Economics Dictionary of ArgumentsHome
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| Capital demand: Capital demand in economics refers to the desire and willingness of firms to acquire physical capital (e.g., machinery, buildings) for production. It depends on factors like interest rates, expected returns, and technological advancements. Higher expected profits increase demand, while high costs reduce it. Capital demand is derived from the demand for goods and services, as firms invest to meet future production needs. See also Capital, Capital goods, Production._____________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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Pierangelo Garegnani on Capital Demand - Dictionary of Arguments
Harcourt I 158 Capital demand/Garegnani/Harcourt: (…) Garegnani(2) argues, 'traditional theory - reduced to its core as the explanation of distribution in terms of demand and supply-rests in fact on a single premise', what Pasinetti [1969](1), p. 519, calls 'an unobtrusive postulate': „This premise is that any change of system brought about by a fall in r must increase the ratio of 'capital' to labour in the production of the commodity: 'capital' being the value of the physical capital in terms of some unit of consumption goods, a value which is thought to measure the consumption given up or postponed in order to bring that physical capital into existence.“ (Pasinetti [1969](1), S. 519). >Reswitching/Economic theories, >Aggregate capital/Economic theories. Harcourt: This becomes the basis for the downward-sloping demand function for capital in a more general model. Harcourt I 159 As r falls, both the change in the system of production for each consumption good, and consumer substitution in favour of the more capital-intensive goods, would raise the ratio of 'capital' to labour in the economy. If we then assume that the quantity of labour employed remains equal to its supply, and the supply shows no drastic fall as w rises with the fall of r, it would follow that the amount of capital employed in the economy increases as r falls. This relation between r and the amount of capital employed could then be viewed as a demand function for capital; and competition in the capital market could be thought of as ensuring the absorption of 'net saving' through appropriate falls of r. (p. 423.) >Rate of return/Frankmlin M.Fisher, >Rate of return/Pasinetti. 1. Pasinetti, L. L. [1969] 'Switches of Technique and the "Rate of Return" in Capital Theory', Economic Journal, LXXIX, pp. 508-31. 2. Garegnani, P. [1970a] 'Heterogeneous Capital, the Production Function and the Theory of Distribution', Review of Economic Studies, XXXVII (3), pp. 407-36._____________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. |
Garegnani I Pierangelo Garegnani The Theory of Value and Distribution in Economics: Discussions between Pierangelo Garegnani and Paul Samuelson Milton Park 2012 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
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