Full text: Stagnation.

The work of Baran (1957 ) and Baran-Sweezy ( 1966 ), written 
during the post-war period of prosperity, dealt extensively 
with the counteracting factors. They stressed in particular 
the importance of sales cost and of public spending but 
played down the effect of innovations on investment. 
Starting from a similar mixture of strands but more specifically 
from Kajbeckian economics Steindl ( 1952 ) asked what 
consequences the shift of capitalism from competition to 
oligopoly near the turn of the century might have had. 
He chose the U.S. because it seemed more nearly a closed 
and private system. 
Steindl saw the function of competition in the elimination 
or prevention of excess capacity. Excess capacity had two 
effects: It discouraged investment; and it increased 
competitive pressure since everybody wanted to gain room 
at the expense of his competitors. This could succeed ony 
in the long run by squeezing some of the capacity out of 
the market. The procedure involved a simultaneous squeezing 
of the profit margin ( measured at normal utilisation of 
capacity ). Restauration of a normal degree of utilisation 
had to go hand in hand with restauration of a normal profit 
Here a link between distribution and the process of investment 
was established which so far had been missing: In Kalecki's 
system the utilisation of capacity played a purely 
passive role while here it was regarded as an important 
determinant of investment, independently of its influence 
on profits so that in two cases with the same rate of profit 
but with different utilisation the investment would be larger 
with the higher utilisation. 
The distribution theory implied in this mechanism of

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