Where Is This Aggregate Demander?
Vacation has been better than I could have hoped. Istanbul was far more beautiful than I expected and Athens is wonderful. Of course, all this historic sightseeing stimulates the mind, and well, my fiancee isn't the type to engage in protracted philosophical discussions - though.. ahem.. she does other things well.
One question I have for the CAPS community is this: Have you seen the Aggregate Demander? I know the textbook definition of aggregate demand, but it makes no sense. It's like Keynesians have no idea what happens in the exchange of goods and services. If you say that something has a demand, that is only because a market participant, or multiple participants, want to exchange something they value less for it.
You can have an Ipod demand, and we can measure that demand by seeing what people in the market give up for an Ipod. In fact, that's how we know that there is an Ipod demand - people demand it over other goods. Likewise, there is a demand for every product and service under the sun precisely because there are people that demand those products. Without the market participants, there is no demand.
So, who is this mysterious market participant who demands everything the economy produces? He or she is the Aggregate Demander! To consider how silly this idea is, remember that the process of exchange is more accurately a process of exchanging something less valuable for something more valuable. So this Aggregate Demander is constantly exchanging items that are less valuable for more valuable items, and then immediately chnaging his (or her) mind and doing it all over again.
Behold, the Great Aggregate Demander! He is quite confused....
Now, I'm sure all the Keynesian apologists will say I just don't get it. They're right. I don't think the economy is a machine that can be tuned to perfection with a few snappy calculations. First, I know that these equations can't be solved a priori on paper. The market process can not be mimicked with fancy calculus. Second, I recognize that the market is in fact much more complex than the Keynesians suppose. It is not a machine, but an evolving ecology that is delicate, natural, and vastly more complex than it first appears. Tinkering with it like a mechanic tinkers with an engine is dangerous and foolish.
I'll keep an eye out for this Aggregate Demander. He shouldn't be hard to spot. He's the guy exchanging everything for everything else at the same time. They have an aisle for that at Walmart, don't they?
Alright, back to planning tomorrow's sightseeing.
David with a splendid view of the Acropolis