Re: Capital: Its Presence, Use and Control

["Per Gunnar Berglund" <pgb@xxxxxxxxxxxxxxxxxx>]

Robyn,
Yes it does affect John's position. The idea of substitution of capital for
labour (or the reverse) is effectively ruled out _in the aggregate_ by the
multiplicative approach (this does not invalidate microeconomic
substitution). The notion of gradual increase of the share of capital
income in the national income goes down with the notion of substitution.

Best,
Per


Per Gunnar Berglund
Lilla Sallskapets vag 60
127 61  SKARHOLMEN
SWEDEN

Voice/fax +46-(0)8-883065


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Robyn Miller wrote:
> 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.