In Chapters 1, 2 and 3 it was taken for granted that capital and what it produces can be measured in the same units. This is implicit in the Cobb-Douglas and CES production functions which suggest that there is a clear relationship between the quantity of capital and the quantity of output. It is implicit in the differentiation of such functions to obtain the marginal products of labour and capital. It is implicit in the type of argument where it is supposed that if a given fraction of the value of output is invested and added to the capital stock, this will increase by precisely the value of output times this fraction, with predictable effects on the following year’s potential output.
KeywordsMachine Tool Switching Point Gestation Period Fixed Capital Capital Intensity
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- 1.See Robinson, The Accumulation of Capital, pp. 109-10; P. Sraffa, Production of Commodities by Means of Commodities (Cambridge U.P., 1960) pp. 34-40, 81-7; J. R. Hicks, Capital and Growth (Oxford U.P., 1965) pp. 148-69; Luigi L. Pasinetti, ‘Changes in the rate of profit and switches of technique’, David Levhari and Paul A. Samuelson, ‘The nonswitching theorem is false’, and Michael Bruno, Edwin Burmeister, and Eytan Sheshinski, ‘Nature and implications of the reswitching of techniques’, all in Quarterly Journal of Economics, vol. LXXX (Nov 1966); Joan Robinson and K. A. Naqvi, ‘The badly behaved production function’, Quarterly Journal of Economics, vol. LXXXI (NOV 1967); and Harcourt, Some Cambridge Controversies in the Theory of Capital, for a general summary and survey of the debate.Google Scholar
- 1.Cf. Bruno, Burmeister and Sheshinski, op. cit., p. 534; and W. A. Eltis, Economic Growth: Analysis and Policy (Hutchinson, 1966) p. 65.Google Scholar
- 1.J. R. Hicks, ‘A Neo-Austrian growth theory’, Economic Journal, vol. LXXX (June 1970).Google Scholar