7
In fact, the railway was in the field of organisation and
M
financeas much or more of an innovation than in technology.
In my book I spoke of a redistribution of the profits of
indu: stry in favor of the oligopolistic sector ( "maldistribution
of profits" ). In the case of the railroads we seem to
note more, a redistribution of capital market funds, credits,
management talent; the bankers who sat on the boards of the
railway corporations must have been heavily biased in favor
of the megacorporation and against the finance of innovations
in new fields and new enterprises.
Moreover, the crisis of the railroads manifested itself
in 1894 -98 as a consequence of a big recession which one
may suspect to have resulted from a general shift to the
oligppoly sector at the expense of consumption.
Thus behind the argument of the dominant industry and its
role in the decline there is again the more complicated
action of oligopoly in the field of organisation.
Let me only briefly touch on the central ideasof my book.
I view e competition more in the manner of the classic
S,
Competition has the function of eliminating excess capacity
^
and it does this by cutting longrun profits at given utilisation
of capacity( or Kalecki's "mark-up" ) . Restauration of a
normal degree of utilisation and a normal profit margin
thus goes hand in hand. ( The long run to which the statements
refer is simply an average over the business cycle ).
Normal profit margins in this context are determined
by the requirements of accumulation, i.e. what is necessary
to finance investment. The latter, the accumulation, is
¿imply assumed to be given somehow by the preceding long term
development of the economy and by exogenous influences.
I insert here a very simple piece of algebra to clarify ideas.