A Model of Technical Progress
The analysis of an economy in which technical progress is going on cannot be made both neat and lifelike. There is nothing in reality which remains constant through time to provide us with neat units in which to calculate. Workers are acquiring new skills and losing old ones. Products are changing in physical character, in saleability and in capacity to satisfy wants. The wants themselves are changing with the products. The purchasing power of money over commodities, or over labour-time, or over both, is changing not only in general level but also in pattern. Above all, capital goods are changing, so that the means of production required for a later technique have little or nothing in common with those of earlier design. On the other hand, analysis which does not take account of technical change can be very neat but it is of no interest. The purpose of the present paper is to set up a highly simplified model in terms of which analysis can be conducted in a definite clear-cut manner, in the hope that it may yield insights that retain some validity when applied to the vaguer and more complicated processes of actual development.
KeywordsReal Wage Marginal Product Technical Progress Consumption Good Full Employment
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- C. Kennedy, ‘Technical Progress and Investment’, Economic Journal, June 1961.Google Scholar