[OPE-L:3471] Re: accumulation suggestion

Duncan K. Fole (dkf2@columbia.edu)
Fri, 18 Oct 1996 07:21:05 -0700 (PDT)

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Comment on Steve's [OPE-L:3462]:

>And I've done the equations, which, putting it mildly, are a horror.

That's one argument for approaching simplified models to get the
methodology straight before tackling the full complications of reality.

>The one conclusion that I can draw from it at present which might be of
>interest here is that the money supply turned out to be endogenous. I
>introduced moneylenders (strictly, a single moneylender), and all
>transactions between sectors, workers & capitalists (buying/selling both
>labor-power and subssitence commodities), and capitalists and
>moneylenders, were carried out via the bank balances of capitalists as
>maintained by the moneylenders.
>It turned out that bankers' "hoards", which were necessary to have them
>undertake the role of bankers, were augmented/decremented by the
>capitalist process, but did not directly determine anything in the

I'm familiar with this type of treatment of finance. You don't say so
explicitly, but I suspect that you hold the price level constant, or
determine it historically as part of the assumptions. I would be cautious
in calling these features of your model "conclusions", since it sounds as
though you've assumed an endogenous credit money system to begin with.


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu