From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Thu Sep 07 2006 - 18:04:22 EDT
> ---------------------------------------- >A simple response to the reasons I gave would be appropriate. Again >here they are: > >1. I argued that Kalecki and Crotty were confused about whether >profits determined investment or investment determined profit. I >argued that Crotty was wrong to rule out the possibility that >declining profitability could depress investment, and I said that Trigg >is best understood as in agreement with Crotty. Trigg did not discuss >Crotty, >but Crotty's work is invoked to make just this point in the Science and >Society >exchange. > ----------------- > >I don't know about Crotty but Kalecki is pretty clear that investment >determines profits At times yes but not all times. See my OPE-L post http://ricardo.ecn.wfu.edu/~cottrell/OPE/archive/0306/0033.html Here I wrote that: "I am not so impressed with "The Determinants of Profits" in Theory of Economic Dynamics (Monthly Review, 1971)...He says profits in the preceding period are one of the important determinants of capitalists' consumption and investment but provides no theory of what the objective determinants of that are." In the recent exchange Andrew emphasizes that Kalecki does not clearly say that investment determines profits. But Crotty does say that very clearly; I took the time to type out a long quote from Crotty on just that (do remember Stavros'accusation that my posts lack proper scholarly citations). I cited Crotty because of his clarity and suggested that Andrew's work is usefully understood in the context of Crotty's strong Kaleckian-Minskyan theses that investment determines profits and that the reason for weakness in autonomous increases in effective demand should be sought in the financial sector. Stavros also then cites Crotty in the course of the critique of Trigg! At the same time, the whole Science and Society debate pretty clearly gets wrong Grossman's understanding of the importance of capitalists' own luxury spending (I have provided clear supporting evidence in a previous post), and I think Ian would agree that there is some overlap between Grossman's argument here and his own theorization of capitalist luxury spending as a real cost. A real cost on the development of the productive forces at least! Rakesh
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