J.Steindl 
/ 
Comment on the paper by Prof H.Kurz: Accumulation,Distribution 
and the Keynesian Hypothesis. 
As a Keynesian I have to comment on the criticism directed 
against the "neo-Keynesian" view from the classical 
point of view. 
H.Kurz argues that "in the long run" saving is adjusted to 
investment by means of an increase of capacity which makes 
it possible to increase output and therefore saving '( p.34). 
On my reading this presupposes that investment, by creating 
capacity and therefore facilitating greater output, will 
finance itself. But it seems to be completely overlooked 
that the capacity effect appears only with a considerable 
lag after the investment while the saving to finance it 
must come simultaneously. The fundamental misconception 
comes out clearly when Kurz speaks of a ." reciprocal 
1 
adjustment of capacity and aggregate demand" (p 28 ). The 
"efforts on the part of producers to adjust the capital stock 
to (expected) demand" ( p.27^8), far from leading to a 
" long period position of the economy which acts as a centre 
of gravitation" (p.28), produces violent instability indeed! 
The expansionary effect of the investment will raise demand 
very quickly while the capacity effect is still far ahead. 
A high degree of utilisation will not be brought down by 
investing more, it will be made even higher! 
At the back of Prof.Kurz 1 s arguments is not only a neglect 
of the essential lags, but also a curious philosophical 
argument about"circular reasoning" (p.31). Investment in the 
long run is not independent of profits, therefore the 
determination of profits byinvestment is supposed to be 
circular reasoning. The hen and the egg. Evidently a 
difference equation, with the proper lags, will make it 
possible to explain both that the hen lays the eggs 
and that the eggs become chicken . 
The apparent belief in "basic reasons" or "Last causes" 
which is underlying the arguments of Prof. Kurz 
seems to play a decisive role in the whole conception of