[OPE-L:6791] Re: Re: Paul Krugman

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Thu Mar 21 2002 - 00:23:17 EST

re: Steve's 6785

>It is tremendously confused Rakesh, and the critiques Sraffa made of 
>it in the 1920s are still worth a read today.
>The basis of it is diminishing marginal productivity, which is a 
>simply nonsensical argument to apply to capital machinery, as Sraffa 
>argued and as I elaborate in my Debunking Economics.
>Keynes had pretty much abandoned the MEI arguments by 1937, but of 
>course textbook writers kept it alive because it was such familiar 
>marginalist stuff.

Well between Krugman's lectures, I jumped ahead to your chapter on 
Keynes, "The sum of the parts". And I see your attempt to redefine 
the term on p. 202.

But first I think there is a contradiction.

Well before that let me say that you write extremely well and 
precisely. Your prose is a model of clarity and concision.

You quote Marx's critique of that pretty conception that the basis of 
capitalist production is the direct satisfaction of the consumption 
of the producers.

But then you say that "a decline in spending on consumption by 
consumers could lead to investors to also reduce their demand for 
investment goods, so that the economy could remain in a situation of 
inadequate excess demand." p 198

Yet if capitalist production is not driven forward by the attempt at 
the direct satisfaction of the consumption of the producers, then why 
would a decline in consumption by consumers, however effected, tend 
to lead investors to reduce their demand for investment goods?


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