Full text: Lecture Notes: Maturity and Stagnation

Harrod no doubt was strongly influenced by the experience of 
the nineteen thirties. His case of a high warranted rate of 
growth exceeding the natural rate might be interpreted as follows 
( the responsibility for this explanation feeing mine): 
Our system is still adapted to the high rates of growth which 
obtained in earlier stafees of capitalism in so far as its 
saving propensities are high in relation to its requiremunts of 
capital as determined by(_demographig and technical conditions. 
A high saving propensity ,however, means a high share of profits 
in the national income . Thus the implication is that the 
distribution is adapted to the high rates of growth *fc±sc±HXgH 
characteristic early capitalism, but ill-suited to a modern 
- a mature - economy. 
While Harrod assumed a very high degree of rigidity of the 
saving ratio, and therefore, in my view implicitly also of the 
distribution of income, the ppposite is assumed by neo-classical 
theory, but also by the so-called Cambridge theory of long run 
income distribution as represented by Kaldor. My own theory is 
in the middle of these extremes: I assumed ^possibility of 
adaptation.in principle^of the distribution to the requirements of 
growth, but I realised that its practical importance in a modern 
ecomomy dominated by oligopolies is limited, and therefore 
there is a rigidity of distribution, though not absolute, still 
sufficiently great to bring about the same result as in Harrods case: 
A tendency to long run unemployment which persists even if it is 
overlaid by bompensating factors like armaments and other public 
expenditure financed by taxes on profits.
	        

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