Full text: Trend and Cycle

ssible approach 
Let us take it that the trend is created by the emergence of 
new techniques which lead to innovative investment of 
the pioneers. Thus the series of such pioneering investments 
will be a relevant observation for the explanation of the trend. 
In the wake of each pioneer comes the diffusion of the 
new methods which accounts for the bulk of investment 
and which depends very much on economic factors as far as 
the timing and the speed of the diffusion is concerned. 
Since the technical progress leads to increasing productivity 
it must involve an increase in real wages ( if there is 
ft 
not to be a crises which blocks the diffusion). 
The consequence is that certain plder methods will become 
unrenumerative and the plant and the firms which own them 
will be driven out of the market. Thus I have to insist on 
my original point ( in polemics with Kalecki ) that 
the (premature ) destruction of capcaity is an element which 
plays a role in the trend ( it works against the creation 
of overcapacity ). However I do now agree with Kalecki that 
the more important factor is the continuing creation of 
new purchasing power by new innovations. 
I feel however that we need to have a mechanism which 
ensures that there is now excess capacity arising in order 
satisfactorily to explain the trend. I see such a mechanism 
in the competitive process wihich I described in Maturity 
and Stagnation. The pressure of competition by new entrants 
and innovators leds to reduction of profit margins to such 
a level as will be compatible with a normal or aatisfactory 
utilisation of capacity.
	        

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