Showing papers in "The Review of Economic Studies in 1962"

The Economic Implications of Learning by Doing

Abstract: It is by now incontrovertible that increases in per capita income cannot be explained simply by increases in the capital-labor ratio. Though doubtless no economist would ever have denied the role of technological change in economic growth, its overwhelming importance relative to capital formation has perhaps only been fully realized with the important empirical studies of Abramovitz [1] and Solow [l 1]. These results do not directly contradict the neo-classical view of the production function as an expression of technological knowledge. All that has to be added is the obvious fact that knowledge is growing in time. Nevertheless a view of economic growth that depends so heavily on an exogenous variable, let alone one so difficult to measure as the quantity of knowledge, is hardly intellectually satisfactory. From a quantitative, empirical point of view, we are left with time as an explanatory variable. Now trend projections, however necessary they may be in practice, are basically a confession of ignorance, and, what is worse from a practical viewpoint, are not policy variables.

Rate of profit and income distribution in relation to the rate of economic growth

Abstract: One of the most exciting results of the macro-economic theories which have recently been elaborated in Cambridge is a very simple relation connecting the rate of profit and the distribution of income to the rate of economic growth, through the inter-action of the different propensities to save. The interesting aspect of this relation is that—by utilizing the Keynesian concepts of income determination by effective demand and of investment as a variable independent of consumption and savings—it gives a neat and modern content to the deep-rooted old Classical idea of a certain connection between distribution of income and capital accumulation. In this sense, it represents a break with the hundred-year-old tradition of marginal theory, and it is no wonder that it has immediately become the target of attacks and eulogies of such strongly emotional character. Approval and rejection have almost invariably coincided with the commentators’ marginalistic or nonmarginalistic view.

Production Functions with Constant Elasticities of Substitution

Abstract: В статье рассматривается класс производственных функций с постоянной эластичностью замены безотносительно цен факторов, рассматривается случай, когда в процесс вовлекается больше чем два фактора.

Parable and Realism in Capital Theory: The Surrogate Production Function

Abstract: Repeatedly in writings and lectures I have insisted that capital theory can be rigorously developed without using any Clark-like concept of aggregate " capital ", instead relying upon a complete analysis of a great variety of heterogeneous physical capital goods and processes through time. Such an analysis leans heavily on the tools of modern linear and more general programming and might therefore be called neo-neo-classical. It takes the view that if we are to understand the trends in how incomes are distributed among different kinds of labor and different kinds of property owners, both in the aggregate and in the detailed composition, then studies of changing technologies, human and natural resources availabilities, taste patterns, and all the other matters of microeconomics are likely to be very important.

A New Model of Economic Growth

Abstract: The purpose of this paper is to present a “Keynesian” model of economic growth which is an amended version of previous attempts put forward by one of the authors in three former publications.1 This new theory differs from earlier theories mainly in the following respects: (1) it gives more explicit recognition to the fact that technical progress is infused into the economic system through the creation of new equipment, which depends on current (gross) investment expenditure. Hence the “technical progress function” has been re-defined so as to exhibit a relationship between the rate of change of gross (fixed) investment per operative and the rate of increase in labour productivity on newly installed equipment; (2) it takes explicit account of obsolescence, caused by the fact that the profitability of plant and equipment of any particular “ vintage ” must continually diminish in time owing to the competition of equipment of superior efficiency installed at subsequent dates; and it assumes that this continuing obsolescence is broadly foreseen by entrepreneurs who take it into account in framing their investment decision. The model also assumes that, irrespective of whether plant and equipment has a finite physical life-time or not, its operative life-time is determined by a complex of economic factors which govern the rate of obsolescence, and not by physical wear and tear; (3) in accordance with this, the behavioural assumptions concerning the investors’ attitudes to uncertainty in connection with investment decisions and which arc set out below, differ in important respects from those made in the earlier models; (4) account is also taken, in the present model, of the fact that some proportion of the existing stock of equipment disappears each year through physical causes—accidents, fire, explosions, etc.—and this gives rise to some “ radioactive ” physical depreciation in addition to obsolescence; (5) since, under continuous technical progress and obsolescence, there is no way of measuring the “ stock of capital ” (measurement in terms of the historical cost of the surviving capital equipment is irrelevant; in terms of historical cost less accrued “ obsolescence ” is question-begging, since the allowance for obsolescence, unlike the charge for physical wear and tear etc., depends on the share of profits, the rate of growth, etc., and cannot therefore be determined independently of all other relations), the model avoids the notion of a quantity of capital, and its corollary, the rate of capital accumulation, as variables of the system; it operates solely with the value of current gross investment (gross (fixed) capital expenditure per unit of time) and its rate of change in time. The macro-economic notions of income, income per head, etc., on the the other hand are retained.

Substitution and Fixed Proportions in the Theory of Capital

Abstract: В статье демонстрируется, что в ситуации отсутствия реализуемой ex post взаимозаменяемости между трудом и капиталом неоклассические теоремы производства продолжают выполняться.