Economics Dictionary of ArgumentsHome
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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. | |||
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Joan Robinson on Capital - Dictionary of Arguments
Harcourt I 17 Capital/Joan Robinson/Harcourt: Removing the cross-section choice of technique from an analysis of investment and accumulation does not preclude her model from bringing out the simple but profound role of the real wage in the growth process. Cf. >Measurements/Robinson. Real wage/capital: Indeed it allows to be highlighted the vital significance of the real wage for the potential surplus available at any moment of time, the saving aspect whereby consumption is forgone, and the investment aspect whereby the real wage determines the command of a given amount of saving over labour power to be used in the investment-goods sector. The productivity of that labour is, of course, the place where (past) choices of technique are relevant, and past real-wage levels, and expectations formed because of them, bear vitally on this aspect of the processes of production and accumulation. Harcourt: The emphasis by Joan Robinson on the priority of forces other than the ability to choose from a number of available techniques at any moment of time does not necessarily place her in the group of economists whom Hicks [1960](1) (…) has, loosely and dangerously, labelled 'the accelerationists', but it certainly puts her apart from the aggregate production function boys, who, Hicks argues, armed with M.I.T.-type techniques [„Neo-neoclassicals“], are providing a strong backlash for a key role for the rate of interest in an explanation of long-run accumulation and distribution ((s) represented by the „Neo-Keynesians“.) >Aggregate production function, >Neo-Neoclassicals, >Neo-Keynesianism. Harcourt I 18 Capital measurement/Robinson: The first puzzle is to find a unit in which capital, social or aggregate value capital, that is, may be measured as a number, Le. a unit, which is independent of distribution and relative prices, so that it may be inserted in a production function where along with labour, also suitably measured, it may explain the level of aggregate output. Furthermore, in a perfectly competitive economy in which there is perfect foresight (either in fact or for convenience of measurement, see Champernowne [1953-4])(2) and (…) static expectations that are always realized, this unit must be such that the partial derivative of output with respect to 'capital' equals the reward to 'capital' and the corresponding one with respect to labour equals the real (product) wage of labour. >D. G. Champernowne. Marginal productivity: The unit would then provide the ingredients of a marginal productivity theory of distribution as well. >Distribution theory/Robinson. Harcourt I 19 Institutions/production/capital/Robinson: „We are accustomed to talk of the rate of profits on capital earned by a business as though profits and capital were both sums of money. Capital when it consists of as yet uninvested finance is a sum of money, and the net receipts of a business are sums of money. But the two never co-exist in time. While the capital is a sum of money, the profits are not yet being earned. When the profits (quasi-rents) are being earned, the capital has ceased to be money and become a plant. All sorts of things may happen which cause the value of the plant to diverge from its original cost. When an event has occurred, say, a fall in prices, which was not foreseen when investment in the plant was made, how do we regard the capital represented by the plant?“ (Robinson [1953-4](3), p. 84) Harcourt I 19/20 Capital/Measurment/production/J.B. Clark/Harcourt: It [the principle of differential gain] .. . identifies production with distribution, and shows that what a social class gets is, under natural law, what it contributes to the general output of industry. Com pletely stated, the principle of differential gain affords a theory of Economic Statics.(4) Stationary state: Joan Robinson had been concerned to deny that such a unit could be found even in the conditions of a stationary state. But to claim that she denied that 'capital' could be given an operative meaning in a stationary state is a bit hard, especially as she proceeds in her article to give it some (limited) meaning, a meaning which does not, however, encompass both requirements of the neoclassical and their Austrian forbears. Capital/rate of interest: The basic reason is that it is impossible to conceive of a quantity of 'capital in general', the value of which is independent of the rates of interest (or interchangeably, profits, given the present assumptions) and wages. Yet such independence is necessary if we are to construct an iso-product curve showing the different quantities of 'capital' and labour which produce a given level of national output, or, as is more usual in the theory of economic growth, if we are to construct a unique relationship between national output per man employed and 'capital' per man employed for any level of total national output. That is to say, if we are to construct the neoclassical production function (…). The slope of this curve plays a key role in the determination of relative factor prices and, therefore, of factor rewards and shares. Problem: However, the curve cannot be constructed and its slope measured unless the prices which it is intended to determine are known beforehand; moreover, the value of the same physical capital and the slope of the iso-product curve vary with the rates chosen, which makes the construction unacceptable. Kaldor: Kaldor advanced independently the same arguments for rejecting the concepts of an aggregate production function and an independent unit in which to measure capital, with their accompanying roles in the determination of factor rewards: see, for example, Kaldor [1955-6](5), 1959a](6). >N. Kaldor, >Equilibrium/Swan, >Equilibrium/Samuelson, >Equilibrium/Modigliani. Harcourt I 21 Solution/Robinson: Joan Robinson's response was to measure capital in terms of labour time. >Labour time/Robinson. 1. Hicks, J. R. [1960] 'Thoughts on the Theory of Capital-The Corfu Conference', Oxford Economic Papers, xn, pp. 123-32. 2. Champernowne, D. G. [1953-4] 'The Production Function and the Theory of Capital: A Comment', Review of Economic Studies, xxi, pp. 112-35 3. Robinson, Joan (1953-4). 'The Production Function and the Theory of Capital', Review of Economic Studies, xxi, pp. 81-106. 4. Clark, J.B. - [1891] 'Distribution as Determined by a Law of Rent', Quarterly Journal of Economics, v, pp. 312-13. 5. Kaldor, N. [1955-6] 'Alternative Theories of Distribution', Review of Economic Studies, xxm, pp. 83-100. 6. Kaldor, N. [1959b] 'Economic Growth and the Problem of Inflation - Part u Economica, xxvi, pp. 287-98._____________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. |
EconRobin I James A. Robinson James A. Acemoglu Why nations fail. The origins of power, prosperity, and poverty New York 2012 Robinson I Jan Robinson An Essay on Marxian Economics London 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
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