Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Economic growth: Economic growth is the increase in the production of goods and services in an economy over a period of time. It is typically measured as a percentage change in real gross domestic product (GDP), which is the total value of all goods and services produced in a country in a given year, adjusted for inflation. See also Economy, Economic development._____________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. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Trevor W. Swan on Economic Growth - Dictionary of Arguments
Harcourt I 5 Measurements/Economic growth/factor rewards/marginal products/Swan/Harcourt: In 1956 Swan(1) published one of the first of a spate of neoclassical models of economic growth in which the equality of factor rewards with marginal products plays a crucial role. >Factors of production, >Factor prices, >Capital, >Factor market, >Production theory, >Capital structure. In the appendix to his article he provided a rationale for his procedure. It contained two strands. 1) The first was the device of using a primary unit, namely, a one all-purpose commodity - his famous meccano sets model - so that capital may be measured in terms of its own unit, i.e. itself. The commodity is, moreover, malleable so that both specificity and heterogeneity - two essential characteristics of capital goods - may be abstracted from, and the implications of disappointed expectations in the sense of actual quasirents differing from expected ones may be avoided. In effect it is 'as if perfect foresight always prevailed. 'Capital' as an aid to production and as privately owned property, whether held or invested by its owners, become indistinguishable. A theory of production and of distribution may thus be invoked simultaneously. That is to say, the level of output and its distribution between labour and 'capital' are explained simultaneously by the same set of factors. 2) The second defence was to examine the neoclassical procedure of considering notional changes at equilibrium points in a stationary state. SwanVsChampernowne: Swan argues that the Champernowne chain index measure of capital is peculiarly suited to cope with this procedure in the analysis of a process of accumulation over time. >Capital/Champernowne. RobinsonVsSwan: This viewpoint was (…) vigorously disputed by Joan Robinson, who argues that comparisons of equilibrium positions one with another are not the appropriate tools for the analysis of out-of-equilibrium processes or changes, and that the neoclassical procedure is singularly ill-equipped to cope with the problem of 'time' Cf. >Time/Rothbard. Harcourt I 34 Economic growth/Swan/Harcourt: In Swan's model of economic growth, Swan [1956](1), capital-labour ratios need to change considerably as accumulation occurs over time, in order that both stable equilibrium capital-output and capital-labour ratios may be re-established following a change in a parameter, for example, the saving ratio. Harcourt I 35 In this manner, considerable processes occur, or, rather, are analysed. Moreover, he uses a Cobb-Douglas production function, and assumes that saving determines investment, and that there are constant returns to scale, full employment, static expectations and perfect competition, so that the wage of labour equals its full-employmerit marginal product and the rate of profits on capital equals its marginal product. >Production function, >Cobb-Douglas Production function. RobinsonVsSwan. Capital/SwanVsRobinson: His first line of defence is to suppose that capital consists of meccano sets which can be costlessly and timelessly transformed into any desired form, as given by the latest booklet of instructions (so incorporating technical progress), in order to co-operate with labour in response to the pull of changes in relative factor prices and to technical advances. Relative prices: The relative prices of products (including meccano sets) never change, no matter how rates of wages and profits (and, sometimes, rents, when land, which we ignore, is considered) do. Aggregation: In this way the aggregation of heterogeneous items of capital, both as cross-sections and over time, where they are both 'infinitely durable and instantaneously adaptable', is possible in terms of their own technical unit and 'the basic model of [his] text could be rigorously established in a form which deceived nobody' - an answer which proceeds by abolishing the question. For, with malleability, disappointed expectations and imperfect foresight can be avoided since the capital stock can be made into any form that is wanted and adapted to any labour supply that is forthcoming. Thus it is hoped that the long-run implications of capital-labour substitution may be analysed independently of any troublesome shortrun Keynesian and other puzzles. 1. Swan, T. W. [1956] 'Economic Growth and Capital Accumulation', Economic Record, xxxn, pp. 334-61._____________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. |
Swan I Trevor W. Swan Trevor Winchester Swan, Volume I: Life and Contribution to Economic Theory and Policy (Palgrave Studies in the History of Economic Thought) London 1922 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
||
> Counter arguments against Swan
> Counter arguments in relation to Economic Growth
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
