Ian Steedman

Questions for Kaleckians

Two central facts about modern industrial economies are that productive processes (a) use produced inputs and (b) produce more than one kind of output. Yet the Kaleckian mark–up theory of pricing and of distribution, which purports to be empirically realistic and concerned with modern industrial economies, pays little or no attention is paid to these real world phenomena, it is found that a number of familiar Kaleckian constructions and claims are inappropriate or unjustified; a summary of the difficulties which arise will be found at the end of the article.

Reswitching and Primary Input Use

The object of this essay is to explain the consequences of the existence of a positive rate of profit in the neoclassical model of long-run general equilibrium,1 in which two commodities are produced by means of land, labour and produced commodities

Joint Production and the Wage-Rent Frontier

It is well known that in any constant-returns-to-scale production model with single-product processes, homogeneous labour and homogeneous land, the real wage rate is inversely related to the real rent rate, for any sensible measure of real wages and rents. It will be shown below, by means of a simple, twocommodity example, that the same cannot be said a priori when joint production is allowed. Some further consequences of this fact will be set out and the results will then be generalised. Since the theory of single-product processes is predominant in some parts of the literature, whilst joint-product processes are predominant in many parts of the real world, it is important to show explicitly that some familiar theorems of single-products theory do not hold good, without modification, in the joint-products context.

On the transformation of theorems

Abstract Professor W. Ethier (1979) has argued that replacing land by capital in the familiar 2×2 trade model leaves the four basic theorems unaffected, with time-phasing and a positive interest rate. In fact, Ethiers HOS and FPE theorems are different in kind from the traditional ones. The traditional theorems predict certain results in terms of trade-independent data: Ethiers theorems describe equilibrium in terms of factor endowments and intensities defined by equilibrium prices. Hence his theorems do not support his central message that nothing is lost in trade theory by treating capital as if it were homogeneous land.

Reswitching, Primary Inputs and the Heckscher-Ohlin-Samuelson Theory of Trade

Over recent decades the theory of trade has been dominated by the Heckscher-Ohlin-Samuelson (H-O-S) analysis which, in its most common form, deals with a two-country, two-commodity, two-factor model of trade. Since the H-O-S analysis is an application of standard general equilibrium analysis to questions concerning trade, it is to be expected that it might be affected by the recent developments in capital theory, and it can be shown (see Essay 5 below) that if the two ‘factors’ are taken to be labour and ‘value capital’ then the analysis does indeed meet difficulties. The object of the present essay is to show that the H-OS theory also meets difficulties if the two factors are taken to be labour and land, the role of time being recognised by the inclusion in the model of a positive rate of profit (interest). It must, of course, be noted carefully that some writers might wish to argue that the existence of a positive profit rate implies the existence of a third factor, capital, and that the model analysed below therefore has two commodities and three factors. Since it is well known that difficulties arise for the H-O-S analysis when there are more factors than commodities (Samuelson [4]) such a writer might then argue that our analysis is redundant. Our standpoint is that the following analysis is intended for those who, like ourselves, do not regard capital (or time) as a ‘factor’ comparable to land and labour.1

Production of Commodities by Means of Commodities and the Open Economy

The small open economy assumption cannot protect marginalist theory from the Sraffian critique. But a member of Sraffian ideas are not readily applicable in the open economy context.

Basics, Non-Basics and Joint Production

The distinction between basic and non-basic commodities plays a central role in the analysis presented by Sraffa in his Production of Commodities by Means of Commodities (1960). Thus, the conditions of production of basics are said to play an essential part in the determination of prices and the rate of profit, while those of non-basics do not; it follows, in turn, that the effects of taxes and of changes in methods of production are said to depend on whether they relate to basic or to non-basic commodities (see, for example, ibid., sections 6 and 65). It may therefore be of interest to examine rather closely the general formulation of the distinction between basics and non-basics which Sraffa presents in the course of his discussion of joint production.

Welfare Economics and Robinson Crusoe the Producer

The welfare of almost all employed people is significantly affected by how they spend their working hours?and not just by how long they work and what they can purchase with their earnings. Yet this brute fact is all but ignored in welfare economics! It is shown here, in a very simple way, how sharply the familiar results of welfare theory are changed once this glaring omission is rectified.

Many Capital-Output Ratios Increasing with the Interest Rate: An Industry-Level Analysis

Whether there be few or many alternative techniques and whether there be fixed capital or only circulating capital involved, the industry-level capital-output ratios can increase with the rate of interest. Copyright

Produced input use per unit of output

Abstract When an input price and the output price change to keep a firm in equilibrium, useful results follow concerning input use per unit of output (Silberberg). Only some of them survive when input supply firms are also kept in equilibrium.