Full text: Lecture Notes: Maturity and Stagnation

A decline in direct cost will increase the slope of the profit 
function; an increase of overhead cost willshift it downwards. 
^learly the balance of the two forcggg wilj^ege^d on the 
utilisation: at a low utilisation j will be decreased, at a high 
one it will Ibe increased. w . ,, „„„ + 
Wfljoxi const£int cost 
Again, a change in the wage-price relatipn^will chagge the 
shape of the profit function ; a relative decrease of wages for example 
/ynA/i/k - ujo 
will increase the profmar^g-i-n- the slope- and at the same time 
shift the curve upward; the new jHapfx profit will be superior 
at any utilisation, but the eaact amount will depend on 
the utilisation. 
Since in my theory there is always talk about the balance of 
the two forces, cost reductions through technical progress and 
wage-price ratio increases through cmmptition, we must 
refer to a certain degree of utilisation in order to state 
unambigously what the balance is. It is natural to choose the 
planned or desired degree of utilisation for the purpose. 
( It is true that the desired utilisation may itself change in the 
process, but then we have the problem of ind/ces with different 
bases which hah have to be linked.). 
Graph: i echnical innovation ledding to decrease in marginal cost and 
increase in overhead cost, compensation by an increase in wage-profit 
ratio.
	        

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