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Notes on the accumulation and utilization of capital: Some theoretical issues

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  • Michalis Nikiforos

Abstract

This paper discusses some issues related to the triangle between capital accumulation, distribution, and capacity utilization. First, it explains why utilization is a crucial variable for the various theories of growth and distribution, and, more precisely, with regards to their ability to combine an autonomous role for demand (along Keynesian lines) and an institutionally determined distribution (along classical lines). Second, it responds to some recent criticism by Girardi and Pariboni (2019) and I explain that their interpretation of the model in Nikiforos (2013) is misguided, and that the results of the model can be extended to the case of a monopolist. Third, it provides some concrete examples on why demand is a determinant for the long‐run rate of utilization of capital. Finally, it argues that when it comes to the normal rate of utilization it is the expected growth rate of demand that matters, and not the level of demand. This insight provides a more straightforward way to link the adjustment at the micro and the macro level.

Suggested Citation

  • Michalis Nikiforos, 2023. "Notes on the accumulation and utilization of capital: Some theoretical issues," Metroeconomica, Wiley Blackwell, vol. 74(1), pages 223-247, February.
    • Handle: RePEc:bla:metroe:v:74:y:2023:i:1:p:223-247
    DOI: 10.1111/meca.12407
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    References listed on IDEAS

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    1. Michalis Nikiforos, 2013. "The (Normal) Rate of Capacity Utilization at the Firm Level," Metroeconomica, Wiley Blackwell, vol. 64(3), pages 513-538, July.
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    5. Marc Lavoie, 1996. "Traverse, Hysteresis, and Normal Rates of Capacity Utilization in Kaleckian Models of Growth and Distribution," Review of Radical Political Economics, Union for Radical Political Economics, vol. 28(4), pages 113-147, December.
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    7. Michalis Nikiforos, 2021. "Notes on the accumulation and utilization of capital: Some empirical issues," Metroeconomica, Wiley Blackwell, vol. 72(4), pages 679-695, November.
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    20. Fabio Freitas & Franklin Serrano, 2015. "Growth Rate and Level Effects, the Stability of the Adjustment of Capacity to Demand and the Sraffian Supermultiplier," Review of Political Economy, Taylor & Francis Journals, vol. 27(3), pages 258-281, July.
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    1. Codrina Rada & Ansel Shiavone & Rudiger von Arnim, 2024. "An exploration of neo-Goodwinian theory of cyclical growth," Working Papers 2403, New School for Social Research, Department of Economics.

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