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Hi Bill:
I did get this message in my inbox.
I will reply as per usual.
(Bill) "So it has a lot to do with Douglas
and Social Credit in that they are kindred theories."
(response) Hayek seemed to think that Douglas
and Keynes were "kindred theories". The problem I have with that type of
analysis is that it's easy to put words in someone else's mouth because their
theories are "similar".
I like to consider theories on their own. I
don't think that Douglas should be lumped in with Keynes or anyone
else. For that matter, I also don't think that Keynes should be
lumped in with Douglas or anyone else.
It would be like saying that Kierkegaard and Sartre
are similar because they are both existentialists, yet their conclusions are
completely different.
""College Professor William T. Foster
(1879-1950) and
businessman Waddill Catchings (1879-1967) joined
forces to
establish the Pollak Foundation for Economic
Research and to co-author
several books in the 1920s
that considered saving harmful,
advocated
contra-cyclical public works, and 'a constant flow of
new money'
to encourage consumer spending."
And this further demonstrates my point.
Douglas never advocated contra-cyclical public works to counter the effect of
the re-investment of savings.
(Bill) Do you see the significance of the
point?
(response) Absolutely. Like you stated,
profit is an accounting fiction. Some things are allowed to be
expensed over time, but the time over which they are expensed is arbitrary, yet
other things, like human capital, and not considered an asset, and are not
expensed over time.
I'm not sure I'm in exact agreement with your
analysis of marginal theory, for demand is determined by marginal utility, and
the supply of labour is also determined by marginal utility (which affects wages
and hence; marginal costs), but resource supply is determined by
scarcity.
Demand and supply curves are measured by relative
prices on the vertical axis, and quanity consumed/supplied on the horizontal
axis. Time is not usually considered to be a factor, as the analysis is
based on equilibrium.
(Bill) I will say that in steady state
and
quasi-steady state the "income from all the processes"
is indeed
sufficient to cover retail prices. In labor
displacement it is not
sufficient to cover retail
prices, if by income we mean the totality of
income
from salaries, wages and corporate dividends. And if
by
prices we mean the cost basis of prices. Both
considered as
flows. Using the accounting method of
analysis.
(response) My only problem with the
"quasi-steady state" analysis is that "quasi-steady state" is unsustainable even
without labour displacement.
From C.G.M.'s pamphlet:
"9. Theoretically it is possible to make
A2 = B1. But practically it is impossible to do so continuously, since it
means that capital goods must always be produced in quantities sufficient to
provide a fixed
purchasing power (i.e. A2 = B1), irrespective of whether this
volume of capital goods is required or not. The result would be a surplus
of capital goods, which must either be exported, in the face of severe
competition with other nations, or must be bought by
home producers, in which
case they become B1 costs infuture consumers' goods."
I will say that the diagrams that you've composed
are very good, and if you're attempting to analyze the effect of labour
displacement within the context of the "truism" known as A+B theorem, then I'm
in complete agreement with your analysis.
Take care,
Jim
----- Original Message -----
Sent: Thursday, January 11, 2007 5:42
AM
Subject: Re: [socialcredit] responding to
Bill
> "(response) But what does that have to do with
> Douglas
and Social Credit?"
>
-----------------------------------------------------
>
------------------------------------------------------
>
> The
Labour Party theoretician, Gaitskell, pulled his
> theory from Hayek, also
associated with the London
> School of Economics, in his refutation of A +
B,
> answered by Joseph in his 1935 paper. In Hayek's
>
lecture 2 in *Prices and Production,* and also in his
> paper "The Paradox
of Saving," he directly addressed
> the theory of Foster and Catchings,
while referencing
> Douglas only peripherally. Foster and Catchings
had
> formed the Pollak Foundation to promote their views.
>
Another author associated with them in the Pollak
> Foundation was H. B.
Hastings, quoted favorably by
> Douglas in *Social Credit*
>
http://www.geocities.com/socredus/compendium/chap2part2.txt
>
> Quoting Douglas quoting the Hastings book
published by
> Pollak. Notice the reference to "an accounting
method
> of analysis." When I personally examined the
Hastings
> book I couldn't find the text that Douglas quoted.
I
> am assuming it was either from another edition or on
> the cover
of the book possessed by Douglas, rather
> than its forward. It is
however completely consistent
> with the book that I saw:
>
>
[Douglas] ...It may be noted that both in Europe and
> America, there are
numerous endeavours being made, and
> theories propounded, to explain this
fact; which was,
> until recently, denied as a fact. The forward to
a
> work by H. B. Hastings ("Costs and Profits"),
> published in
America, remarks:
>
> "By an accounting method of analysis, the
conclusion
> is reached that the value, at the current retail
>
price-level, of goods produced far exceeds the flow of
> purchasing-power
from permanent sources. In other
> words, recurring periods of
business depression are
> shown to be the result of present financial
and
> business policies. The importance of this new method
>
of approach to the most important of modern economic
> problems is
self-evident."
>
> So it has a lot to do with Douglas and Social
Credit
> in that they are kindred theories.
>
> I pulled this
from an online resource:
>
> "College Professor William T. Foster
(1879-1950) and
> businessman Waddill Catchings (1879-1967) joined
>
forces to establish the Pollak Foundation for Economic
> Research and to
co-author several books in the 1920s
> that considered saving harmful,
advocated
> contra-cyclical public works, and 'a constant flow of
>
new money' to encourage consumer spending."
> -
>
>
"(response) But the diagram fails to introduce the
> effect of the
re-investment of savings."
>
-----------------------------------------------------
>
------------------------------------------------------
>
> Yes it
does, for it's predicated on the assumption of
> steady state. An
increase to the fund of savings is a
> departure from steady
state.
> -
>
> "(response) I'm sure you're correct, but
again, it
> does not change my point. The point is that it has
to
> do with accounting conventions, and has nothing to do
> with
sales."
> -----------------------------------------------------
>
------------------------------------------------------
>
> Do you
see the significance of the point? The
> significance is that profit
is not a tangible thing
> that can be quantified, but the result of
accounting
> convention that is quite arbitrary. There is no
>
absolute thing called profit that can be measured
> objectively. But
within certain limits the rate of
> profit being reported determines the
utilization of
> real productive capacity. A lower rate of
profit
> being reported results in a lower amount of productive
>
capacity that is utilized. A greater rate results is
> a greater
amount of productive capacity that is
> utilized. It is therefore an
independent control
> mechanism. It has very little to do with
"marginal
> utility" as visualized by economists.
> -
>
> "So is it your claim that in a steady state, or
> quasi-steady
state, that the income from all the
> processes is sufficient to cover
retail prices. (i.e.
> A2=B1) or from the diagram
A2=$800=B1?"
>
-----------------------------------------------------
>
------------------------------------------------------
>
> The
Gaitskell diagram, diagram 1 at
> http://www.geocities.com/socredus/compendium/joseph
> depicts steady state and can only depict steady
state.
> I don't know how it could be modified to depict
>
quasi-steady state or the parametric shift from labor
>
displacement. I will say that in steady state and
> quasi-steady
state the "income from all the processes"
> is indeed sufficient to cover
retail prices. In labor
> displacement it is not sufficient to cover
retail
> prices, if by income we mean the totality of income
> from
salaries, wages and corporate dividends. And if
> by prices we mean
the cost basis of prices. Both
> considered as flows. Using
the accounting method of
> analysis.
>
>
> --- Jim
<jschroeder@shaw.ca> wrote:
>
[snipped]
>
>
>
>
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>
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