Abstract
The supply side of the synthesis model involves the introduction of an aggregate relationship between factor inputs and output. For those who believe that The General Theory achieved its claim of generality by focusing analysis upon a capitalist economy under conditions of less than full employment of resources, this relation, ‘the aggregate production function’ is an anathema, a Trojan Horse which dominates the entire synthesis model and undermines all of Keynes’s insights. The full implications of the aggregate production function will be explored in Chapter 10. At this point we show that it becomes the keystone of the model, establishing the equilibrium solution to the system.
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Note and References
Robert J. Gordon, Macroeconomics (second edn) (Boston: Little, Brown, 1981) p. 176. The aggregate supply curve Gordon refers to here is the aggregate production function translated into a price/output space from a labour/output space. Aggregate supply curves are treated in the discussion of inflation, Chapters 12 and 14.
After making no mention of any aggregation problem, Parkin writes, ‘This completes the definition of the short-run aggregate production function’ (Michael Parkin, Macroeconomics (Englewood Cliffs, New Jersey: Prentice-Hall, 1984)) p. 112. Dernburg is considerably more careful.
(Thomas F. Dernberg, Macroeconomics (New York: McGraw-Hill, 1985) pp. 145–8.) Bronfenbrenner, whose text includes non-neoclassical treatments of macroeconomics, makes no mention of the aggregation problem when he presents the aggregate production function.
(Martin Bronfenbrenner, Macroeconomic Alternatives (Arlington Heights, Illinois: AHM Publishing Company, 1979) pp. 52, 220–21.)
See the seminal article by Smith and a similar treatment by Ackley. In both of these the commodity market equilbrium is treated by use of ‘IS-LM’ curves (see Chapter 5). (Warren L. Smith, ‘A Graphical Exposition of the Complete Keynesian System’, The Southern Economic Journal, vol. 23 (October 1956); and Gardner Ackley, Macroeconomics: Theory and Policy (New York: Macmillan, 1978).)
For an elaboration of the implications of this definition, see John Weeks, Capital and Exploitation (New York and London: Princeton University Press and Edward Arnold, 1981), ch. 2.
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© 1989 John Weeks
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Weeks, J. (1989). The Neoclassical Model with a Supply Side. In: A Critique of Neoclassical Macroeconomics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20296-6_2
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DOI: https://doi.org/10.1007/978-1-349-20296-6_2
Publisher Name: Palgrave Macmillan, London
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