Re: Capital: Its Presence, Use and Control

["Robyn Miller" <lady-r@xxxxxxxxxx>]

----------
> From: Per Gunnar Berglund <pgb@xxxxxxxxxxxxxxxxxx>
> To: POST-KEYNESIAN THOUGHT   <pkt@xxxxxxxxxxxxxxxx>
> Subject: Re: Capital: Its Presence, Use and Control
> Date: Wednesday, July 30, 1997 1:55 PM
>
> John,
> 	Your message below is truly interesting, because I guess it reveals a
> difference between the ways you and I look at the very concept of
capital.
> Metaphorically speaking, you seem to think of the production process in
an
> "additive" fashion; that output is obtained by capital + labour. Instead
of
> this view, I would take, again metaphorically speaking, a
"multiplicative"
> view on production; that output is obtained by capital x labour.

Per,

This is an interesting philosophical point, but since it does not impact
output's fundamental characteristic of being a positively correlated
function of both capital and labor, I am not sure that it neccessarily
affects John's conclusions.  As is the case with John's "Additive World,"
output can only be increased by one of three mechanisms:

1)increased capital
2)increased labor/labor productivity
3)an increase in both capital and labor/labor productivity

I agree that framing capital and labor in a multiplicative relationship is
a more sohisticated (and probably more accurate) way to look at their
impact on output - but I just don't see how this negates Gelle's position.

                                                              R. Miller
                                                            -undergrad-
                                                           UCRiverside


> 	When taking the "additive" view, real and human capital become separate,
> or mutually independent, identities. On the other hand, when the
> "multiplicative" approach of mine is being used, the concepts of real and
> human capital are intertwined and never mutually independent.
> 	This might seem like an esoteric issue, but I think the philosophical
> difference between the "additive" and the "multiplicative" approach is
> crucial. The neoclassical attempts at erecting a theory of capital have
> indeed proven to be failures, and I venture to claim that this is because
> it has all been directed at preserving the "additive" principle of mutual
> independence. Once this is abandoned for a "multiplicative",
interdependent
> concept, approach, the whole task of constructing a logically coherent
> theory of capital proves to be a straightforward one.
>
>
> Best,
> Per
>
>
> Per Gunnar Berglund