Monday, February 26, 2007
"General Theory " - John Maynard Keynes
From the time of Say and Ricardo , the classical economicsts have taught that supply creates its own demand. Meaning, that the whole of the costs of production must necessarily be spent in the aggregate, directly, or indirectly, on purchasing the product.
Those who think it this way are deceived by an optical illusion, which makes two essentially different activities appear to be the same. They are fallaciously supposing that , there is a nexus which unites decisions to abstain from present consumption with decisions to provide for future consumption........
Our knowledge of the factors which will govern the yield of an investment some years hence is usually very slight and often negligible.
If we speak frankly, we have to admit that our basis of knowledge for estimating the yield ten years hence of a railway, a copper mine, a textile factory, the goodwill of a patent medicine, a building in the city of London - amounts to little and somtimes , to nothing ; or even five years hence,.
Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic.
Most , probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits - of a spontaneous urge to action rather than inaction.
Those who think it this way are deceived by an optical illusion, which makes two essentially different activities appear to be the same. They are fallaciously supposing that , there is a nexus which unites decisions to abstain from present consumption with decisions to provide for future consumption........
Our knowledge of the factors which will govern the yield of an investment some years hence is usually very slight and often negligible.
If we speak frankly, we have to admit that our basis of knowledge for estimating the yield ten years hence of a railway, a copper mine, a textile factory, the goodwill of a patent medicine, a building in the city of London - amounts to little and somtimes , to nothing ; or even five years hence,.
Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic.
Most , probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits - of a spontaneous urge to action rather than inaction.
