Nicholas Kaldor

Alternative theories of distribution

Дается обзор теорий, касающихся одной из ключевых проблем политической экономии, - проблемы распределения дохода. Имеющиеся теории классифицируются по четырем группам: классические (рикардианские), марксистские, неоклассические и кейнсианские.

Capital Accumulation and Economic Growth

A Theoretical model consists of certain hypotheses concerning the causal inter-relationship between various magnitudes or forces and the sequence in which they react on each other. We all agree that the basic requirement of any model is that it should be capable of explaining the characteristic features of the economic process as we find them in reality. It is no good starting off a model with the kind of abstraction which initially excludes the influence of forces which are mainly responsible for the behaviour of the economic variables under investigation; and upon finding that the theory leads to results contrary to what we observe in reality, attributing this contrary movement to the compensating (or more than compensating) influence of residual factors that have been assumed away in the model. In dealing with capital accumulation and economic growth, we are only too apt to begin by assuming a ‘given state of knowledge’ (that is to say, absence of technical progress) and the absence of ‘uncertainty’, and content ourselves with saying that these two factors — technical progress and uncertainty — must have been responsible for the difference between theoretical expectation and the recorded facts of experience. The interpretative value of this kind of theory must of necessity be extremely small.

Speculation and Economic Stability

The purpose of the following paper is to examine, in the light of recent doctrines, the effects of speculation on economic stability. Speculation, for the purposes of this paper, may be defined as the purchase (or sale) of goods with a view to re-sale (re-purchase) at a later date, where the motive behind such action is the expectation of a change in the relevant prices relatively to the ruling price and not a gain accruing through their use, or any kind of transformation effected in them or their transfer between different markets. Thus, while merchants and other dealers do make purchases and sales which might be termed ‘speculative’, their ordinary transactions do not fall within this category. What distinguishes speculative purchases and sales from other kinds of purchases and sales is the expectation of an impending change in the ruling market price as the sole motive of action. Hence ‘speculative stocks’ of anything may be defined as the difference between the amount actually held and the amount that would be held if, other things being the same, the price of that thing were expected to remain unchanged; and they can be either positive or negative.1

The scourge of monetarism

Now thoroughly revised and updated, this edition also includes a new introduction which places Britains experience of monetarism into a world context.

A New Model of Economic Growth

The purpose of this paper is to present a “Keynesian” model of economic growth which is an amended version of previous attempts put forward by one of the authors in three former publications.1 This new theory differs from earlier theories mainly in the following respects: (1) it gives more explicit recognition to the fact that technical progress is infused into the economic system through the creation of new equipment, which depends on current (gross) investment expenditure. Hence the “technical progress function” has been re-defined so as to exhibit a relationship between the rate of change of gross (fixed) investment per operative and the rate of increase in labour productivity on newly installed equipment; (2) it takes explicit account of obsolescence, caused by the fact that the profitability of plant and equipment of any particular “ vintage ” must continually diminish in time owing to the competition of equipment of superior efficiency installed at subsequent dates; and it assumes that this continuing obsolescence is broadly foreseen by entrepreneurs who take it into account in framing their investment decision. The model also assumes that, irrespective of whether plant and equipment has a finite physical life-time or not, its operative life-time is determined by a complex of economic factors which govern the rate of obsolescence, and not by physical wear and tear; (3) in accordance with this, the behavioural assumptions concerning the investors’ attitudes to uncertainty in connection with investment decisions and which arc set out below, differ in important respects from those made in the earlier models; (4) account is also taken, in the present model, of the fact that some proportion of the existing stock of equipment disappears each year through physical causes—accidents, fire, explosions, etc.—and this gives rise to some “ radioactive ” physical depreciation in addition to obsolescence; (5) since, under continuous technical progress and obsolescence, there is no way of measuring the “ stock of capital ” (measurement in terms of the historical cost of the surviving capital equipment is irrelevant; in terms of historical cost less accrued “ obsolescence ” is question-begging, since the allowance for obsolescence, unlike the charge for physical wear and tear etc., depends on the share of profits, the rate of growth, etc., and cannot therefore be determined independently of all other relations), the model avoids the notion of a quantity of capital, and its corollary, the rate of capital accumulation, as variables of the system; it operates solely with the value of current gross investment (gross (fixed) capital expenditure per unit of time) and its rate of change in time. The macro-economic notions of income, income per head, etc., on the the other hand are retained.

The economic aspects of advertising

Оценивается влияние рекламы на общественное благосостояние и распределение ресурсов между различными сферами использования. Реклама рассматривается как антиконкурентная, по своей сути, практика, в частности из-за того, что она снижает ценовую эластичность спроса и служит определенным барьером для входа в отрасль потенциальных конкурентов.

Equilibrium Theory and Growth Theory

Publisher Summary This chapter discusses equilibrium theory to be misleading and useless for formulating nontrivial predictions concerning the effects of policy measures or other changes and growth theory or non-equilibrium theory with focus on the manner of operation of both exogenous and endogenous forces in a market economy making for continuous change and development. The Walrasian equilibrium theory is a highly developed intellectual system, much refined and elaborated by mathematical economists since World War II. If the market is thought to be primarily an instrument for transmitting impulses to change, then it is a logical conclusion that the various interrelated sectors within an economy should under favorable conditions, by a kind of chain reaction, receive impulses through market phenomena, and transmit impulses in turn. Thereafter, the primary thing that is wrong with the paradigm of equilibrium theory is thinking of a given quantum of resources, which are scarce and always fully utilized, and which are effectively allocated between different uses. Most abstract economic models postulate a closed system, but they apply the conclusions reached to open systems such as national economies, without being fully aware of the inconsistencies involved in this procedure. There is no such really closed system except the world economy as a whole, and to capture the really important aspects of the economic mechanism, one ought to use a paradigm that embodies the significant features of the world economy as a unit as a starting point in the basic theoretical model.

The role of commodity prices in economic recovery

The economic model which in my view is most likely to highlight the central problems facing the world economy is the one which looks upon the economic activities of the world as consisting of two large complementary sectors. One is the primary sector, which supplies food, raw materials and energy, all of which depend upon man’s powers to exploit for his own use the natural resources of the planet. The other main sector is the so-called secondary sector, which consists of the production of finished goods out of the products of the primary sector. In a simple approxlmatlon we could refer to these two sectors as “agriculture” and “industry.” But not all primary products are agricultural; there are all the minerals and forms of energy such as coal and oil which are the result of mining. What is common to all of them is that they are “landbased” activities in the production of which natural resources (or simply “land” to use the classical expression) play an important role. Industry on the other hand is dependent of the flows of supplies of primary products, for the conversion of which it requires increasing amounts of labor and capital. However, the availability of labor and capital for industrial purposes cannot really be regarded as an effective limitation in itself except for short periods. The conversion capacity of the numerous industries of the world can be treated as given at any one moment, as the heritage of the past, but over longer periods it can be increased almost indefinitely, since on a global scale there are no practical limits to the increased employment of labor, whilst the accumulation of capital through additional investment is but a facet of the increase in industrial production and a more or less automatic consequence of the increase in demand for manufactured goods. The classical economists, Adam Smith and his followers, were undoubtedly on the right track when they made their predictions on the assumption that while the law of increasing returns applies in industry (because the productivity of labor depends on the division of labor and the latter in turn depends on the size of the market), the law of diminishing returns applies in agriculture, because the most favorable opportunities are exploited first, and any further enlargement of production implies exploiting the less favorable or less adaptable resources of nature. Hence their underlying pessimism based on the existence of ultimate limits to primary production which must bring all economic growth sooner or later to an end. Yet nowhere were the predictions of economists so completely falsified as in the prophecy of Malthus and Ricardo that with the growth of world population more and more of the world’s labor and capital resources would be required to be devoted to agriculture, leaving less available for industry and services. On the contrary, the last two hundred years witnessed, despite the enormous population explosion, a spectacular diminution of the share of economic resources devoted to agriculture and mining. There can be no guarantee that this favorable trend will continue. That it was so completely unforeseen was due to the failure to recognize that land-saving or natural-resource-saving technological progress was so much more important quantitatively than the labor-saving technical progress in the manufacturing industries. This account gives a partial view, however, since the world production of primary commodities has not grown as fast as would have been required to raise the living standards of the world population at the same rate as those of the industrially developed countries which comprise only one-

Public or Private Enterprise — the Issues to be Considered

The subject matter of this meeting concerns the relative advantages of public and private enterprise in mixed economies.

The Foundations of Free Trade Theory and their Implications for the Current World Recession

Traditional theory, both classical and neo-classical, asserts that free trade in goods between different regions is always to the advantage of each trading country, and is therefore the best arrangement from the point of view of the welfare of the trading world as a whole, as well as of each part of the world taken separately.1 The purpose of this paper is to show that these propositions are only true under specific abstract assumptions which do not correspond to reality. I want to show that conditions can exist (and indeed are likely to exist) in which unrestricted trade may lead to a loss of welfare to particular regions or countries and even to the world as a whole — the world will be worse off under free trade than it could be under some system of regulated trade.