Re: end.gr Harrod

[Ajit Sinha <ASINHA@xxxxxxxxxxxx>]

I have recently joind the famous pkt-list, and could get hold of Heinz Kurz and
Neri Salvadori's paper only yesterday-- so excuse me for coming in so late. The
paper by Heinz and Neri is a delight to read. Without going into the
intricacies of the theories discussed in the paper-- as I understand it, the
endogeniety of the new economic theories (NGT) appears to be a positive
externality of accumulation. In Arrow a simple growth of physical capital leads
to "learning by doing" and a positive impact on the rate of growth. In Lucas
accumulation of human capital leads to a positive impact on the rate of growth.
A greater accumulation of physical and human capital will lead to a greater
positive impact on the rate of growth. Moreover, this endogenous variable of
growth is ultimately determined or explained by the preferences of economic
agents between current and future consumption. In these theories the
externality factor does not sound like a technical change, it is rather an
undefined increase in "labor productivity".

I think it would be interesting to contrast the NGT with Marx's theory of
technical change in particular. I think marx has a theory of endogenous
technical change within the capitalist structure. The theory has mainly two
aspects. First, intra-industry competition is taken to be the structural aspect
of capitalism. The capitalist competion does not only lead to centralization of
capital (i.e. the big fish eating the small fish in the dog eat dog world), but
also a concentration  of capital, i.e. a certain kind of tech. change
introduced as a weapon in this war for survival. Second, the growth process of
capitalism goes through a periodic business cycles. The duration of these
business cycles (10 years or so) is smaller than the duration between two
generations. Thus upswings from the bottom of a cycle will always be frustated
because of the lack of labor-power, unless the system maintained on the average
a "reserve army of labor". Marx postulated that capitalism as a system whose
sole reason of existence is accumulation could not accept the limitation posed
to its accumulation by the "natural growth in population': "Capitalist
production can by no means content itself with the quantity of disposable
labour-power which the natural increase of population yields." (CAPITAL 1, 788,
Vintage). Given that in general the rate of accumulation would be higher than
the "natural rate of growth of population", the "reserve army of labor" can
only be maintained through a periodic introduction of labor-saving technical
change. Thus the labor-saving technical change that amounts to increase in
labor productivity is explained by the internal pressure and dynamics of the
structure of capitalism itself. One another important difference from not only
the NGT but the whole of classical economics that Marx introduces is that a
decision to accumulate is not explained by the agent's (or the capitalist's)
preferences about present and future consumption. Rather the competitive
mechanism forces this decision to accumulate on the agents: "But looking at
these things as a whole, it is evident that this [capitalist's attempt to
extract the maximum labor-time from the worker] does not depend on the will,
either good or bad, of the individual capitalist. Under free competition, the
immanent laws of capitalist production confront the individual capitalist as a
coercive force external to him." (Ibid, 381) Even consumption of luxuries by
the capitalist is explained by Marx in such terms as: "When a certain stage of
development has been reached, a conventional degree of prodigality, which is
also an exhibition of wealth, and consequently a source of credit, becomes a
business necessity to the unfortunate capitalist. Luxury enters into capital's
expenses of reproduction." (Ibid, 741).

                          Cheers, Ajit Sinha