To read this content please select one of the options below:

The Improbability of Reswitching, the Certainty of Wicksell-Effects and the Poverty of Production Functions: The Cambridge Critique of Capital Transformed^☆

Including a Symposium on New Directions in Sraffa Scholarship

ISBN: 978-1-78714-540-5, eISBN: 978-1-78714-539-9

Publication date: 16 December 2017

Abstract

Capital theory has taken a new turn with the theoretical discovery that wage curves tend to get linear in random systems, the larger they are, and with the confirmation that empirical wage curves do not deviate a great deal from linearity. The present chapter adds to these results by arguing that reswitching becomes less likely for larger systems, while Wicksell effects are almost surely present. But it can also be shown that the elasticity of substitution is likely to be small in random systems so that a policy to lower real wages will not easily generate much additional employment in a closed economy. A new perspective on employment policies is therefore called for.

Keywords

Acknowledgements

Acknowledgement

I should like to thank for comments received on all three occasions mentioned in the title footnote, and in particular, Scott Carter for his annotations to an earlier version.

Citation

Schefold, B. (2017), "The Improbability of Reswitching, the Certainty of Wicksell-Effects and the Poverty of Production Functions: The Cambridge Critique of Capital Transformed^☆ ", Including a Symposium on New Directions in Sraffa Scholarship (Research in the History of Economic Thought and Methodology, Vol. 35B), Emerald Publishing Limited, Leeds, pp. 171-194. https://doi.org/10.1108/S0743-41542017000035B008

Publisher

:

Emerald Publishing Limited