A possible approach
Let us take it that the trend is created by the emergence of
new techniques which lead to innovative investment of
the pioneers. Thus the series of such pioneering investments
will be a relevant observation for the explanation of the trend.
In the wake of each pioneer comes the diffusion of the
new methods which accounts for the bulk of investment
and which depends very much on economic factors as far as
the timing and the speed of the diffusion is concerned.
Since the technical progress leads to increasing productivity
it must involve an increase in real wages ( if there is
not to be a crises which blocks the diffusion).
The consequence is that certain pride r methods will become
unrenumerative and the plant and the firms which own them
will be driven out of the market. Thus I have to insist on
my original point ( in polemics with Kalecki ) that
the (premature ) destruction of capcaity is an element which
plays a role in the trend ( it works against the creation
of overcapacity ). However I do now agree with Kalecki that
the more important factor is the continuing creation pf
new purchasing power by new innovations.
I feel however that we need to have a mechanism which
ensures that there is now excess capacity arising in order
satisfactorily to explain the trend. I see such a mechanism
in the competitive process wihich I described in Maturity
and Stagnation. The pressure of competition by new entrants
Cl/
and innovators Ipds to reduction of profit margins to such
a level as will be compatible with a normal or aatisfactory
utilisation of capacity.