Murray Brown on Capital - Dictionary of Arguments

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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.

> Brown, Murray	> Capital	Murray Brown on Capital - Dictionary of Arguments Harcourt I 172 Capital/Brown/Harcourt: Brown [1966]⁽¹⁾, (…) just because he wishes to retain maximizing behaviour, has suggested neoclassical exploitation as a compromise. Moreover, in his later papers [1968⁽²⁾,1969⁽³⁾], 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. The tools which he uses are substitution and composition effects (…). „The basic result that emerges from the neoclassical analysis is that the substitution and composition effects (as defined within that system) determine the uniqueness of the relationship between the aggregate labour-capital ratio and relative factor prices. The parallel is then taken: substitution-composition effects (as defined within the linear system) determine CIU as well as other things; and substitution-composition effects (as defined within the marginal productivity system) determine, uniquely, the aggregate capital-labour and factor-price relationship.“ (Brown [1969]⁽³⁾, p. 355.) Harcourt: This leads him to conjecture that answers to certain large questions may not be substantially different, a philosophy and strategy which, for obvious reasons, is akin to those of Solow on his busman's holiday. Solow/Harcourt: The latest statement of Solow's philosophy, one which is entirely consistent with his earlier ones, is as follows: „So far as I know, I have never in rigorous work adopted Pasinetti's 'unobtrusive' postulate - which is intimately connected with his special version of orthodox theory - that if one of two techniques is more profitable than the other at a higher real wage and less profitable at a lower wage it will have a higher value of capital goods per man. It is true that one-capital-good models behave that way, but they are merely cheap vehicles for interpreting data (which seem to behave that way).“ (Solow [1970]⁽⁴⁾, p. 424.) Harcourt I 173 Pasinetti: Pasinetti [1970]⁽⁵⁾, p. 429, rightly points out the 'surprisingly high proportion of current economic literature [that is] carried out in terms of "neoclassical production functions" and one-commodity-models', which, whether rigorous or not, certainly do depend for their validity on the 'unobtrusive postulate'. Secondly, he points to the 'ancients' and 'moderns' who also have used the 'unobtrusive postulate' in order to get an index of scarcity in a general equilibrium system, and so a marginal productivity theory of capital. For: „It made 'capital' appear to be like a scarce resource, and the rate of profits to be like any other general-equilibrium price - an index of scarcity. It is this construction that has fallen down. For that unobtrusive postulate was essential to it.“ (Pasinetti [1970]⁽⁵⁾, p. 429.) Demand/Ferguson/Allen: Ferguson and Allen [1970]⁽⁶⁾ have carefully analysed the conditions under which the construction does break down when changes in the composition of demand due to changes in relative product prices are taken into account. They derive some comfort from their results. Their approach seems open to at least two criticisms. First, as they candidly admit, they use a model which favours the neoclassical position, as intermediate goods are ignored and the capital good is the only basic. Secondly, they do not investigate whether the changes in the composition of demand are consistent with their assumption of full employment. Moreover, as their analysis consists only of comparisons, their appeal to the facts to decide seems to be beside the point. RobinsonVsBrown/RobinsonVsSolow: Joan Robinson [1970a⁽⁷⁾, 1970b⁽⁸⁾], of course, would accept neither Brown nor Solow's approach, nor Samuelson's rationalization of it. To her, Samuelson's surrogate production function, even though it allows the simple parables to be told, does so only in the form of comparisons, so that it remains a spoof-a pseudo-production function. Only when capital is actually jelly (or leets) can substitution and the other neoclassical processes occur and full employment of all factors be maintained in competitive economies. But, in her view, such constructions assume away all the real difficulties associated with the existence of heterogeneous capital goods and the implications of the disappointed expectations of atomistic economic actors in competitive situations. 1. Brown, Murray [1966] 'A Measure of the Change in Relative Exploitation of Capital and Labor', Review of Economics and Statistics, XLvm, pp. 182-92. 2. 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. 3. Brown, Murray [1969] 'Substitution-Composition Effects, Capital Intensity Uniqueness and Growth', Economic Journal, LXXIX, pp. 334-47. 4. Solow, R M. [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8. 5. Pasinetti, L. L. [1970] 'Again on Capital Theory and Solow's "Rate of Return" ', Economic Journal, LXXX, pp. 428-31. 6. Ferguson, C. E. and Allen, Robert F. [1970] 'Factor Prices, Commodity Prices, and the Switches of Technique', Western Economic Journal, vin, pp. 95-109. 7. Robinson, Joan, [1970a] 'Capital Theory Up to Date', Canadian Journal of Economics, in, pp. 309-17. 8. Robinson, Joan, [1970b] 'Review of C. E. Ferguson, The Neoclassical Theory of Production and Distribution, 1969', Economic Journal, LXXX, pp. 336-9. _____________ 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.	BrownMurray I Murray Brown On the theory and measurement of technological change Cambridge 1968 PolBrown I Wendy Brown American Nightmare:Neoliberalism, neoconservativism, and de-democratization 2006 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972

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