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# General Theory Chapter 20 and 21

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Points 300 I have seen no criticisms of this so far how would you respond to this

Keynes defined P to be expected economic profit.The second line from the bottom of this footnote reads as " = delta P ", which is the same as" = dP".That should actually be " = delta P w subscript" due to either (a) a typographical error made by the printer in the GT or (b) because Keynes felt that it was obvious,since he divided D=Z through by w,to get Dw subscript = Zw subscript,which means that you must divide P by w.P is AUTOMATICALLY DEFINED IN TERMS OF WAGE UNITS.Pw subscript is equal to Dw subscript-N.Thus dP(or dPw subscript)=d(Dw subscript - N) =dDw subscript -dN.Simple integration gives the following result- Pw subscript=Dw subscript-N .Divide through by w and you obtain P=D-wN.Add wN to both sides.You get P+wN=D=pO or Z =D.Z=P+wN.w is the money wage.N is aggregate employment.p is the expected price level.O is real output,which is a function of N.D,the expected aggregate demand function,is thus equal to expected total revenue.Z,the expected aggregate supply function,is equal to total variable cost plus expected economic profit.

The same analysis and result is contained in footnote 2 on pp.55-56 of the GT.Keynes defines the derivative dZw subscript/dN=dphi(N)/dN =phi'(N)=1,where you use "d" instead of " delta " notation used by Keynes.Integrate to obtain Z=wN + C,where C is a constant of integration,after you divide through by w.We know that D=Z by definition and that D=pO from chapter 20.We get wN +C=pO or C=pO-wN once we subtract wN from both sides.By definition,C must be equal to actual profit if p is an actual price and expected profit if p is an expected price.Of course,if P=0,then you get Z=wN= total variable cost.(This is the case of constant returns to labor.Note that Keynes covered this case explicitly at the top of p.284, as well as on p.306 of the GT ,in chapter 21.)This,of course is the mistake that Don Patinkin made continuously from 1976-1989 in 3 books and 5 articles-failing to consider that Z is linear in both the diminishing returns and constant returns to labor cases.Of course,in the case of constant returns to labor,you would get a linear 45 degree cross representing the aggregate supply curve.The same mistake is made by all Post Keynesian economists like Sydney Weintraub, Paul Davidson,Douglas Vickers,Jan Kregel, Victoria Chick,Nevile,Skott and Dutt,etc.They fail to consider that Keynes worked with both cases, diminishing returns to labor as well as constant returns to labor,in his microeconomic analysis contained in chapters 20 and 21 of the GT.It is not surprising that the Post Keynesians can not deal with the technical analysis contained in chapters 20 and 21 of the GT and expressed by Keynes in the form of elasticities.Instead,they build their analysis on the claims of a mathematically illiterate economist named Dennis Robertson.It was Robertson who claimed that Keynes's theory of effective demand(D-Z analysis)was contained in chapter 3 of the GT.All Post Keynesians base their work on the assumption that Robertson was correct.Post Keynesians also confuse the D=Z locus,the aggregate supply curve,with Z,the aggregate supply function.All of these errors can be traced back to the original errors made by Dennis Robertson in correspondence with Keynes in Feb.-Mar.,1935 about the first 17 chapters of the GT.Keynes told Robertson very clearly that the anaysis of his D-Z model was in a chapter called the Employment Function.Chapter 20 of the GT is titled," The Employment Function ".After seventy years it is time for economists to read this chapter upon which KEYNES SAID EVERYTHING DEPENDS.

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Points 13,830 Not getting enough bites on Amazon? Proper formatting might help.

“Elections are Futures Markets in Stolen Property.” - H. L. Mencken

• | Post Points: 5  3,113 Posts
Points 60,515 Suggested by Esuric MichaelEmmettBrady:

I have seen no criticisms of this so far how would you respond to this

Keynes defined P to be expected economic profit.The second line from the bottom of this footnote reads as " = delta P ", which is the same as" = dP".That should actually be " = delta P w subscript" due to either (a) a typographical error made by the printer in the GT or (b) because Keynes felt that it was obvious,since he divided D=Z through by w,to get Dw subscript = Zw subscript,which means that you must divide P by w.P is AUTOMATICALLY DEFINED IN TERMS OF WAGE UNITS.Pw subscript is equal to Dw subscript-N.Thus dP(or dPw subscript)=d(Dw subscript - N) =dDw subscript -dN.Simple integration gives the following result- Pw subscript=Dw subscript-N .Divide through by w and you obtain P=D-wN.Add wN to both sides.You get P+wN=D=pO or Z =D.Z=P+wN.w is the money wage.N is aggregate employment.p is the expected price level.O is real output,which is a function of N.D,the expected aggregate demand function,is thus equal to expected total revenue.Z,the expected aggregate supply function,is equal to total variable cost plus expected economic profit.

The same analysis and result is contained in footnote 2 on pp.55-56 of the GT.Keynes defines the derivative dZw subscript/dN=dphi(N)/dN =phi'(N)=1,where you use "d" instead of " delta " notation used by Keynes.Integrate to obtain Z=wN + C,where C is a constant of integration,after you divide through by w.We know that D=Z by definition and that D=pO from chapter 20.We get wN +C=pO or C=pO-wN once we subtract wN from both sides.By definition,C must be equal to actual profit if p is an actual price and expected profit if p is an expected price.Of course,if P=0,then you get Z=wN= total variable cost.(This is the case of constant returns to labor.Note that Keynes covered this case explicitly at the top of p.284, as well as on p.306 of the GT ,in chapter 21.)This,of course is the mistake that Don Patinkin made continuously from 1976-1989 in 3 books and 5 articles-failing to consider that Z is linear in both the diminishing returns and constant returns to labor cases.Of course,in the case of constant returns to labor,you would get a linear 45 degree cross representing the aggregate supply curve.The same mistake is made by all Post Keynesian economists like Sydney Weintraub, Paul Davidson,Douglas Vickers,Jan Kregel, Victoria Chick,Nevile,Skott and Dutt,etc.They fail to consider that Keynes worked with both cases, diminishing returns to labor as well as constant returns to labor,in his microeconomic analysis contained in chapters 20 and 21 of the GT.It is not surprising that the Post Keynesians can not deal with the technical analysis contained in chapters 20 and 21 of the GT and expressed by Keynes in the form of elasticities.Instead,they build their analysis on the claims of a mathematically illiterate economist named Dennis Robertson.It was Robertson who claimed that Keynes's theory of effective demand(D-Z analysis)was contained in chapter 3 of the GT.All Post Keynesians base their work on the assumption that Robertson was correct.Post Keynesians also confuse the D=Z locus,the aggregate supply curve,with Z,the aggregate supply function.All of these errors can be traced back to the original errors made by Dennis Robertson in correspondence with Keynes in Feb.-Mar.,1935 about the first 17 chapters of the GT.Keynes told Robertson very clearly that the anaysis of his D-Z model was in a chapter called the Employment Function.Chapter 20 of the GT is titled," The Employment Function ".After seventy years it is time for economists to read this chapter upon which KEYNES SAID EVERYTHING DEPENDS.

You don't know what the hell you're talking about, and no one can understand what you're trying to say.

"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."

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Points 300 typical never read the general theory and are mathematically illiterate.

• | Post Points: 95 7,105 Posts
Points 115,240 I would love to watch you reading Hazlitt.

Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid

Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring

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Points 335 I don't think Keynes even knew what he was saying.

Not everybody here has a PhD in Economics. If you could explain  what the hell this passage means and how it is relevant to anything, then maybe people would have an easier time responding to you.

• | Post Points: 5  5,255 Posts
Points 80,815 typical never read the general theory and are mathematically illiterate.

Explain this without the maths, or admit it's garbage that cannot be put into plain language and is cloaked in formal language for obscurantist purposes - there's lots of maths students/grads on here, so please keep the denigrating nonsense to yourself, no one cares and you only make yourself look like a twat. Alternatively, go away.

Freedom of markets is positively correlated with the degree of evolution in any society...

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Points 300 It's about Keynes aggregate supply function,there are no mysteries about Keynes's aggregate supply function unless you do not know how to differentiate and integrate basic ,simple functions.Anyone who has this basic skill can simply go to the footnote(Footnote 2) on pp.55-56 and integrate the derivative.Presto ! It will be found that Z=wN +P,where w is a constant,short run money wage,N is aggregate employment ,and P is expected profit.This ,of course,means that there is just not one aggregate supply function,as claimed by the Post Keynesians and Cambridge Keynesians ,but many, a different expected aggregate supply function for every different level of expected profits, P.One can also go to p.283 of the GT and integrate any of the mathematical expressions derived by Keynes.Again,Presto,one will arrive at the same answer,Z=wN + P.An alert reader will soon realize that Keynes took the standard TR-TC= P(profit) model,where TR=total revenue equals pO and TC equals total cost equals wN,so that P = pO-wN, and simply added wN to both sides.One obtains wN+P=pO,where O= f(N)is an aggregate production function that Keynes derived based on the assumption that a unit had been defined with which to measure aggregate output (p.283;GT) and p is an expected price.pO =D is the expected aggregate demand function.These functions define a number of different potential equilibria,D=Z,only one of which can be the actual outcome.Keynes called the locus of the set of all possible outcomes the aggregate supply CURVE,if N is designated as the independent variable and placed on the abscissa and D and Z on the ordinate,or the employment function if N is defined on the ordinate and D and Z are defined as the independent varibles and placed on the abscissa.Only in the minds of mathematically illiterate economists like Paul Davidson,Sydney Weintraub,G C Harcourt, and J E King is the explicitly defined Z function " mysterious and i have read hazlitt and he clearly couldn't pass a calculus course.

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Points 115,240 you might need to justify what connection calculus has with economic truth.

Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid

Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring

• | Post Points: 5 7,105 Posts
Points 115,240 oh and stop copy and pasting from your store of hack articles stored up on amazon books.

Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid

Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring

• | Post Points: 5  5,255 Posts
Points 80,815 Re-read my post and do as I said.

Freedom of markets is positively correlated with the degree of evolution in any society...

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Points 60,515  MichaelEmmettBrady:
typical never read the general theory and are mathematically illiterate.

I bet you didn't know that: XP_nH+P(Price of consumption goods on monday)(aggregated of course)=ICnX REMEMBER IT DEPENDS ON J(jelly beans).

"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."

• | Post Points: 5  478 Posts
Points 9,180 In your original post you argue that post Keynesian analysis stems from an error made by a man by Dennis Roberton. What does this have to do with Austrian economics?

Anyone who has studied economics knows the derivation of the Aggregate Supply curve. For a critique of Keynesianism and Hicksian IS-LM analysis, etc., see chapter 18 of Reisman's Capitalism. #### Austrians do it a priori

• | Post Points: 20 6 Posts
Points 300 Robertson's mathematical skills were on a par with those of Henry Hazlitt.Both of them would be able to read books that were at the 6th grade pre-algebra level.Keynes wrote the introduction to his D-Z model ,of his theory of effective demand in chapter 3 of the GT, at the pre-algebra level so that the vast majority of 1930's economists would be able to follow what he was doing.Keynes told Robertson point blank that it was a later chapter, titled The Employment Function,that contained his formal,mathematical, technical analysis.This chapter,of course,is chapter 20 of the GT.Robertson could not read this chapter because he was ignorant of calculus.In his original 1955 contribution to the Economic Journal's 1954-56 exchange over the aggregate supply function with Hawtreu and De Jong ,he had to ask Harry Johnson to write a mathematical appendix showing what the functional relationships were in chapter 3 of the GT.Johnson got it wrong right out of the starting gate when he accepted Robertson's claim that Z,the aggregate supply function,equaled pO,where p is the price level and O is output,which is a function of N,total employment.In fact ,it is D=pO,where D is the expected aggregate demand function, and not Z=pO.It is easily proven through simple integration,both in footnote 2 on pp.55-56 and footnotes 1 and 2 on p.283 of the GT,that Z=wN + P,where w is a fixed,short run money wage,and P is expected economic profit.The latest Cambridge followers of the D Robertson approach are Mark Hayes and Gerhard Michael Ambrosi.It looks like it is going to take a Field prize winner to demonstrate to economists how to do simple integration.

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Points 53,250  MichaelEmmettBrady:

typical never read the general theory and are mathematically illiterate.

Typical, you don't know anything about economics, and it doesn’t even prove you are mathematically literate.  There is nothing in the General Theory that is beyond High school math.  Nearly every equation in the General Theory bears absolutely no meaningful relationship to reality.

Keynes was either the biggest fool there was, or the biggest practical joker.

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