Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Capital: Capital in economics refers to assets used to produce goods and services, including financial capital, machinery, buildings, and human skills. It represents an investment in productive resources, contributing to economic growth, productivity, and wealth generation. Capital can be physical or human, and its accumulation is crucial for 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 |
|---|---|---|---|
|
George David Norman Worswick on Capital - Dictionary of Arguments
Harcourt I 96 Capital/labour/Worswick/Harcourt: Saving/investment/Solow/Harcourt: (…) two extreme cases are chosen (by Solow(1)] in order to show '. . . that the rate of return . . . does not depend for its existence and meaning on the possibility of defining "marginal productivities" or having smoothly variable proportions between the factors of production' (Solow [1963a],(1) p. 30). Harcourt I 97 [The] results are offered as the answer (or, rather, an answer) to the important question: What is the pay-off to society from an extra bit of saving transformed into capital formation? Worswick: In Worswick's model(2) there is no direct substitution between capital and labour, but, overall, proportions may be varied by changing the distribution of the total work-force between the three sectors of the economy. These are the two consumption-good sectors, one of which is handicrafts, the other, mechanized, and the capital-good or machinemaking sector, which is also a handicrafts sector. For simplicity we assume that machines last forever. We now derive an expression for the perpetuity rate of return and show that it is equal to the rate of profits (equals the rate of interest) if the economy is a competitive market one and if - a big one - the collective outcome of the behaviour of atomistic businessmen coincides with the outcome that the dictator may consciously plan for. In the handicrafts part of the consumption-good sector, one man working for one period produces b units of the consumption good (there is only one). In the mechanized part of the consumption-good sector n men working on one machine for one period produce nc units of the consumption good. In the machine-making sector m men working for one period produce one machine. At the start of the analysis there are M machines and L men allocated as follows Lh to consumption handicrafts Lc to mechanized consumption production Lm to machine-making i.e. L=Lh + Lc + Lm Clearly Lc = nM (and we assume that Lc< {L—Lm}, i.e. Lh>0). Harcourt I 98 One machine and n men working for one period produce nc units of the consumption good. In a competitive economy this amount, nc, must be sufficient to pay the wages (w per man) of n men and provide the rate of profits, r, on the value of the machine, wm, supposing wages to be paid at the end of the gestation period of production of the machine (…) Harcourt I 99 i.e. nc = wn + rwm But as long as there is a consumption handicrafts sector, w = b, because one man, unaided, can produce b per period, which is, therefore, the opportunity cost of transferring him to the machine-making sector and the wage payment needed to do so. It follows that nc = bn + rbm and (…) r = n/m(c/b -1) = R∞ We are, of course, in a very funny sort of economy (as Solow would be the first to admit). Handicraft workers dutifully transfer from their branch of the consumption-good sector to the machine-making sector whenever atomistic businessmen sense profit opportunities in the mechanized branch of the consumption-good sector and so invest (according, however, to an unspecified investment function). Consumption: The consumption habits of businessmen and workers (if they save) adjust just sufficiently to absorb total consumption output, which is at a level that provides just enough employment for that part of the total workforce which is not employed currently in the machine-making sector, so ensuring full employment each and every short period. 1. Solow, Robert M. [1963a] (Professor Dr. F. De Vries Lectures, 1963) Capital Theory and the Rate of Return (Amsterdam: North-Holland). 2. Worswick, G. D. N. [1959] 'Mrs. Robinson on Simple Accumulation. A Comment with Algebra', Oxford Economic Papers, xi, pp. 125-41._____________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. |
Worswick I George David Norman Worswick Concept and Measurement of Involuntary Unemployment London 1976 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
||
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
