Comment on Prof. Pivetti's paper

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Comment on Prof. Pivetti's paper

Author:: Steindl, Josef

Scope:: Typoskript, 5 Blätter

Year of publication:: 1986

Language:: English

Note:: Unveröffentlichtes Typoskript, Mimeo. - Handschriftliche Anmerkung auf Seite 1: "revised June 1986".

JEL Classification:: E12 [General Aggregative Models: Keynes, Keynesian, Post-Keynesian] E11 [General Aggregative Models: Marxian, Sraffian, Kaleckian]

Shelfmark:: S/M.65.2

Access:: Free access

/ 2 r©l£i"bioris But can these equilibrium wtee be used to draw conclusions about a process of adjustment? In actual fact there is a jumble of capital assets from different periods with different techniques and different cost of output. If there is anything that empirical study can show it is the fact of vast differences in cost of production between different firms ( not temporary or accidental but systematic!). How can a calculation of normal cost uund uniform rate of profit be applied under such circumstances? In fact, there are all the time new techniques emerging, upsetting all chance of equilibrium being ever reached, and the various producers will be modest or ambitious in their profit requirements according to their circumstances. Surely Schumpeter was just a little nearer to the truth when he related profits to these dynamic considerations? Prof.Pivetti has carefully analysed the dilemma ft whichpight arise if we assumed an automatic adjustment of profit rate to interest: This would preclude any effect of interest changes on investment. His solution: Short run changes in interest will affect investment, but once they are regarded as permanent the price adjustment occurs and there can be no further effect on quantities. The necessary condition for this "price effect" is competition: No impediments to free entry and mobility. Prof Pivetti is perfectly aware of the importance of this assumption (p.27) and he tries very hard to play6 down these disturbing elements.

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