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Different Employment of Capitals in Vertically Integrated Sectors: Smith after the Austrians

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  • Meacci, Ferdinando

Abstract

The Austrian notion of stages of production and the related principle of the greater productivity of roundabout methods plus the neo-Austrian notions of vertical integration and vertical division of labour are utilized in this paper in an attempt to reconstruct Smith’s convoluted arguments on the different employment of capitals in Chapter V, Book II, of the Wealth of Nations. Smith’s arguments are first clarified in the light of the two concepts of capital (money capital and productive capital), of the two aspects of productive labour (living labour and dead labour) and of the two viewpoints (of an individual and of society) on which Smith’s theory is based. The results of this clarification are then used to prove that, independently of Smith’s own words but in consistency with his theory, the notions of ‘quantity’ and ‘productivity’ of productive labour have a ‘vertical’ as well as an ‘horizontal’ dimension so that they fit both the input-output scheme and the Austrian framework of time-consuming methods of production.

Suggested Citation

  • Meacci, Ferdinando, 2008. "Different Employment of Capitals in Vertically Integrated Sectors: Smith after the Austrians," MPRA Paper 11702, University Library of Munich, Germany, revised 02 Oct 2008.
  • Handle: RePEc:pra:mprapa:11702
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    References listed on IDEAS

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    1. repec:ebl:ecbull:v:28:y:2004:i:18:p:a0 is not listed on IDEAS
    2. Meacci, Ferdinando, 2004. "The competition-of-capitals doctrine and the wage-profit relationship," MPRA Paper 20118, University Library of Munich, Germany, revised 2006.
    3. Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1776.
    4. Young, Allyn A., 1928. "Increasing Returns and Economic Progress," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 38, pages 527-542.
    5. repec:elg:eechap:13938_6 is not listed on IDEAS
    6. Smith, Adam, 2008. "An Inquiry into the Nature and Causes of the Wealth of Nations: A Selected Edition," OUP Catalogue, Oxford University Press, number 9780199535927 edited by Sutherland, Kathryn.
    7. Stigler, George J, 1976. "The Successes and Failures of Professor Smith," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1199-1213, December.
    8. Neri Salvadori & Rodolfo Signorino, 2016. "Competition," Chapters,in: Handbook on the History of Economic Analysis Volume III, chapter 6, pages 70-81 Edward Elgar Publishing.
      • Salvadori, Neri & Signorino, Rodolfo, 2011. "Competition," MPRA Paper 38387, University Library of Munich, Germany.
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    Keywords

    Classical and Austrian capital theory; stages; sectors; vertical integration;

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
    • B12 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Classical (includes Adam Smith)
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian

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