From Stagnation in the 30s to Slow Growth in the 70s.

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: From Stagnation in the 30s to Slow Growth in the 70s.: Fassung 2

Author:: Steindl, Josef

Scope:: Typoskript, 24 Blätter, mit zahlreichen Anstreichungen und Anmerkungen

Year of publication:: 1989

Source material date:: [vermutlich um 1989]

Note:: Kopie einer Fassung mit kopierten, ursprünglich handschriftlichen Korrekturen und handschriftlichen Anmerkungen und Anstreichungen. Der vorliegende Text wurde in einer minimal geänderten Fassung zweimal publiziert. In den "Economic Papers" fehlt der einleitende Absatz ("Personal Reminiscenes").

Topic:: Growth,cycle and stagnation

JEL Classification:: E32 [Business Fluctuations, Cycles] O11 [Macroeconomic Analyses of Economic Development]

Shelfmark:: S/M.59.6

Rights of use:: Free access In Copyright

Access:: Free access

DOI:: https://doi.org/10.48671/nls.js.AC14446134

/ 9 The restauration of a normal u may come about by an increase in effective demand - by a shift to wages which is the same as a shift to consumption - or elsi-it may come about by a reduction in productive capacity. In the former case there will be an increase in the multiplier: The reduction in the growth rate will thus imply a structural change in favor of consumption at the cost of investment. The alternative form of adjustment, the elimination of capacity, will to some extent be inevitable, if we assume that firms have very different cost and some are at the margin of existence and profitability. They will be pushed out mostly on account of very high break-even points. The solution by way of capacity elimination will also be inevitable if there are special structural problems owing to technica_l change. But the expansion of demand can in principle also play a role in the reestablishment of normal capacity. In my book I relied only on the reduction in capacity because I started from a micro-economic analysis of a single industry. Now my message was of course that this adjustment to a reduction in growth does not work in our modern economy and has not worked already for a long time, because cut throat competition among giant firms is exceedingly dangerous and costly. The elimination of excess capacity by competition does not work. In consequence there arises a downward cumulative process based on the fact that the reduction in utilisation affects adversely investment. In this way a continuing decline of accumulation may well be explained. If in fact it stretches out over many decades one may however, well ask how it could take so long: One would have expected it to proceed rather more quickly. It would seem, intuitively, that there must have been counteracting forces acting as a brake on the decline.

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