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The Improbability of Reswitching, the Certainty of Wicksell-Effects and the Poverty of Production Functions: The Cambridge Critique of Capital Transformed

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  • Schefold, Bertram

Abstract

Capital theory has taken a new turn with the theoretical discovery that wage curves tend to get linear in random systems, the larger they are. The paper by argues that reswitching becomes less likely for larger systems, while Wicksell effects are almost surely present. But it can also be shown that the elasticity of substitution is likely to be small in random systems so that a policy to lower real wages will not easily generate much additional employment in a closed economy.

Suggested Citation

  • Schefold, Bertram, 2017. "The Improbability of Reswitching, the Certainty of Wicksell-Effects and the Poverty of Production Functions: The Cambridge Critique of Capital Transformed," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168104, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc17:168104
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    References listed on IDEAS

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    1. Zonghie Han & Bertram Schefold, 2006. "An empirical investigation of paradoxes: reswitching and reverse capital deepening in capital theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(5), pages 737-765, September.
    2. David Levhari, 1965. "A Nonsubstitution Theorem and Switching of Techniques," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 79(1), pages 98-105.
    3. Mauro Boianovsky & Hans-Michael Trautwein, 2003. "Wicksell, Cassel, and the Idea of Involuntary Unemployment," History of Political Economy, Duke University Press, vol. 35(3), pages 385-436, Fall.
    4. Harcourt,G. C., 1972. "Some Cambridge Controversies in the Theory of Capital," Cambridge Books, Cambridge University Press, number 9780521096720, October.
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    Cited by:

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    2. Gary Mongiovi, 2021. "Pierangelo Garegnani and the revival of the ‘submerged and forgotten’ surplus approach," Bulletin of Political Economy, Bulletin of Political Economy, vol. 15(2), pages 163-184, December.

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