|Subject:||Re: [socialcredit] dialog: PDF from "H.M.M." from Wally discussing the A + B Theorem and Just Price|
|Date:||Thursday, August 5, 2004 10:25:30 (-0700)|
|From:||william_b_ryan <william_b_ryan @.....com>
|In reply to:||Message 52 (written by Wallace M. Klinck)|
While this document by "H.M.M" is of historical
interest, it is a very confused and contradictory
rendition of Douglas's A+B theorem. Most
egregiously, no-where in the chapter is there any
mention of labor displacement. Less egregious but
definitely adding to the confusion is his usage of
terms never used by Douglas--"outside" and "inside"
"If we call the Inside Payments A, and the Outside
Payments B, total costs are A plus B; so it is
equally obvious that the owners and employees of the
business cannot, between them, possibly buy--with
their joint incomes, represented by A--the total
output of the business, the price of which is A plus
B--even if they wanted to, which, of course, they
[Reply] Modern industrial production is multi-staged.
B payments are flowing from firms to firms in payment
for intermediate production, broadly defined. The
firms receiving the B payments are simultaneously
making A payments. There is directionality in
production, from lower to higher stages--the highest
"That is true of every individual business, so it is
true of all businesses collectively, in any week,
month, year, or period of years we like to take; from
which it follows that the country's total income--
every country's total income--all the world's total
income--is at all times insufficient to buy its total
output; and to that fact all the world's major
troubles are due."
This does not follow at all from his preceding
paragraph. In the hypothetical condition of dynamic
steady-state, the rate of flow of B payments by the
retail sector will necessarily equal the rate of flow
of the totality of the A payments made throughout the
economy outside the retail sector, so the costs of
production flowing to the point of retail will equal
the flow of payments to final consumers.
Every "refutation" of A+B I've from seen from
credentialed economists is in refutation of this
"straw man theorem" from H.M.M., and others before
him who should have known better. I've found several
hundred textbooks, mostly from the 1920s and 30s,
mostly notably from Friedrich Hayek in the early 30s,
who greatly influenced Keynes (who at the time was
leaning toward Douglas's position in this graduate
lectures), but also into the 90s in Heilbroner's
macro texts, with the very same specious argument.
H.M.M.'s complete ignorance made their task much
The false assumption to the economist's "refutation"
is the assumption that the economy remains unchanged
through time. But it is quite adequate to defeat the
theorem as presented by H.M.M.
--- "Wallace M. Klinck" <email@example.com> wrote:
> I think that Martin has expressed the essentials
> succinctly. Copied below is a somewhat expanded
> discussion in plain English of Douglas's A + B
> Theorem and the concept and application of the Just
> Price. Wally
> THE STRUGGLE FOR MONEY
> A Study of the struggle which is the underlying root
> cause of all the world's troubles and problems, from
> poverty to world-wars and the hydrogen bomb; and is
> quite insane and unnecessary. Who at present owns,
> and who ought to own, all money and credit, asks the
> author--the Banks, the Government or the Consuming
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