Brief von Josef Steindl an Krishna Bharadwaj
Josef
Steindl
1505117019611
1050 Wien, Schwarzhomgasse 10/17
Jan.24, 1982.
ear Krishna,
I applogize for taking so lang to answer, hut I have been
working on a few papers and I am very slow nowadays.
You have written a very beautiful paper on a forbiddingly
difficult subject. My comments almost entirely refer not to
your exposition but to its subject - the discussion round Keynes.
It will not be a secret to you that I have a f eling of deep
alienation with regard to this discussion. In fact, I can't make
head and tails of it. Let me mention throe fairly general points*
1. The discussion at Trieste and what they referred to, are
almost exclusively turning on Keynes a3 if this were a father figure
which holds pepple in his grips. If the matter, the problems are
of interest in the first place, and not the appreciation of depreciation
of a particular life work, then you would think it natural that
Kalecki would be included euqually, having the same results as heh;.d
broadly speaking but different assumptions ( distribution theory! )
and a much less ambiguous and more comprehensive system. Equally,
Keynes' friends Joan R., Kahn al so Harrod could just as well
I
contribute to an understanding of what is behind this theory.
2. What is long run? You come to it fairly late in your paper, on
p 27 -29. It Appears that it is steady state growth. Strictly
speaking you jean only compare two such growth systems, which have
gone on for a very |lo g time and Eire continuing forever! But I
could hardly jibe too strict about i^t, since Harrod has used the
method or concept oijf steadiy state growth and 3 have I mylelf in
i
Maturity etc. The o!;ppis±te to it would be process analysis which
pr ceeds from peri >d to period, and which could also be applied to
the long run Obvi imsly the steady gr owth is a very abstract concept
and its basis must Ibe somewhat speculative, certainly much more than
short run pr cess <|malysis which can more plausibly appeal to facts.
^ You refer t > peisrmanent characteristics of the system, but are there
any since the syst em continuously changes? The permanent features are
either very general ( there is a surplus, but how much? ) or they
reflect an ideology.
5. I comldtely fafll to understand how saving which is ( admittedly,
I suppose) adjusted to investment via the GDP, can be equalised to
investment (or rarthor, the other way round) by the rate of interest.
I seems that different concept of savings must be used here (ex ante?)
I any case this question is not receiving anything like the attention
and explanation it deserves, it is slipped over in all the discussions.
I want to illustrate my general puzzlement with this
whole subject bay something concrete, namely the demand function for
investment (p.16 ). This according to Garegnani, is derived from
the demand function for capital ( you relegated the question to
a footnote now ). I think the steady state growth will beimportant here
to justify the result. Moreover, it strikes me that the argument always
runs in terms of substitution of captal for labour. Would not the
thing be cmplicated if you take into account that entrepreneurs
may simply want to invest in order to inrease their capacity,
In fact this case is the one which Keynes and Kalecki primarily had in
mind when they talked of investment and the inducements to it.
Does Garegnani assume that there is always full capacity use in
the steady state growth? If, on the other hand, you assume that
investment creates new capacity, then you have an obvious reason
why the Hicksian I S curve is simply wrong: It is not possible to
create a continuing flwo of investment by reducing the rate of interest
because of the capacity effects. It seems to me that this is the real
reasoh why Hicks and tutti quanti are wrong.
I have only one little criticism of your foot note on p 24i Tfee
Marx department scheme was used by K. to establish the equation: profits
equals investment plus capitalist consumption. The distribttion share
is independent of this, and based(partly) on the mark-up, which does
not presuppose necessarily oligopoly but only imperfect competition.
Kaleckis distribution theory gives only a very general framework.
But so does, and iven more so, your surplus approach, ^on Harris
praised it as an advantage that it relegates the determination of the
real wage to exogenous influence.
I hope you will be in Trieste in August and we shall be
able to talk there. •Lhank you very much for your new years card and
your wishes which I reciprocate!
Amit has been here and we have produced a conspirational
paper on monetatlsm
With my best wishes,
Yours,
Josef
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