An interesting demonstration
of this approach's high level of generality, is its ability to
evaluate the central tenet of Keynes' "General Theory …"
what he calls a "psychological law", or the propensity of
individuals in a community to proportionally save more than consume
out of any marginal increase in income; to be compensated for, by
increasing entrepreneurial investment in order to maintain full
employment. Sidestepping for a moment, how far away from ourselves we
can push the philosophical need for exogeneity to impart sense a
priori, there is no apparent conflict; if the population is
axiomatically taken to be endogenous, its quantified activities are
determinate by definition. But his recognition that consumption is
the sole end and object
of all economic
activity, with unemployment being [a] necessary [evil?] to keep
investment at a level not to exceed the provision of future
consumptive demand, (the latter being hinted at on p.105
of the GT) depicts a systematic
situation in dynamic
equilibrium over
time; with an
exogenous population being purposefully served, just as in the proposed new paradigm.
So
even though Keynes professes "to state the obvious", I
don't think he fully grasped its deep-going ramifications. That first part of
the assertion comprises a fair bit of data, and if we parse it
further it means that consumption determines value, and anterior to
consumption, all values are indeterminate. Because means-of-production
investment occurs prior to consumption; in Keynes' model this is
both indeterminate over time (as in the "obvious" first
sentence), and determinate with an endogenous population in
time, as he
takes it to be in the bulk of the GT and in particular regarding its MEC calculations. Hence the internal
contradiction and resulting overdetermination of economic-asset valuations in his GT.
All exogenous impulses (propensities, animal spirits, investment
decisions, CB interventions and the like) are indeterminate by
definition and, needing an endogenous reaction, cannot produce determinate effects; they neither, by
themselves, can be equilibrating, nor depended upon to restore an
existing disequilibrium. In Keynes' overdetermined model they effect
paradoxes, or a "riddle" as he calls it; which in and of
itself is already proof of erroneous, and/or too many, premises or axioms.
Endogenous population economic theories are most problematic, as
objectivity has to fall by the wayside; and even if 'subjective
quantification' is no utter self-contradiction in terms, its
rationalization is tautological at best.
Meanwhile, the "novel
expedient" he is looking for is not so novel at all; it finds
its cradle with Adam Smith and the classical separate determinants
(resolves) of wages, rents, and profits. Keynes' obligation to
Marshallian ex ante scissor-blades' determination simply proved too great an obstacle, leading to an
internally contradictory half-way measure of induced investment to tackle the unemployment
problem; for not full employment but neutral money, through the time
it takes to fully resolve
economic costs and profits, is
the condition whereby the (neo)classical edification would come into
its own again. The marginalists' approach to economics, apparently
oblivious that exogeneity is imperative to prevent a degeneration
into meaningless circular reasoning, while charting a make-belief
course as if
the economy is an ex ante determinate
structure, can never comprise reality either; so it is a dead end for
the very same reason. And any socio-economic order, although able to
confer rights upon endogenous abstractions (capital, interest, income) as if
these are real, is yet altogether powerless to prevent the occurrence
of crises and/or burst economic bubbles, that arise from not having
heeded to the very difference between abstraction and reality. The
only option to get to the bottom of all of this, is to go back as far
as Sismondi's first hints about determination, and endogenous economic values
being abstract, and take it from there.