Lecture Notes: Maturity and Stagnation

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Lecture Notes: Maturity and Stagnation

Author:: Steindl, Josef

Scope:: Typoskript, 6 Blätter, mit handschriftlichen Korrekturen und Ergänzungen

Year of publication:: ohne Datum

Language:: English

Description:: Steindl sees his theory on maturity and stagnation positioned in the middle of Harrod's theory and Kaldor's so called Cambridge theory of long run income distribution.

Note:: Vorlesungsnotizen

Related work:: Steindl, Josef: Maturity and Stagnation in American Capitalism. Oxford: Blackwell, 1952

Topic:: Growth,cycle and stagnation

JEL Classification:: E32 [Business Fluctuations, Cycles]

Shelfmark:: S/M.53.5

Access:: Free access

What can we do with the profit function? In the short run, if profits haave to he adjusted upwards or downwards becaus e there is a boom in or a slump in investment, and the saving mainly comes out of profits, then the utilisation will vary and all the other quantities will stay constant, these other quantities being rather rigid in the short run. In the long run we cannot take the constancy of these factors for granted. First , they will chagge in the course of technical ( h,h Q ) and economic ( Tf ,w ) develppment. u econd, they may haveeto change, if the utilisation is not any more a passive factor, and therefore the adjustment of savings and profits can not rely on the fluctuations in utilisation any more. This second caae is relevant for my theory: I assume that firms are in principle concerned with establishing in the long run, that is on the average over boom and slump, a normal or desired degree of utilisation. This is done by varying the pressuce of competition in such a way that either more or less hxekssx capaaity is eliminated in a given year. The variation in competitive pressure involves a ahift, or change in xhajsax the parameters, of the profit function. Thus, in the long run, an increase in profits and savings may be brought about by an increase of the -fr* — hw mark-up —2 rather than an increase in utilisation, 7T and mutatis mutandis the same is true for a decrease in profits. In this sense the long run distribution pattern will change aas a result of a change in the speed of accumulation (rate of investment). In connection with this we have now to eexplain a technical point. If the increase in prdducktivity affeet^variable and overhead cost in the same proportion ( if h and ho ^.s reduced in the same porportion) then a corresponding increase in w/ir may compensate it so that the parameters of equation (lo) rremain unchanged. In the al&erhative case/of a non-ppoportionate movement - for example, if the direct cost decrea:se and the overhead cost are const a nt or even increase, a compensating movement of the wage-price ratiowill not restore the original values of the parameters: the shape of the function will not he the same as before, and the amount of compensating movement rquired to keep the rate of profit unchanged will depend on the existing degree of utilisation.

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