Full text: Stagnation.

8 
In a modern economy the existence of large government budgets 
will to a greater or lesser extent attenuate the effects 
of inadequate private investment on effective demand 
and employment. 
The role of finance ( stock markets ) and debt is also treated 
extensively in the above work. 
Sylos-Labini ( 1956 ) also regarded the replacement of 
competitive by oligopolistic structures as the source of 
depressive and stagnationist tendencies. He concentrated 
in particular on the effects which oligoplistic structures 
have on technical progress and innovation. Under the 
oligopolistic regime the chances of new entries are small. 
Innovations are therefore not made by new entrants who 
would undertake new investment, but by the existing large 
concerns. They will have a strong bias in favour of process 
innovations ( which are less favoorable to employment ).. 
And they will finance their innovations to a large extent 
out of depreciation. They space out their innovations in 
such a way as to avoid premature obsolescence. Sylos-Labini 
concludes that under oligopoly the forces generating 
unemployment are stronger than those absorbing it. 
A basic reason for this are the price policies prevailing 
in a concentrated industry where cost reductions due to 
technical progress are less likely to be pa§?ed on to the 
consumer than under a competitive regime. The oligopolistic 
profits of concentrated industries yield more disposable 
funds than are required for self-financing; in other words 
there is a drain on effective demand.
	        

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