Full text: Brief von Josef Steindl an Krishna Bharadwaj

I any case this question is not receiving anything like the attention 
and explanation it deserves, it is slipped over in all the discussions. 
I want to illustrate my general puzzlement with this 
whole subject bay something concrete, namely the demand function for 
investment (p.16 ). This according to Garegnani, is derived from 
the demand function for capital ( you relegated the question to 
a footnote now ). I think the steady state growth will beimportant here 
to justify the result. Moreover, it strikes me that the argument always 
runs in terms of substitution of captal for labour. Would not the 
thing be cmplicated if you take into account that entrepreneurs 
may simply want to invest in order to inrease their capacity, 
In fact this case is the one which Keynes and Kalecki primarily had in 
mind when they talked of investment and the inducements to it. 
Does Garegnani assume that there is always full capacity use in 
the steady state growth? If, on the other hand, you assume that 
investment creates new capacity, then you have an obvious reason 
why the Hicksian I S curve is simply wrong: It is not possible to 
create a continuing flwo of investment by reducing the rate of interest 
because of the capacity effects. It seems to me that this is the real 
reasoh why Hicks and tutti quanti are wrong. 
I have only one little criticism of your foot note on p 24i Tfee 
Marx department scheme was used by K. to establish the equation: profits 
equals investment plus capitalist consumption. The distribttion share 
is independent of this, and based(partly) on the mark-up, which does 
not presuppose necessarily oligopoly but only imperfect competition. 
Kaleckis distribution theory gives only a very general framework. 
But so does, and iven more so, your surplus approach, ^on Harris 
praised it as an advantage that it relegates the determination of the 
real wage to exogenous influence. 
I hope you will be in Trieste in August and we shall be 
able to talk there. • L hank you very much for your new years card and 
your wishes which I reciprocate! 
Amit has been here and we have produced a conspirational 
paper on monetatlsm 
With my best wishes, 

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