Prices and Profits

Abstract

IN the tranquil conditions of a golden age productive capacity, actual output and effective demand all expand together. When the conditions of a golden age are not being maintained demand may expand faster than capacity (as, for instance, when there is an unforeseen speeding up of technical progress, leading to an investment boom) or may drop below it (as, for instance, when an increase in monopoly lowers real wages without a corresponding increase in the rate of accumulation). We must now examine these situations in more detail.