As a short hand expression we can write for the last equation:
P - Au - B
T he neatness of this expression is of course due to the
drastic simplifications we have made:
1) Linearity of t|ie function
2) Overhead cost are assumed to he a constant ratio of
the capacity output (at prices of the basis year ).
3) We consider only price of output and wage, but do not
introduce rq.w materials, which according to Kalecki ought to have
an influence on the profit margins.
In fact, if the constants in the equation are constant
then the direct labour cost are a constant share of the price of
the output. From Kaleckis point of view this would bejtrue only
if the proportion of rqw material dnd direct wage cost were
constant, and if the mark up was constant too.
It appears that a change iin the mark-up
—
implies a proportionate change in the coefficient A of utilisation
in equation Oo). ( assuming either the proportionality of
raw material cost or that the mark-up is/calcultated on direct labour
alone).
ad 2) The assumption about overhead cost implies that there are
no economies or diseconomies of scale in overhead labour .
The last mentioned assumption particularly is probably quite
unrealistic. It is to be understood merely as a simplification.
In the general case we should habe a function f ( K* ) which
will presumably be non-decreasing. Changes taking\ place in this
function or in h Q in the course of time are a different matter:
they will be due to technical progress.