Comment on the paper by Prof. H. Kurz: Accumulation, Distribution and the Keynesian Hypothesis.

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Comment on the paper by Prof. H. Kurz: Accumulation, Distribution and the Keynesian Hypothesis.: Preliminary draft

Author:: Steindl, Josef

Scope:: Typoskript, 2 Blätter

Year of publication:: 1985

Language:: English

Note:: Zusatz zum Titel fingiert. - Kommentar im Rahmen der Conference on Sraffa's Production of Commodities, Florence, 24-27 August 1985.

Topic:: Economic history,economic theory,current developments

JEL Classification:: E12 [General Aggregative Models: Keynes, Keynesian, Post-Keynesian]

Shelfmark:: S/M.65.4

DOI:: https://doi.org/10.48671/nls.js.AC14446309

J.Steindl / Comment on the paper by Prof H.Kurz: Accumulation,Distribution and the Keynesian Hypothesis. As a Keynesian I have to comment on the criticism directed against the "neo-Keynesian" view from the classical point of view. H.Kurz argues that "in the long run" saving is adjusted to investment by means of an increase of capacity which makes it possible to increase output and therefore saving '( p.34). On my reading this presupposes that investment, by creating capacity and therefore facilitating greater output, will finance itself. But it seems to be completely overlooked that the capacity effect appears only with a considerable lag after the investment while the saving to finance it must come simultaneously. The fundamental misconception comes out clearly when Kurz speaks of a ." reciprocal 1 adjustment of capacity and aggregate demand" (p 28 ). The "efforts on the part of producers to adjust the capital stock to (expected) demand" ( p.27^8), far from leading to a " long period position of the economy which acts as a centre of gravitation" (p.28), produces violent instability indeed! The expansionary effect of the investment will raise demand very quickly while the capacity effect is still far ahead. A high degree of utilisation will not be brought down by investing more, it will be made even higher! At the back of Prof.Kurz 1 s arguments is not only a neglect of the essential lags, but also a curious philosophical argument about"circular reasoning" (p.31). Investment in the long run is not independent of profits, therefore the determination of profits byinvestment is supposed to be circular reasoning. The hen and the egg. Evidently a difference equation, with the proper lags, will make it possible to explain both that the hen lays the eggs and that the eggs become chicken . The apparent belief in "basic reasons" or "Last causes" which is underlying the arguments of Prof. Kurz seems to play a decisive role in the whole conception of

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