Humbug Production Function
Neoclassical economics has always tried to portray wages and profits as mere technical variables. At an aggregate level, this is accomplished by connecting labour and capital to output through a ‘well-behaved’ aggregate production function, with the marginal products of labour and capital equal to the wage rate and profit rate, respectively. Thus in competitive equilibrium each social class is pictured as receiving the equivalent of the marginal product of the factor(s) it owns (Shaikh 1980).
- Allen, R.G.D. 1968. Macro-economic theory: A mathematical treatment. London: Macmillan.Google Scholar
- Shaikh, A. 1980. Laws of algebra and laws of production: The humbug production function II. In Growth, profits and property: Essays on the revival of political economy, ed. E.J. Nell. Cambridge: Cambridge University Press.Google Scholar