Re: Paying for Katrina

On Sat, 24 Sep 2005 12:11:13 -0400, "tonyp" <tonyp@xxxxxxxxxxxxx>
wrote:
>
>"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote
>
>> If "money" were just a shorthand for keeping track of the exchange of
>> goods, you are describing what is basically a barter economy. A key
>> feature of a modern economy is credit, sometimes over many years as
>> with mortgages or long term bonds. There is no way your definition of
>> money fits into the real world economy.
>
>Here's a purely real-world, modern transaction: I trade a ten-dollar bill
>for a movie ticket. We don't call that "barter", but that's just a
>linguistic convention, not an economic insight. An economist would surely
>allow that if I got the $10 for mowing your lawn, I did in essence exchange
>my labor for the ticket.
>
>No sensible economist would insist on tracking my particular ten-dollar-bill
>through the box office, to the studio, to the best-boy grip's wages, and
>back to you, the guy who sold him a pizza six months ago. But neither would
>he deny that your making a pizza had something to do with getting your lawn
>mowed. Money and credit just makes the transaction more roundabout than the
>straight "barter" of you giving me a pizza to mow your lawn.
>
>The dispassionate Martian naturalist would see us all busily producing goods
>and services. He would see us each consuming different goods and services
>than we individually produce. And he would notice that some of us consume
>more goods and services than others. He might try to explain how all this
>happens. Maybe he could _not_ explain it without hypothesizing the
>existence of "money".
>
>But, as a naturalist, he would not say that we produce and consume "money".
>
Naturalist or not, I don't think anyone would say we produce and
consume "money." What I was critiquing was your comment:

>If a dispassionate Martian naturalist were observing the frantic to-and-fro
>of earthlings, these exchanges are what he would see. Could he come up with
>a workable theory of how these exchanges happen, without knowing we have a
>concept called "money"? I tend to think yes.

Exchanges such as buying and selling goods and services have very
little instructive value per se. They are just the tip of the
iceberg.

Keynes revolutionized economics with his 1936 classic book, "The
General Theory of Employment, Interest and Money." Are you implying
that he over-played the role of money and credit in our understanding
of how a modern economy works?
.

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