Saving "the Market” out of Cambridge: “Fixed Supply”

 

Scene #1. Paul Samuelson and William Nordhaus, Economics (19^th and final ed.), p.159

Some goods or productive factors are completely fixed in amount, regardless of price. There is only one Mona Lisa by da Vinci. Nature’s original endowment land can be taken as fixed in amount.

Scene #2. Gregory Mankiw, Macroeconomics (8^th ed.), p.508

Panel (a) of Figure 17-5 shows how the … price of housing P_H… is determined by the supply and demand for existing stock of houses. At any point in time, the supply of houses is fixed.

 

Really amazing is how on Earth those household-name economists have so powerful blind spots in their eyes.

 

Blindness #1. There is no way to trade what is in the inventory aka “stock.” For instance, we, if not they, can by no means purchase Mona Liza or “the fixed stock at any point in time.” In the first place, the object must be put on the block possibly to be purchased.

Blindness #2. In the second place, there in the world does a moment (T⁰), or “point in time” for that matter, exist no more plausibly than zero does. Yes, there are zeros lots of them in arithmetic except for arithmetic is never realistic, way far from “empirical” which by the way Cambridge macroeconomics is claimed to be. My House on the Hill (1) and the Capitol Hill (1) would in no realistic way make two (2).

Blindness #3. As we learn as sophomore at the latest, both demand and supply represent a quantity of certain object to be traded per certain period of time (T^-1). That is because without defining the boundary there is no way whatsoever to account for the quantity traded (q) or the average price (p) of all the deals done.    

 

Between the rest of us pairwise,

1)     Mona Lisa is an asset of the commonwealth of France, which would probably never be put on sale.

2)     If ever, the price must be fixed through auction to be held once a week or so.

3)     Trade of Mona Lisa could possibly take place “many times over” per period which unfortunately is undefined as per the Cambridge Standard.

4)     Ditto for all houses on Earth, the number of which incidentally keeps varying by nanosecond (T¹) that is indefinitely longer than “any point in time” (T⁰).

5)     Adam Smith and David Ricardo are well aware that the “amount” of arable “land” supplied to the community keenly “regards” the rental rate, if not “price.”

6)     In fine, “the amount” or “the supply” is everywhere unfixed except for those super- and steady selling books of Economic Principles.