Hi Dave
Let me simplify further and ignore "Investment" in your equations.
Just for clarity, profit is a flow of income, consumption is a flow of
spending, but "net savings" is a change to a stock (e.g., the current
value of my bank account).
The Kaleckian identities don't hold out of equilibrium. In general
although total effective demand (from workers and capitalists) always
returns as income (either wages or profits) nonetheless during its
circulation the effective demand may transfer from one class to
another. Given that:
Profits + Net savings by workers = Capitalist consumption
Then if net savings by workers are positive then workers are earning
more than they spend. Assume the total stock of savings in the economy
is constant (i.e., conservation of monetary value). Then net savings
by workers (the change in stock) necessarily implies net dis-savings
by capitalists (a corresponding change in stock). So capitalists must
be earning less than they spend. In other words, the above equation
can be written as:
Net savings by workers = Capitalist consumption - Profits
which is equivalent to
Net savings by workers = Net dis-savings by capitalists
I'd suggest that this describes a situation where the distribution of
income is moving in favor of workers. In other words, the workers are
"winning the fight" over the material surplus.
Does this help at all?
-Ian.
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Received on Wed Apr 7 15:46:03 2010
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