i wrote:
> > Some sort of abstraction is needed if you believe that the macroeconomy
> > is more than the sum of its parts. The measure of aggregate demand is an
> > abstraction, but without it one is stuck with a pre-Keynesian vision of
> > the world (which basically saw the macroeconomy as the microeconomy writ
> > large, applying what's now called the "representative agent model," and
> > applied Say's bogus "Law").
Tom W. writes:
>I agree that abstraction is needed. I don't agree that a single
>abstraction captures both the "more than the sum" and the "of its
>parts" perspectives.
I didn't say that "a single abstraction" could do so.
>To sum up our differences, it seems to me that you are saying inflation
>arises from the aggregate as conditioned by its heterogeneity. I'm saying
>it arises from heterogeniety as it is influenced by the aggregate. The
>whole may be more than the sum of its parts, but the parts have to come
>before the more.
I agree with Levins & Lewontin, in their DIALECTICAL BIOLOGIST, that
neither the whole not the parts have ontological priority. To paraphrase,
they say that the whole makes the parts, while the part makes the whole. I
see this relationship as a dynamic one.
> > If one measures aggregate demand using nominal GDP, by the way, the
> > relative weights of demand are irrelevant, since nominal GDP is simply
> > the amount of money spent buying newly produced goods and services
> > supplied through the market.
>But if one is thinking about change in aggregate demand, the relative
>weights aren't irrelevant.
if one is looking at _nominal_ GDP, it's simply price times quantity for
all final products. There aren't really any "weights" since it's not a
weighted average.
> > this doesn't make sense to me. Say's Law was shown to be inadequate by
> Marx and Keynes, among others. That is, the "Law" is wrong, untrue. It
> should be discarded. The Phillips Curve is not on the same level of
> abstraction. It's an empirical generalization that has several theories
> attached to it.<
>My impression was that Say's Law is one of those tautologies that is
>trivial to the extent that it is true and misleading when it is stretched
>beyond its short reach.
No, it's not tautological. It assumes that sum of the excess supplies for
each good or service (that are in excess supply) equals the sum of the
excess demands for all of the other goods and services. It ignores the fact
that there may be an excess demand for _money_, so that excess supplies for
goods and services may persist. If further ignores the way in which the
excess supplies of commodities leads to cutbacks in employment and/or wages
that lead to falls in income that end the excess demand for some
commodities and for money by reducing incomes (a recession). (This
statement is in the general spirit of Clower & Leijonhufvud, though my
terminology is different.)
>There may well be good uses to which the Phillips Curve may be put, but it
>seems to me it has mainly been used as an after
>the fact and beside the point justification for good ol' fashioned
>Treasury conventional wisdom.
hey, I use the Force for good rather than for evil! One can use the PC
without accepting the Treasury View or the Washington Consensus.
Jim Devine [EMAIL PROTECTED] & http://clawww.lmu.edu/~JDevine
"It takes a busload of faith to get by." -- Lou Reed.
