Incidentally, , when in para 5, p. 44, you say "there must thus be an
'enforced raationalisation 0 investment, a seemingly perverted reaction
to a fall in profits and demand", you probably mean "reaction to a fall
in competitors* profits and in demand for their products", for there
is, if I understood you well, only a redistribution of profits and
demand between the innovator on the one hand and his competitors on
the other while the relative income distribution fewtee between profits
and wages remains unaffected. Is that correct?/
Once a constant process of introducing new innovations is introduced,
its impact on the trend depends on the relative advantages which these
innovations offer to those who introduce them, but also on the "general
climate", the "state of business", "animal spirits", etc. The latter
may be different in some countries and/or periods than in others. Thfe
could explain some differences in output series. What will happen,
however, if after a period of successful "enforced rationalisation"
investments 4ha4a there is a change in the entrepreneurs* attitudes
/say, in their "animal spirits 1 / and a gereral ease in competition
ensues. Would not it resula rather in a protracted depression than in
a positive tpfid (though at somewhat lower rate of growth than before)?
How should thepe and similar factors,which are perhaps more of a socio
logical character, be accounted for in your formula which is meant to
explain both the cycle and the trend? Would it not be easier to account
for them in a separate equation determining F/t/?
I need not mention how very stimulating I found your paper and I am
sure I will come back to it more than once. I shall be most obliged
to hear from you on the points I have mentioned above.
This paper is an evidence that you are indeed in a very good form}
this is excellent news.
With best regards and greetings
Yours sincerely