tag:blogger.com,1999:blog-2098432983500045934.post2292573796863050080..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: What is "effective demand" and why do we care?The Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2098432983500045934.post-63608911340347411262023-10-31T04:30:13.345-04:002023-10-31T04:30:13.345-04:0031 October 2023...
"Effective demand is the ...31 October 2023...<br /><br />"Effective demand is the actual amount of consumer and investor spending in an economy. When effective demand is up, businesses are profitable and employment is high."<br /><br />from: <a href="https://www.crf-usa.org/bill-of-rights-in-action/bria-25-3-john-maynard-keynes-and-the-revolution-in-economic-thought.html" rel="nofollow">John Maynard Keynes and the Revolution in Economic Thought</a>, at the Constitutional Rights Foundation<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-31954933330773726772016-07-28T10:42:17.860-04:002016-07-28T10:42:17.860-04:00Okay. (After a year and more...) At Syll's
ht...Okay. (After a year and more...) At Syll's<br /><br />https://larspsyll.wordpress.com/2016/07/18/what-is-effective-demand/<br /><br />Syll quotes Jesper Jespersen:<br /><b>It is the behaviour of profit-seeking firms acting under the ontological condition of uncertainty that is at the centre of post-Keynesian concept of effective demand. It is entrepreneurs’ expectations with regard to demand and supply factor that determine their plans for output as a whole and by that the effective demand for labour.</b><br /><br />Jespersen's is an exactly correct representation of what Keynes said, which I quoted in the last section of the post.<br /><br />Wow. I wasn't really sure I was reading Keynes right. I feel better about it now.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-33448155260842932312015-05-31T10:53:08.989-04:002015-05-31T10:53:08.989-04:00Art
The belief that price and quantity are jointl...Art<br /><br />The belief that price and quantity are jointly determined by the interaction of supply and demand is perhaps the most central tenet of conventional economics. <br />Marshall’s words that supply and demand are like the two blades of a pair of scissors: both are needed to do the job, and it’s impossible to say that one or the other determines anything on its own, sum sit up best for me. <br /><br /><br />The bigger story is while you can at a simplified level show downward sloping demand curves for individuals you cannot do the same for market demand curves. Society is more complicated than the sum of its individual members, and a society’s behavior cannot be modeled by simply adding up the behaviors of all the individuals in it.<br /><br />If demand curves are not always downward sloping then the notion that demand for a commodity falls as its price rises, supply rises as price rises, and the intersection of the two curves determines both the quantity sold and the price does not hold true in markets. <br />Oilfield Trashhttps://www.blogger.com/profile/16151172995826850192noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-83998901529446372352015-05-31T06:15:30.330-04:002015-05-31T06:15:30.330-04:00Yeah, OT, that's what I thought. (Only I didn&...Yeah, OT, that's what I thought. (Only I didn't think it as clearly as you.) But I'm not trying to evaluate effective demand based on what I thought or on what you thought or on what any of the many interpreters of Keynes thought. I'm trying to evaluate it based on what Keynes said.<br /><br />I pruned it down to those two "expectation of proceeds" statements because I thought that was the best minimal representation of <a href="https://www.marxists.org/reference/subject/economics/keynes/general-theory/ch03.htm" rel="nofollow">Chapter Three</a>.<br /><br />In section ii of the chapter, item (3), Keynes says effective demand is the sum of "the amount which the community is expected to spend on consumption" plus "the amount which it is expected to devote to new investment". That's the familiar version. And that's more like how I think of "demand" except I think actual spending, not expected spending. (But then, I'm not one to plan ahead.)<br /><br />Sumner & Glasner & the lot of them apparently say demand at any moment is a whole range of expected quantities demanded, depending on price. Keynes pins effective demand down to a single point. "The value of D at the point of the aggregate demand function, where it is intersected by the aggregate supply function, will be called <i>the effective demand</i>."<br /><br />I think it is interesting that Sumner dismisses "quantity demanded" in favor of a whole range of possible quantities demanded, while Keynes pins it down to the single point because that is the significant quantity.<br /><br />I guess they base it on expectations because employment today depends on how employers expect things will turn out tomorrow, when the product is sold.<br /><br /><b>It is not “altogether supply-side machinery.”</b><br /><br />Don't get defensive :)<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-49815544024306816962015-05-30T22:59:17.578-04:002015-05-30T22:59:17.578-04:00Art
The importance of the principle of effective ...Art<br /><br />The importance of the principle of effective demand lies in pointing out the cause and remedy of unemployment. <br /><br />Unemployment is caused by a deficiency of effective demand and it can be removed by an increase in consumption expenditure or/and investment expenditure and in case private expenditures are insufficient and ineffective in bringing about the required level of employment, the same can be achieved by government expenditure.<br /> <br />The principle of effective demand repudiates Say’s law of markets that supply creates its own demand and that full employment equilibrium is a normal situation in the economy.<br /><br />It is not “ altogether supply-side machinery.”<br />Oilfield Trashhttps://www.blogger.com/profile/16151172995826850192noreply@blogger.com