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,
Yours,
Josef