Economics Dictionary of ArgumentsHome
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| Distribution Theory: The Distribution Theory in economics explains how income and wealth are allocated among individuals, factors of production (labor, capital, land), or social groups. It examines wages, profits, and rents, influenced by productivity, market forces, and policies. Key theories include classical, neoclassical, and Keynesian approaches, each offering different views on income distribution and economic inequality. See also Value- and distribution theory, Wages, Income, Factors of production, Profit, Rent, Neoclassical economics, Keynesianism._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Neo-Neoclassical Economics on Distribution Theory - Dictionary of Arguments
Harcourt I 170 Distribution theory/Value theory/Neo-neoclassicalsVsMarx/Harcourt: The neo-neoclassicals have produced a string of rebuttals ((s)to Joan Robinson’s remarks on Value theory). >Distribution/Value theory/Robinson. Rate of profit/demand: First, they argue that no one, these days, tries, or ever did try, to determine the rate of profits or other prices within the production system alone. After all, the neoclassical marginalist 'revolution' was concerned with first the prior, and then the equal, importance of the blade of scissors known as 'demand'. Measurement of capital: Secondly, they could refer to Bliss's arguments (…), and to the statements by Hahn and Matthews [1964](1) at the end of their survey of the theory of economic growth. Thus: „As far as pure theory is concerned the 'measurement of capital' is no problem at all because we never have to face it if we do not choose to. With our armchair omniscience we can take account of each machine separately. Moreover the measurement business has nothing whatsoever to do with the question of whether imputation theory is or is not valid. In an equilibrium of the whole system provided there is perfect competition, no learning by doing and no uncertainty, the neoclassical imputation results hold. Harcourt I 171 This should now be beyond dispute. It is also of little comfort to the empirically inclined.“ (p. 888.) „Returning once more to the question of the validity or otherwise of imputation theory there is a further, purely theoretical, point of some importance to be made. When an economy with many goods is considered, then we must also find the relative equilibrium prices of these goods. Whether these are determined a la Leontief-Samuelson-Sraffa or a la Walras, imputation is at once involved. If we abandon imputation entirely then the whole question of relative prices must be reconsidered afresh. Perhaps it ought to be, but recognition that this problem exists seems desirable“.(p. 889.) >Relative prices. Harcourt: (…) [the neo-neoclassicals] could refer to Samuelson's opening remarks in Samuelson [1962](2), (…) and Solow's closing ones, Solow [1970](3). That is to say, they would dismiss an aggregative approach to a rigorous theory of distribution - and capital - (though not, necessarily, one to econometrics). They could next invoke Swan's appendix, Swan [1956](4), and Champernowne's original paper [1953-4](5). In the latter, when doubleswitching is allowed to occur, the production function is multi-valued, i.e. the same q is associated with two or more values of k. Factors of production/factor price: Nevertheless, factors are paid their marginal products. Labour/capital/ Champernowne: However, 'the question of which (r, w) and hence what income-distribution between labour and capital is paid is left in this model for political forces to decide' (p. 130) - surely one of the most perceptive comments of the whole debate? (At the (double) switch points, one technique is coming in at one point, leaving at the other, as it were; which, then, is the relevant one to determine distribution?) Champernowne adds: 'It is interesting to speculate whether more complex situations retaining this feature are ever found in the real world.' Harcourt I 172 To the neo-neoclassical answer that the existence or not of an aggregate production function or of a well-behaved demand curve for capital at economy (or industry level) has nothing to do with marginal productivity relations, some critics (Kaldor [1966](6), Nell [1967b](7)) might reply: Your logic may be impeccable but your results are, nevertheless, irrelevant for the world as we know it, and especially for an explanation of distribution, i.e. they would reject maximizing behaviour as a fundamental postulate of economic analysis (see Solow [1968](8) also). This raises a puzzle in the analysis of choice of technique where most writers, including Sraffa, explicitly assume maximizing behaviour. Kaldor: Kaldor, of course, does not; his analysis is based upon the implications of businessmen following rules of thumb such as the pay-off period criterion. Brown: Brown [1966](9), on the other hand, just because he wishes to retain maximizing behaviour, has suggested neoclassical exploitation as a compromise. Moreover, in his later papers [1968(10),1969(11)], while he accepts the logic of the neo-Keynesian critics, as an econometrician, he, possibly rightly and certainly understandably, tries to find common ground between linear models and neoclassical ones. He works out the conditions which ensure capital-intensity uniqueness (CIU) at an aggregate level in two two-sector models, one linear, the other neoclassical, i.e. one in which each sector has a well-behaved production function. >Capital/Brown. 1. Hahn, F. H. and Matthews, R. C. O. [1964] 'The Theory of Economic Growth: A Survey', Economic Journal, LXXIV, pp. 779-902. 2. Samuelson, P.A. [1962] 'Parable and Realism in Capital Theory: The Surrogate Production Function', Review of Economic Studies, xxix, pp. 193-206. 3. Solow, R M. [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8. 4. Swan, T. W. [1956] 'Economic Growth and Capital Accumulation', Economic Record, xxxn, pp. 334-61. 5.Champernowne, D. G. [1953-4] 'The Production Function and the Theory of Capital: A Comment', Review of Economic Studies, xxi, pp. 112-35 6. Kaldor, N. [1966] 'Marginal Productivity and the Macro-Economic Theories of Distribution', Review of Economic Studies, xxxm, pp. 309-19. 7. Nell, E. J. [1967b] 'Theories of Growth and Theories of Value', Economic Development and Cultural Change, xvi, pp. 15-26. 8. Solow, R. M. [1968] 'Distribution in the Long and Short Run', The Distribution of National Income, ed. by Jean Marchal and Bernard Ducros (London: Macmillan), pp. 449-75. 9. Brown, Murray [1966] 'A Measure of the Change in Relative Exploitation of Capital and Labor', Review of Economics and Statistics, XLvm, pp. 182-92. 10. Brown, Murray [1968] 'A Respecification of the Neoclassical Production Model in the Heterogeneous Capital Case', Discussion Paper No. 29, State University of New York at Buffalo. 11. Brown, Murray [1969] 'Substitution-Composition Effects, Capital Intensity Uniqueness and Growth', Economic Journal, LXXIX, pp. 334-47._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Neo-Neoclassical Economics Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
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