Psychology Dictionary of ArgumentsHome
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| Reswitching: Reswitching is a concept in capital theory where a particular production technique, abandoned at one interest rate, becomes optimal again at a different, lower rate. It challenges the idea of a simple relationship between capital intensity and interest rates, undermining neoclassical theories of capital and distribution. See also Capital, Capital theory, Cambridge Capital Controversy. _____________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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Paul A. Samuelson on Reswitching - Dictionary of Arguments
Harcourt I 131 Reswitching/Samuelson/Harcourt: [Samuelson] started with a heterogeneous capital-goods model whereby there were many different ways of producing the consumption good, methods which required different inputs of direct and indirect labour, i.e. labour applied after being transformed into commodities, and therefore different inputs of the same good treated as a capital good, into itself. (When producing itself, its form and the quantities used varied from method to method, so that we have in effect heterogeneous capital goods.) >Capital structure, >Capital theory, >Capital/Robinson, >Cambridge Capital Controversy. Harcourt I 132 „I want to consider a special subclass of realistic cases, to present certain valid results which hold rigorously for such models .. . it would serve no purpose... to consider a model in which there were not diverse physical capital goods .. . it would evade the issue to consider a model in which capital goods were not highly specific to one use and to one combination of co-operating labour. None of these issues will be dodged in the slightest.“ (Samuelson [1962](1), p. 196.) Harcourt: Taking each method in turn he 'costed' them up at different rates of profits to find the maximum equilibrium real-wage rate that could be associated with each. The range of rate of profits is from zero to a maximum which is determined by the commodity's own rate of growth when the real-wage rate is zero and radioactive depreciation is allowed for. Harcourt I 133 Production/labour: (…) The w-r relationship, (…) , is a straight line if, when r = 0, the ratio of the labour value of the means of production to the direct labour used in the production of commodity 1 is the same as the corresponding ratio associated with the production of commodity 2, and the time patterns of the inputs are uniform, so that the relative prices of the two commodities are independent of the rate of profits, even when it is positive. (They are in fact equal to the ratio of the direct labour inputs per unit of output of the two commodities.) It follows that the value of'*capital' - means of production - is similarly independent of the value of r, in the sense that it does not change when we consider different values of r. Harcourt I 134 Value theory: Students of Marx will prick up their ears here for this is, if you like, the pure labour theory of value case - uniform organic compositions of capital. 'Pure' is perhaps an unfortunate word since it may be taken to imply that the labour theory of value is simply the proposition that prices are proportional to embodied labour whereas, in fact, it implies that prices are determined by embodied labour. >Value theory/Marx. Labour theory/Sraffa: In this sense, Sraffa has a labour theory of value: see Harcourt and Massaro [1964b](2), Meek [1967](3), pp. 161-78. >Piero Sraffa. Harcourt I 136/137 Labour/capital: Samuelson, in fact, assumed that the physical capital to labour ratios of each activity in a technique were the same and that the net product consisted of the consumption good. As a result, he could order techniques according to the maximum real-wage rates (physical outputs per head when r = 0). 1. Samuelson, P. A. [1962] 'Parable and Realism in Capital Theory: The Surrogate Production Function', Review of Economic Studies, xxix, pp. 193-206. 2. Harcourt, G. C. and Massaro, Vincent G. [1964a] 'A Note on Mr Sraffa's Sub- systems', Economic Journal, LXXTV, pp. 715-22. [1964b] 'Mr Sraffa's Production of Commodities', Economic Record, XL, pp.442-54. 3. Meek, R. L. [1967] Economics and Ideology and Other Essays. Studies in the Development of Economic Thought (London: Chapman and Hall)._____________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. |
EconSamu I Paul A. Samuelson The foundations of economic analysis Cambridge 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
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> Counter arguments against Samuelson
> Counter arguments in relation to Reswitching
