In a comment on his recent Occult Mysteries of the Heterodox, Noah Smith linked to JW Mason's couple year old crit of something in Steve Keen's work.
One of Mason's complaints is that Keen mis-applies the concept of aggregate demand. I thought I knew what aggregate demand was, so this brought my mental process to a sudden halt.
Mason considers a detail from Keen's view, compliments its clarity, and says "With all this, I am in perfect agreement." After that comes the problem. "But then he tries to formalize these ideas," Mason says:
Keen repeatedly says that “aggregate demand is income plus change in debt.” There are many variations on this through his writing, he evidently regards it as a central contribution. But what does it mean? To a non-economist, it appears to be a challenge to another, presumably orthodox, view that aggregate demand is equal to income. But if you are an economist you know that there is no such view, whether neoclassical, Keynesian or radical.
There is no such view, Mason says. That's what stopped me.
The term “aggregate demand” is shorthand for the argument that causality runs from aggregate expenditure to aggregate income, whereas pre-Keynesian orthodoxy held that causality ran strictly from income to expenditure. (It’s worth noting that in this debate Krugman is solidly with Keen — and me — on the Keynesian side.) But there isn’t any separate variable called “aggregate demand”; AD is just another name for aggregate expenditure insofar as it determines output.
So that sums up Mason's view of that detail, and I think I understand what he said.
Now I've got Lars P. Syll, who says:
The basic explanation for unemployment is insufficient aggregate demand
and there it is. There is causality in Syll's statement: Insufficient aggregate demand causes unemployment.
That's what Mason was talking about. Sometimes I just need to see these things.
Now I can go back to Mason's old post and wonder whether including "change in debt" in aggregate demand somehow throws a monkey wrench into the "insufficient aggregate demand" argument. I can't see it from here.