Full text: Brief von Jerzy Osiatyński an Josef Steindl

W.D.N. Sniadeckich 8, zam. 541/77 n. 10.000 
Insfyfuf Historii Nauki 
Oswiafy i Techniki 
ul. Nowy Swiat 72, pok. 9. tel. 26-87-54 
00-330 WARSZAWA 
Jerzy Osiatyriski 
Warszawa, dnia 26 July 1978I 
Professor Josef Steindl 
Schwarzhorng 10/17 
1050 Wien 
Dear Professor Steindl, 
Thank you for sending me the off-print of your "Ideas and concepts of 
long run growth". I read it with great interest. I think your presen 
tation of the essence of the J. von Neumann, Harrod, Neoclassics, and 
Kalecki variety of growth theories illuminating and very lucid. 
On p. 41 /1st complete para/ I’d perhaps mention, next to the impact 
of a reduction of the interest rate, that of a reduction in the income 
taxation - the more so that the tax reduction argument appeals nowa 
days to many as an effective instrument of stimulating the business 
upswing and dumping inflation at the same time. As you certainly re 
member) Kalecki argued that as invfcase of interest rates, to have a 
long-run impact on the trend the taxation of incomes whould have to Is 
reduced not once but continuously /and also that these reductions 
would influence demand not in toto but only in so far as they increased 
I am not certain that I follow your argument starting from the 3rd 
complete para on p. 44 and continued to the middle of p. 45. For simpli 
city I shall assume a closed system /no Import leak in multiplier/. 
Additional investments of the innovator, of, say one unit, due to their 
multiplier effect rise total investment and profits in a given period 
to the amount of, say, three units. Given the capital-output ratio 
this will have a negative effect on future investment decisions due t» 
the new capacity whether this new capacity is large or small. Thus it 
appears to me that the negative effect you mention in the last sentence 
of the 3rd para on p. 44 must be felt notwithstanding the magnitude 
of the new capacity, the latter depending on the innovator*s initial 
investment, the multiplier coefficient and the capital output ratio. 
From what follows in paragraphs 5 and 6 /pp.44/5/ it seems to me you 
consider there the case of a once and for all Innovative investment 
and study the process until the diffusion of that innovation is lahgely 
completed. It is true that towards the end of this process the extra 
profit of the innovator will disappear and the old m^rk-ups will be 
re-establised. But this does not convince me that thpi, as you say, 
"the situation generally becomes more favourable to growth", because 
once the process is completed all competitors end up with new productive 
capacities, which embody new technologies, and this will have a dumping 
effect on the utilisation of capacities and hence also on new investment. 
Thus I do not see how innovation need not have negative after effects 
unless you intruduce a steady stream of new innovations /what you do 
subsequently on p. 45/. Indeed I have an impression that in your argu 
ment you somewhat escape the difficulty by assuming in the 1st complete 
para on p. 45 that the "wage drift" will consume what there is to be 
consumed from new capacities /since "workers spend what they earn"/ and 
thus the level of capacity utilisation will ultimately remain constant. 
However, if this is indeed what you argue - that a redistribution of 
national income towards wages will offset the depressing impacj; of new 
capacities due to a completed round of innovative investments^/this 
could be made clearer to your readers. 

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