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"Drop the dead donkey": a response to Steven Kates on the subject of Mill's fourth proposition on capital

Roy H Grieve ()
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Roy H Grieve: Department of Economics, University of Strathclyde

No 1603, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: Steven Kates has recently (2015a) attempted to explain and justify J S Mill’s paradoxical “fourth proposition on capital†, which states that “demand for commodities is not demand for labour†, a proposition which notoriously – over generations – has baffled many eminent commentators. Kates intends to resolve the puzzle by offering “a proper understanding of Say’s Law as it was understood by Mill and his contemporaries.†We conclude that Kates does indeed reveal the logic of Mill’s proposition, making it clear that from Mill’s lost “supply-side†perspective, it is in no way puzzling or paradoxical. However, at the same time it becomes evident that Mill’s whole position is undermined by his acceptance of the untenable belief that “demand is constituted by supply†, which leaves us with the clear understanding that his fourth proposition, despite Kates’s rationalisation and defence thereof, as well as certainly being paradoxical, is simply untrue.

Keywords: Mill's fourth proposition on capital; Say's Law; wage-fund theory; Steven Kates (search for similar items in EconPapers)
JEL-codes: B12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hpe
Date: 2016-03
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