If one were state the difference between Post Keynesianism and mainstream neoclassical theory, it might be summed up with the idea that Post Keynesian theory is “economics without (Walrasian) equilibrium.”Social Democracy For The 21st Century
Kaldor on Economics without Equilibrium
Lord Keynes
Kaldor understood how business works and how firms actually respond to signals rather in the highly idealized way of price being the equilibrium between perfectly elastic supply and demand "curves" (behavior) that economics generally assumes as intuitively true. That behavior of firms is just not factual, as every business person knows from experience, much along the lines that Kaldor describes.
Ramanan elaborates with an extended Kaldor quote:
The Case for Concerted Action
The Heavenly Walrasian Auctioneer
10 comments:
LK's getting desperate. The point is not that prices and only prices provide essential information, although they are extremely important. The important points are that the terms of exchanges provide the essential information about what people want and what people have. There is no other equivalent source of such information which is carried in the minds of the individual actors and cannot be collected by the Keynesian bureaucracy.
So Kalder doesn’t like concepts such as consumers ‘maximize’ their utility or producers ‘maximize’ their profits, perfect competition, perfect divisibility, linear-homogenous and continuously differentiable production functions, wholly impersonal market relations, and perfect knowledge of all relevant prices by all agents and perfect foresight. Sounds like an Austrian.
"So *Kalder* doesn’t like..."
Kalder? Shows how closely you read the post
"The point is not that prices and only prices provide essential information, although they are extremely important."
No, in the fixprice markets they are of limited importance, compared to the quantity signals.
"The important points are that the terms of exchanges provide the essential information about what people want and what people have."
This trivial truth - which is true in any modern economy - refutes nothing that I've said.
y: There would only be starving people in your Stalinist wet dream.
In a free society, one would look at the cost of various inputs for growing and producing food, including the price of the inputs and outputs. If the inputs consistently cost more than the output brings in, whether in money or personal satisfaction as the case may be, the endeavor will be unsustainable.
This isn't complicated and your pathetic and idiotic attacks demonstrate that you have nothing of substance to offer in response.
y: I just eviscerated these same stupid objections of your 10 days ago.
http://mikenormaneconomics.blogspot.com/2013/02/izabella-kaminska-savers-are-not-sacred.html?showComment=1362163666005#c5320795952432387155
Bob you're a seriously delusional individual.
"I just eviscerated these same stupid objections of your 10 days ago."
No, you just repeated your usual sanctimonious drivel and infantile slogans. That's all you ever do.
The entire raison d'etre of Austrianism is to "repair" prices that you guys think are "wrong"
…..
Maybe someone (LK?) could link to the appropriate information regarding this, but one thing RandyWray (I think) said on Hartmann's show the other day is that pre-Keynes, there was inflationary and deflationary fulctuations, so if you look back at the time period as a whole, the price level masks the price level volatility.
Post Keynes, we've cut out the deflationary trend (for the most part), so the system is now inherently inflationary over the long-run.
Oh but economic calculation!
Wouldn't economic calculation is far more accurate over a slow long steady inflation, than it is with swings between inflation and deflation?
JK, I don't think that the price distortion argument is all wrong when the Fed admits that a purpose of QE was to elevate prices in asset markets higher than they would be otherwise. The cb does have the capacity to blow bubbles.
It's also pretty clear that subsidies influence prices in favor of suppliers. On the other hand, most countries protect their viral industries, on one hand, and on the other, powerful interests can extract political favors through crony capitalism and corruption.
In addition, there is also truth to Cantillon effects in economies in which the dominant mode of money creation is bank credit, since the most creditworthy (and influential) borrowers get funded first and at the best deal, which gives them a leg up in asset markets in troughs, for instance.
There is also little evidence that I can find showing that cb interest rate setting is contributive to anything substantial economically. Remind me why we still do run a command system wrt rates when monetarism has been largely discredited under the present monetary regime.
Minsky recognized the role of finance in economics. So I think that there are areas of agreement that are possible, even though we may not agree on an overall solution, since there are other theoretical and factual disagreements.
All good thoughts, Tom. I would never say that our current system is perfect, or that there aren't plenty of price distorting mechanisms in play.
My overall point and question is this: is there anything about steady inflation, where we prevent the deflations, that makes economic calculations MORE difficult then if we were to allow the 'full bust' of a delfationary spiral, followed by full boom, followed by full bust, etc?
It seems to me the pre-keynes wild swings would make economic calculation even more difficult.
From there, the Austrian calls for a fixed money supply (?) to prevent the Booms which cause the Busts. As far as I know, no monetary economy has ever been shown to sustinably work with a fixed money supply.
Probably no way to eradicate booms and busts in a capitalist economy due to "animal spirits" and the resulting financial and economic instability. But running a full employment budget would probably come closest to achieving an equilibrium.
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