production-consumption economy with market clearing, i.e. X=O. Changes of inventory, i.e. X≠O, have been dealt with elsewhere.
(v) The investment economy has been dealt with elsewhere.
(vi) Monetary saving of the household sector is defined as Sm≡Yw−C. Total saving S is the sum of monetary Sm and nonmonetary saving Sn. The latter has been dealt with elsewhere.
(vii) Monetary profit Qm and monetary saving Sm are measurable with the precision of two decimal places. There is NOT the slightest ambiguity here. Qm and Sm are as real as cash in the box or as money in the bank.
(viii) From this follows: the macroeconomic Profit Law for the most elementary case of a production-consumption economy with market clearing reads Qm+Sm=0 or Qm=−Sm. This is the irreducible hardcore of the macroeconomic Profit Law.
For the more complex cases see the overview on Wikimedia.#1 From this overview follows that the MMT sectoral balances equation is provably false.
That you have not realized anything to this day disqualifies you as a mathematician and economist.
#1 Wikimedia, Profit Law
You say: “You missed the entire point. There is no market clearing in the model I referred to; there are inventories.”
The model you published last week is NOT the point at issue. The definition of macroeconomic profit is at issue. You said: “You’re defining profits wrong.”
Fact is that there are two cases (i) market clearing (ii) inventory changes.
Case (ii) has been dealt with elsewhere.#1 This leaves one with (i). And in this case, macroeconomic profit is in the elementary production-consumption economy Qm=−Sm. This formula is sufficient to disprove Keynes and MMT and you. There is NO need to go any further. You got the basics wrong.
#1 Primary and Secondary Markets, Levy Economics Institute of Bard College Working Paper No. 741
Blog-Reference and Blog-Reference and Blog-Reference on Feb 16 adapted to context and Blog-Reference on Feb 18
The characteristic of economic debates is to talk about everything except the point at issue.
Krugman starts the talk show with: “Well, it looks as if policy debates over the next couple of years will be at least somewhat affected by the doctrine of Modern Monetary Theory, …” Then he realizes that he is not up-to-date but this does not matter because: “The good news is that MMT seems to be pretty much the same thing as Abba Lerner’s ‘functional finance’ doctrine from 1943.” And off he goes parroting the worn-out stuff about inflation and crowding-out with the finale: “The bottom line is that while functional finance has a lot going for it, it’s not the kind of axiomatically true doctrine that Lerner ― and, I think, modern MMTers ― imagined it to be.”
No word about that MMT is just proto-scientific garbage. And, of course, no state-of-art refutation of the MMT approach, no proof of material/formal inconsistency.
Brian Romanchuk’s answer remains on the same low level and consists of pointing out that Krugman himself clings to a rather crappy approach: “The fundamental problem with the New Keynesian approach of Paul Krugman, Brad DeLong, Simon Wren-Lewis, etc., is that the model is fundamentally neoclassical rather than Keynesian., only departing somewhat in assumptions but not methodology. This methodology falls into the class formal (mathematical) rather than empirically based and it ignores the role of institutions and operations.”
Both parties are spot on in their critique of the other approach. The irony is that both approaches share a common blunder. Krugman refers via the IS-LM model back to Keynes and MMT via the sectoral balances equation, i.e. via (I−S)+(G−T)+(X−M)=0 which boils down to I=S when the public sector and the foreign sector are taken out of the picture for a moment.
The common blunder can be exactly located in the GT: “Income = value of output = consumption + investment. Saving = income − consumption. Therefore saving = investment.” (p. 63)
“His Collected Writings show that he wrestled to solve the Profit Puzzle up till the semi-final versions of his GT but in the end he gave up and discarded the draft chapter dealing with it.” (Tómasson et al.)
Keynes, like his academic colleagues, NEVER understood what profit is and thus ended with I=S ― one of the greatest blunders in the history of modern science. Neither New Keynesians nor MMTers, though, have realized anything for 80+ years.#1 Both are too stupid for the elementary mathematics that underlies macroeconomics.
The correct macroeconomic relations are given by Q=−S for the elementary production-consumption economy and Q=I−S for the elementary investment economy with Q business sector’s monetary profit, S household sector’s monetary saving, business sector’s I investment expenditures. From this follows that all I=S/IS-LM models and their derivatives are scientifically worthless.#2
Both New Keynesianism and MMT are provably false.#3 By consequence, the economic policy arguments of both sides have NO scientifically valid foundations. What Krugman advertises as wonkish is just the usual brain-dead blather of failed/fake scientists.
Egmont Kakarot-Handtke
* NYT, Paul Krugman, What’s Wrong With Functional Finance? (Wonkish)
#1 Mr. Keynes, Prof. Krugman, IS-LM, and the End of Economics as We Know It
#2 For details see cross-references Refutation of I=S
#3 See cross-references Keynesianism and cross-references MMT
Related '#DrainTheScientificSwamp' and 'Macroeconomics: Drain the scientific swamp'.
***
REPLY to Brian Romanchuk on Feb 15You say: “You’re defining profits wrong.”
Macroeconomic profit is defined for the most elementary case as Q≡C−Yw.
Stop waffling, just write down your definition with 6 or 7 characters. This is what a real mathematician would do.
***
REPLY to Brian Romanchuk on Feb 15Just write down YOUR definition with 6 or 7 characters.
***
REPLY to Brian Romanchuk on Feb 16 and Blog-ReferenceYou say: “The cost of goods sold is itself complicated, since it depends on the valuation of inventory. … Depreciation is also based on the historical cost of capital. In summary, way more complex than the junk you blather on about.”
The alleged complexity is merely a projection of your own confusion.
(i) Total macroeconomic profit Q is composed of monetary profit Qm and nonmonetary profit Qn.
(ii) Nonmonetary profit Qn is the sum of all positive/negative changes of valuation including depreciation.
(iii) Qn has been dealt with elsewhere and is taken out of the picture for a moment.
(iv) Monetary profit Qm for the one-fully-integrated-macroeconomic firm is defined as Qm≡C−Yw. In your words: Qm is “sales revenue” C minus “cost of goods sold” Yw in the most elementary production-consumption economy with market clearing, i.e. X=O. Changes of inventory, i.e. X≠O, have been dealt with elsewhere.
(v) The investment economy has been dealt with elsewhere.
(vi) Monetary saving of the household sector is defined as Sm≡Yw−C. Total saving S is the sum of monetary Sm and nonmonetary saving Sn. The latter has been dealt with elsewhere.
(vii) Monetary profit Qm and monetary saving Sm are measurable with the precision of two decimal places. There is NOT the slightest ambiguity here. Qm and Sm are as real as cash in the box or as money in the bank.
(viii) From this follows: the macroeconomic Profit Law for the most elementary case of a production-consumption economy with market clearing reads Qm+Sm=0 or Qm=−Sm. This is the irreducible hardcore of the macroeconomic Profit Law.
For the more complex cases see the overview on Wikimedia.#1 From this overview follows that the MMT sectoral balances equation is provably false.
That you have not realized anything to this day disqualifies you as a mathematician and economist.
#1 Wikimedia, Profit Law
***
REPLY to Brian Romanchuk on Feb 16You say: “You missed the entire point. There is no market clearing in the model I referred to; there are inventories.”
The model you published last week is NOT the point at issue. The definition of macroeconomic profit is at issue. You said: “You’re defining profits wrong.”
Fact is that there are two cases (i) market clearing (ii) inventory changes.
Case (ii) has been dealt with elsewhere.#1 This leaves one with (i). And in this case, macroeconomic profit is in the elementary production-consumption economy Qm=−Sm. This formula is sufficient to disprove Keynes and MMT and you. There is NO need to go any further. You got the basics wrong.
#1 Primary and Secondary Markets, Levy Economics Institute of Bard College Working Paper No. 741
***
The point of proof Feb 16
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