Economics Dictionary of ArgumentsHome
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| Aggregate Production Function: The Aggregate Production Function represents the relationship between total output and inputs like capital and labor in an economy. It is used to analyze productivity, growth, and income distribution. Criticized in capital theory debates, it assumes homogeneous capital and smooth substitution, which may not reflect real-world complexities. See also Production function, CES production function, Cobb-Douglas production function, Capital._____________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 Aggregate Production Function - Dictionary of Arguments
Harcourt I 11 Measurements/capital/Aggregate Production Function/RobinsonVsNeoclassical Economics/Robinson/Harcourt: In 1953 Joan Robinson wrote The Production Function and the Theory of Capital' (Robinson [1953-4])(1) in which she made a number of specific complaints about the state of economic theory and the state of some economic theorists, who soon were to become identified as the latter-day neoclassical whose [headquarter] is now Cambridge, Mass. Her complaints related to the ambiguity concerning the unit in which capital was measured in the neoclassical aggregate production function, the concentration on factor proportions and the neglect of factor supplies and technical progress in the explanation of distributive prices and shares, and what she saw as the deficiencies of the neoclassical definition of equilibrium. >Equilibrium, >Capital, >Measurements. Harcourt I 15 RobinsonVsWicksell: Joan Robinson's first complaint related to the fuzzy nature of the capital variable in the aggregate production function, the concept of which, she argued, was used by the neoclassicals to explain the distribution of income between profit-receivers and wage-earners in capitalist economies, taking as given the stocks of labour and capital and the knowledge of how one may be substituted for the other, so that their respective marginal productivities were known. >Capital/Wicksell. Harcourt I 16 Robinson(2): „The dominance in neoclassical economic teaching of the concept of a production function, in which the relative prices of the factors of production are exhibited as a function of the ratio in which they are employed in a given state of technical knowledge, has had an enervating effect upon the development of the subject, for by concentrating upon the question of the proportions of factors it has distracted attention from the more difficult but more rewarding questions of the influences governing the supplies of the factors and of the causes and consequences of changes in technical knowledge. Moreover, the production function has been a powerful instrument of miseducation. The student of economic theory is taught to write Q = f(L,K) where L is a quantity of labour, K a quantity of capital and Q a rate of output of commodities. He is instructed to assume all workers alike, and to measure L in man-hours of labour; he is told something about the index-number problem involved in choosing a unit of output; and then he is hurried on to the next question, in the hope that he will forget to ask in what units K is measured. Before ever he does ask, he has become a professor, and so sloppy habits of thought are handed on from one generation to the next.“(2)* Harcourt I 17 RobinsonVsNeoclassical economics: The neoclassical way of looking at the problem, Joan Robinson argues, directed interest away from the forces that determine the growth of capital and labour, and how technical advances affect growth, accumulation and income shares. Robinson/Harcourt: By contrast, her own interest in capital theory was in order to analyse what she regarded as a secondary factor in the list of factors which explain growth and distribution over time, namely, the role of the choice of techniques of production in the investment decision. The main propositions of The Accumulation of Capital, Robinson [1956](3), are established in a model in which there is only one technique of production available at any moment of time;(…) >Capital/Robinson. Harcourt I 25 Aggregate production function/Robinson/Harcourt: The costing and valuation process is repeated for all equipments, ws and rs and then the relationship between output per head and real capital is plotted to give Joan Robinson's version of the aggregate production function - her pseudo-production function - which has (…) a rather bizarre appearance relative to the smooth curves of the textbooks. RobinsonVsSolow: „It is an absurd, though unfortunately common, error to suppose that substitution between labour and capital is exhibited by a movement from one point to another along a pseudo-production function (see, for example, Solow [1970](4)). Each point represents a situation in which prices and wages have been expected, over a long past, to be what they are today, so that all investments have been made in the form that promises to yield the maximum net return to the investor. The effect of a change in factor prices cannot be discussed in these terms. Time, so to say, runs at right angles to the page at each point on the curve. To move from one point to another we would have either to rewrite past history or to embark upon a long future.“ (Robinson [1971(5)], pp. 103-4. Harcourt I 25/26 Harcourt: Moreover (…) neither the wage rate nor the reward to capital can be obtained by suitable partial differentiation of the factor ratio relationship. Harcourt I 29 Equilibrium: It has been stressed that an implication of Joan Robinson's definition of equilibrium is that points on the pseudo-production function are equilibrium positions and that comparisons between points are just that, comparisons of one equilibrium position with another. >Equilibrium/Robinson. Time/process/accumulation/Harcourt: The comparisons are certainly not a description of a process - a change - whereby accumulation occurs and new, or, rather, different techniques (technical progress is ruled out by assumption) replace old ones as a result, for example, of changes in relative factor prices. >Factor price. Neo-Keynesianism: Moreover, a point which has been reiterated again and again in the literature by neo-Keynesians, especially by Joan Robinson, is that the application of results obtained from such equilibrium comparisons to long-period analyses of actual changes can be, at the least, most seriously misleading and, usually, just plain wrong. Neo-neoclassical economics: This fact vitiates many analyses of the past and, to be fair, has been countered in recent years by an enormous growth of models in which out-of-equilibrium processes are explicitly analysed, often (but not exclusively) by neo-neoclassical economists equipped with the appropriate techniques to do so. *Harcourt: I have changed the notation of the original article in order to make it consistent with the notation of this book. 1. Robinson, Joan (1953-4). 'The Production Function and the Theory of Capital', Review of Economic Studies, xxi, pp. 81-106. 2. Ibid. p. 81 3. Robinson, Joan [1956] The Accumulation of Capital (London: Macmillan). 4. Solow, R.M. [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8. 5. Robinson, J. [1971] Economic Heresies: Some Old-fashioned Questions in Economic Theory (New York: Basic Books)._____________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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