From Steven Kates.
You could tell the true economists from the ones who knew little of value about how an economy worked by whether they understood and accepted that demand for commodities is not demand for labor. In classical times, just about every macroeconomist today would have been described as a fraud.
He quotes John Stuart Mill’s fourth principle of capital:
What supports and employs productive labour, is the capital expended in setting it to work, and not the demand of purchasers for the produce of the labour when completed. Demand for commodities is not demand for labour.
Kates seems to ignore the role of money, and of the intermediation involved in ‘saving’ becoming ‘investment’, to the substantial detriment of his overall argument. It’s not unreasonable that he might be correct when taking the long view, when aggregated and averaged over a period of years, but this conceals an enormous amount of economic activity and decision-making. You can take money out of an economic model, theory, or argument, but you’ll have far less success taking money and its effects out of the real world.
Forgive me for being a lazy commenter, but I have limited time. Am I to read this as a criticism of our common practice of talking about supply and demand without talking about entrepreneurship? Hamlet without the prince, so to speak?