Showing papers in "Cambridge Journal of Economics in 1989"
TL;DR: In this paper, the transition from mass-production organization to flexible specialization is analyzed in detail through a case study of the film industry, where it is shown that a system of production once based on product standardization, high levels of vertical integration, and stable oligopolistic market structures has, after a period of vertical disintegration, given way to a production system based on a deep division of labor between firms and high level of flexibility in both product design and output levels.
Abstract: There is increasing evidence that mass-production methods are losing their dominance in the advanced industrial economies and that various forms of flexible production organization are on the rise. The transition from mass-production organization to flexible specialization is analyzed in detail through a case study of the film industry, where it is shown that a system of production once based on product standardization, high levels of vertical integration, and stable oligopolistic market structures has, after a period of vertical disintegration, given way to a production system based on a deep division of labor between firms and high levels of flexibility in both product design and output levels. The transition may be the result of increasing external economies of scale stemming from the development of the industry's social division of labor. Copyright 1989 by Oxford University Press.
358 citations
TL;DR: In this paper, the authors show that if the economy is relatively open to trade and price elasticities satisfy certain restrictions, the worsening of the trade balance more than outweighs the increase in workers' consumption, thus reducing the growth rate.
Abstract: This paper shows that the neo-Keynesian case for wage-led growth does not generally hold in an open economy model. Wage increases cause a loss of competitiveness that reduces the trade balance. If the economy is relatively open to trade and price elasticities satisfy certain restrictions, the worsening of the trade balance more than outweighs the increase in workers' consumption, thus reducing the growth rate. The main theoretical innovation is a flexible markup pricing rule that allows changes in unit labor costs and exchange rates to affect profit margins. Implications for international relations and class conflict are discussed. Copyright 1989 by Oxford University Press.
275 citations
TL;DR: The authors argue that such notions can be readily explicated and their employment justified through adopting an explicitly realist approach to economic analysis and that realism represents a serious alternative to current orthodox approaches to economics without suffering from some of the latter's more obvious limitations.
Abstract: In his numerous methodological asides and assertions that feature in his more empirically-oriented, postwar contributions, Nicholas Kaldor makes frequent reference to notions of abstraction, tendencies, and stylized facts. However, the employment of such terms seems rarely to be explicitly questioned, justified, or explicated. This paper argues that such notions can be readily explicated and their employment justified through adopting an explicitly realist approach to economic analysis. It is also argued that realism represents a serious alternative to current orthodox approaches to economics without suffering from some of the latter's more obvious limitations. Copyright 1989 by Oxford University Press.
164 citations
TL;DR: In this article, labor values and prices of production were calculated for the postwar U.S. economy using a seventy-one-sector input-output model with fixed capital, as well as actual wage-profit curves during the same period.
Abstract: This paper presents labor values and prices of production calculated for the postwar U.S. economy using a seventy-one-sector input-output model with fixed capital, as well as actual wage-profit curves during the same period. It is found that the cross-sectional deviations of values and prices of production from market prices are quite small: between 12 and 14 percent on average. Over time, approximately 75 percent of the variation of market prices is accounted for by changes by both values and prices of production, and 93 percent of the variation of prices of production is accounted for by changes in labor values. Wage-profit curves exhibit near-linearity, casting some doubt on the significance of reswitching for actual economies. Copyright 1989 by Oxford University Press.
121 citations
TL;DR: In this paper, an empirical analysis at the all-India level demonstrates that, while the level of agricultural production and rural poverty were inversely related, unanticipated consumer price increases aggravated rural poverty.
Abstract: The empirical analysis at the all-India level demonstrates that, while the level of agricultural production and rural poverty were inversely related, unanticipated consumer price increases aggravated rural poverty. Whether the advent of the new agricultural technology in the late 1960s altered the relationships in question is also considered. During the new technology phase, the coefficient of agricultural production ceased to be significant, while that of unanticipated price changes continued to be significant. Rationalization of the absence of a significant (inverse) relationship between rural poverty and agricultural production at the state-level, in terms of distress migration between neighboring states, is questioned and an alternative explanation is provided. Copyright 1989 by Oxford University Press.
49 citations
TL;DR: The authors explores the conditions under which the same property holds when government expenditure is financed by a budget deficit, and the conclusion is reached that such conditions coincide with those that assure "Ricardian equivalence" between public indebtment and taxation.
Abstract: A well-known characteristic of Nicholas Kaldor's theory of income distribution (and of the related "Cambridge Theory" of the rate of profits) is that any tax imposed on profits is shifted on to wages, in analogy (but with a reversal of the causation chain) with David Ricardo's theory of income distribution, in which any tax imposed on wages is shifted on to profits. The present paper explores the conditions under which the same property holds when government expenditure is financed by a budget deficit, and the conclusion is reached that such conditions coincide with those that assure "Ricardian equivalence" between public indebtment and taxation. Copyright 1989 by Oxford University Press.
47 citations
TL;DR: In this paper, an alternative approach is developed based on the nature and role of institutions in modern economies, and their function in encapsulating or transmitting both codifiable and non-codifiable knowledge.
Abstract: This paper involves a critical discussion of Nicholas Kaldor's contribution to the theory of economic growth, and the associated Verdoorn Law. As well as Kaldor's theory, prominent rival theories, such as the diffusion hypothesis of S. Gomulka and the neo-Marxist model proposed by S. Bowles et al., are found wanting. An alternative approach is developed based on the nature and role of institutions in modern economies, and their function in encapsulating or transmitting both codifiable and noncodifiable knowledge. Confirmation of this "institutional" theory of economic growth is provided by an econometric test using cross-section OECD data. Copyright 1989 by Oxford University Press.
44 citations
TL;DR: In this article, the authors provide a consistent conceptual framework for analyzing this issue, which is then applied to the experience of the U.K. economy and conclude that, in the 1970s, U.S. manufacturing trade with the South lead to an increase, rather than a decline, in output and employment.
Abstract: Rapid industrialization in the third world during the last three decades and the continuing fast expansion of the South's manufacturing exports to the advanced countries has raised the question whether these have, or will in the future, lead to "deindustrialization" in the North. This paper provides a consistent conceptual framework for analyzing this issue, which is then applied to the experience of the U.K. economy. It is concluded that, in the 1970s, U.K. manufacturing trade with the South lead to an increase, rather than a decline, in output and employment. However, the paper also provides evidence that in the future this trade is likely to become a source of disequilibrium and may contribute to deindustrialization. Copyright 1989 by Oxford University Press.
37 citations
TL;DR: A three-equation, simultaneous model for the military burden, economic growth, and a human suffering index is estimated for a cross-section of developing nations for the period 1973-84 as discussed by the authors.
Abstract: A three-equation, simultaneous model for the military burden, economic growth, and a human suffering index is estimated for a cross-section of developing nations for the period 1973-84. Findings of the study include the sensitivity of the regression estimates to the particular constellation of nations in the sample; the relative importance of strategic and political determinants and the relative unimportance of economic determinants of the military burden; and support for the basic needs approach to alleviating poverty and human suffering in the contemporary developing nations. Copyright 1989 by Oxford University Press.
31 citations
TL;DR: In this article, the authors set out a general theoretical structure for analyzing price adjustments to cost changes within asymmetric oligopolistic markets and explored the European car market; intracountry changes in car prices and the huge differences in U.K. and European car prices were both examined.
Abstract: This paper sets out a general theoretical structure for analyzing price adjustments to cost changes within asymmetric oligopolistic markets. The theory implies that, contrary to the usual assumption, exchange rate changes may leave prices unaltered. This is explored by an empirical examination of the European car market; intracountry changes in car prices and the huge differences in U.K. and European car prices are both examined. The empirical results are in line with the theoretical implications: changes in relative supply costs are more likely to be converted into changes in price-cost margins than prices within a national oligopolistic market. Copyright 1989 by Oxford University Press.
30 citations
TL;DR: The authors investigates the effects of the reforms in China's financial sector on enterprise performance and investigates the effect of the increased role played by banks as a result of the major reorganization of the banking system which occurred in 1984.
Abstract: This paper investigates the effects of the reforms in China's financial sector on enterprise performance Particular attention is paid to the effect of the increased role played by banks as a result of the major reorganization of the banking system which occurred in 1984 It is argued that, although China's banks now possess considerable power to discriminate between enterprises in the allocation of credit, in practice this power is seldom used and enterprises have not been subjected to significantly increased financial discipline as a result of the reforms The reasons for this are discussed and the prospects for further reform assessed Copyright 1989 by Oxford University Press
TL;DR: In this paper, the authors argue that while the trend is attributable to redistributive policies, the short-run fluctuations are adequately explained by the fluctuations in agricultural output and in relative prices of agricultural products vis-a-vis manufactures.
Abstract: This paper begins with the observation that there has been a trend decline, albeit small, in rural poverty during 1956-83, but this is obscured by the substantial short-run fluctuations around the trend. It argues that while the trend is attributable to redistributive policies, the short-run fluctuations are adequately explained by the fluctuations in agricultural output and in relative prices of agricultural products vis-a-vis manufactures. In view of the finding that rising relative agricultural prices increase rural poverty, the paper goes on to analyze the process of determination of relative prices. This analysis highlights the characteristics of the inflationary process and the role of agricultural price policy in the Indian economy. Copyright 1989 by Oxford University Press.
TL;DR: In this article, the elasticity of substitution between factors in production has been studied in the context of international trade and the author's theory of relations between factors, which is called factor price equalization.
Abstract: Nicholas Kaldor was right to maintain that this assumption is unrealistic, but that does not mean that it is useless. There are propositions that can be proved assuming it, which would never have been found without it, but that look as if they are independent of it. Two examples: (1) Paul Samuelson's factor-price equalization theorem in international trade and (2) the author's theory of relations between factors in production (" elasticity of substitution" in a modern form). P-and q-substitutes (complements) must be distinguished. Weakly related factors are p-substitutes and q-complements. This is the only case when no more than two factors are present. Otherwise, two factors (out of many) may be strong substitutes (substitutes both ways) or strong complements (complements both ways). The excluded case, when they would be p-complements and q-substitutes, appears, in the presence of scale economies, to be excluded a fortiori. Copyright 1989 by Oxford University Press.
TL;DR: The question of how it was done in Vietnam is addressed at two levels: economic policy technicalities and political economy by as discussed by the authors, who examines that experience, in relation to the quite different experiences of most other socialist countries.
Abstract: Between mid-1988 and mid-1989, Vietnam greatly reduced a very high inflation rate at the same time as removing almost all administrative control over individual prices. This paper examines that experience, in relation to the quite different experiences of most other socialist countries. The question of how it was done in Vietnam is addressed at two levels: economic policy technicalities and political economy. Copyright 1989 by Oxford University Press.
TL;DR: The main obstacle to Chile's development is not natural, technical, nor economic, but political as discussed by the authors. But the main obstacle is not the scarcity of investible resources, but low investment by the property-owning class.
Abstract: This article discusses Nicholas Kaldor's 1956 paper on Chile and its relevance today. Kaldor concludes that the main obstacle to Chile's development is neither natural, technical, nor economic, but political. He identified the low rate of accumulation as the basic problem due not to scarcity of investible resources, but to low investment by the property-owning class (the proportion of after-tax profits ploughed back into investment was 15 percent while the United Kingdom's was 60 percent). Kaldor proposed higher taxation of profits and an effective public investment program. Copyright 1989 by Oxford University Press.
TL;DR: In this article, it was shown that the Cambridge Theorem holds independently of Ricardian Equivalence, if the net rate of profits is properly defined, which is the main purpose of this paper.
Abstract: The main purpose of this paper is to show that the Cambridge Theorem holds independently of Ricardian Equivalence, if the net rate of profits is properly defined
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TL;DR: A formal model of Kaldor's work, in the spirit of Allyn Young, is presented in this article, which is based on the work of the authors of this paper.
Abstract: Nicholas Kaldor's contribution to growth theory is critically assessed. A formal model of Kaldor's work, in the spirit of Allyn Young, is presented. Copyright 1989 by Oxford University Press.
TL;DR: The study examines aspects of sex differentials in mortality in India and focuses on the interesting exception to the Indian trend and an explanation for the unusual sexual profile that Kerala displays.
Abstract: This study examines aspects of sex differentials in mortality in India. "The general question of sex bias and excess female mortality is first discussed....Subsequently the reasons for the regional contrast in sex ratios are explored....We then focus on the interesting exception to the Indian trend and attempt an explanation for the unusual sexual profile that Kerala displays....The paper ends...with an attempt to draw some tentative conclusions from the Kerala experience with an eye towards more general issues concerning women and the development process." (EXCERPT)
TL;DR: This paper argued that Kaldor's critique of John Maynard Keynes's monetary theory is an extension of his "Radcliffe" views and this paper argues that, in this matter, Kaldi was mechanical in his modeling of the endogeneity of money supply.
Abstract: Nicolas Kaldor's critique of monetarism from 1970 until his death is described and evaluated. It is argued that subsequent events, as well as empirical research, vindicate his critique. Kaldor's critique of John Maynard Keynes's monetary theory is then seen as an extension of his "Radcliffe" views and this paper argues that, in this matter, Kaldor was mechanical in his modeling of the endogeneity of money supply. It is suggested that the work of Hyman Minsky and Victoria Chick has the potential for further work in this area. Copyright 1989 by Oxford University Press.
TL;DR: Kaldor's most important work on U.K. direct taxation is his path-breaking book An Expenditure Tax (1955), which actually covers the whole field of direct taxation, and was written because the terms of reference of the Royal Commission on which he played a leading part did not cover a tax on expenditure.
Abstract: Nicholas Kaldor's most important work on U.K. direct taxation is his path-breaking book An Expenditure Tax (1955). This actually covers the whole field of direct taxation, and was written because the terms of reference of the Royal Commission on which he played a leading part did not cover a tax on expenditure. Kaldor also played a vital part in the measures on direct taxation applied by Labour governments in the 1960s and 1970s. In indirect taxation, his outstanding contribution was his invention of the selective employment tax, which an independent enquiry showed to have raised productivity in the service trades. Copyright 1989 by Oxford University Press.
TL;DR: In this article, the welfare economics of schemes for countering price instability and to the macroeconomic destabilization attributed to commodity price fluctuations are discussed. But the focus is on the welfare aspects of the schemes.
Abstract: Nicholas Kaldor's commodity concerns were wide and persistent; they encompassed a number of micro and macro issues, some of which are still prominent in both academic and policy agendas and are capable of generating new insights. This paper, while attempting comprehensiveness, pays special attention to the welfare economics of schemes for countering price instability and to the macroeconomic destabilization attributed to commodity price fluctuations. The micro subheadings include: the rationale for intervention; efficiency-preserving intervention, distributional neutrality, and income stability; and market failures. Macro subheadings include: intersectoral asymmetries; flexible commodity prices and demand deficiency; commodity reserve currency; and severing the first link of an inflationary chain. Copyright 1989 by Oxford University Press.
TL;DR: In this paper, the choice of technology and the income distribution depend on the saving propensities in a two-sector economy, where two technologies are available, but only as either/or alternatives.
Abstract: Nicholas Kaldor's capital/labor income distribution theory relied on differential saving propensities from profits and wages. Joan Robinson's growth models typically specified constant-coefficient technologies in which marginal productivities cannot determine distribution. Here these two insights are combined in a two-sector (capital goods, consumption goods) economy. Two technologies are available, but only as either/or alternatives. The choice of technology and the income distribution depend on the saving propensities. Steady-state consumption need not be greater when the economy is more capitalized and profit rates are lower. Copyright 1989 by Oxford University Press.
TL;DR: In this article, the so-called general transformation problem is introduced and it is shown that any actual economy of multiproduct firms, with joint production and technical change, is traceable to a corresponding labor theory of value economy of labor values, and unrewarded labor as profits.
Abstract: The so-called general transformation problem is introduced and it is shown that any actual economy of multiproduct firms, with joint production and technical change, is traceable to a corresponding labor theory of value economy of labor values, and unrewarded labor as profits. Conversely, the labor theory of value economies are transformable into the economies of prices and profits, and profits, by means of prices of labor, can be distributed at will--including the celebrated case of equalized profit rates, even negative profits in some or all units. All economies are therefore labor theory of value economies distorted by prices. The author claims to have solved the transformation problem and that his work validates the labor theory of value--in the spirit of David Ricardo and Karl Marx, but without Marx's tools. Copyright 1989 by Oxford University Press.
TL;DR: In this paper, the authors summarize the empirical findings on changes in firms' temporary hiring in the local labor market of a northern German depressed area, and identify very different interests and functions served, as well as the limitations of temporary hiring.
Abstract: Since the end of the 1970s, growing unemployment has, in many European countries, been accompanied by a politics of deregulating labor markets. The Employment Promotion Act of 1985 was a milestone in normative deregulation, extending employers' possibilities of subcontracting and of temporary hiring. The article sums up the empirical findings on changes in firms' temporary hirings in the local labor market of a northern German depressed area, and identifies very different interests and functions served, as well as the limitations of temporary hirings. Normative deregulation seems only to enforce tendencies in the labor market, not to change them. Copyright 1989 by Oxford University Press.
TL;DR: Kaldor's tax reforms in India reflected a philosophy of taxation for developing economies that remains fully pertinent today as discussed by the authors, concluding that Kaldor had correctly diagnosed the nature of "resource imbalance", which afflicts planners and policymakers today in India and elsewhere.
Abstract: Nicholas Kaldor's writings in India, extending over a period of three decades, are reviewed in the paper. The author concludes that Kaldor's writings on tax reforms in India reflected a philosophy of taxation for developing economies that remains fully pertinent today. Kaldor had correctly diagnosed the nature of "resource imbalance," which afflicts planners and policymakers today in India and elsewhere. Kaldor's writings on India reflect an approach to development problems that he later elaborated in his "Cornell Lectures" and elsewhere. Copyright 1989 by Oxford University Press.