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Mathematical Vindication of Ricardo on Machinery

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  • Samuelson, Paul A

Abstract

Ricardo is shown to be right that machinery can hurt wages and reduce output. A dramatic robot example reveals Knut Wicksell's erro r in believing that Pareto optimality calls for no drop in total outp ut from a viable invention. Under Ricardo's axiom that labor supply a djusts to keep wages at the subsistence level, he can correctly deduc e on a market-clearing basis a rise in his net product (rent plus int erest), while the greater drop in population and total wages results in a reduction in his gross product (rent plus interest plus wages). Copyright 1988 by University of Chicago Press.

Suggested Citation

  • Samuelson, Paul A, 1988. "Mathematical Vindication of Ricardo on Machinery," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 274-282, April.
  • Handle: RePEc:ucp:jpolec:v:96:y:1988:i:2:p:274-82
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    Cited by:

    1. Marco Capasso & Tania Treibich & Bart Verspagen, 2015. "The medium-term effect of R&D on firm growth," Small Business Economics, Springer, vol. 45(1), pages 39-62, June.
    2. Takashi Uchiyama, 2000. "Ricardo on machinery: a dynamic analysis," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 7(2), pages 208-227.
    3. Piva, Mariacristina & Vivarelli, Marco, 2017. "Technological Change and Employment: Were Ricardo and Marx Right?," IZA Discussion Papers 10471, Institute for the Study of Labor (IZA).
    4. Peter Sinclair, 2016. "Ezra Mishan, Contrarian And Sage: An Appreciation," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(03), pages 1-9, June.
    5. Mariacristina Piva & Marco Vivarelli, 2017. "The employment impact of R&D expenditures and capital formation," DISCE - Quaderni dell'Istituto di Politica Economica ispe0078, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    6. Miguel Morin, 2015. "The Labor Market Consequences of Electricity Adoption: Concrete Evidence from the Great Depression," Cambridge Working Papers in Economics 1554, Faculty of Economics, University of Cambridge.
    7. Thomas M. Humphrey, 2004. "Ricardo versus Wicksell on job losses and technological change," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 5-24.
    8. Meacci, Ferdinando, 2008. "Machinery Question," MPRA Paper 11696, University Library of Munich, Germany.
    9. Freni, Giuseppe & Salvadori, Neri, 2016. "Ricardo on Machinery: A Textual Analysis," MPRA Paper 73427, University Library of Munich, Germany.
    10. Joao Ricardo Faria & Miguel Leon-Ledesma & Adolfo Sachsida, 2006. "Population and income: Is there a puzzle?," Journal of Development Studies, Taylor & Francis Journals, vol. 42(6), pages 909-917.

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