Advertisement

Efficiency Curves in the Theory of Capital: A Synthesis

  • John Craven

Abstract

In Capital and Time Hicks (1973) introduced the ‘efficiency curve’ to capital theory. This was not new, except in name, for many authors had written previously of ‘factor price frontiers’ (Samuelson (1962)), ‘optimal transformation frontiers’ (Bruno (1969)), ‘wage frontiers’ (an earlier vintage of Hicks (1965)) and ‘w-r relationships’ (Harcourt (1972)). None of these earlier names captured the important dual nature of these curves, which relate not only the real wage to the profit rate, but also the level of consumption output per labour unit to the growth rate. This duality has been demonstrated by Hicks (1973), by Bruno (1969) and in its most general form by Burmeister and Kuga (1970), but none of these authors has exploited the expository powers of efficiency curves to the full. In this paper we shall discuss the role of these curves in many parts of steady state capital theory, including the debates on the measurement of capital and on Marxian theorems. Their usefulness is heightened by the fact that, even in the most complicated models involving joint production, an efficiency curve can be represented in two dimensions without the problems of aggregation which prevent the use of plane geometry so often in multisectoral models.

Keywords

Real Wage Competitive Equilibrium Golden Rule Labour Unit Joint Production 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Bliss, C. J. (1975) Capital Theory and the Distribution of Income (Amsterdam: North-Holland).Google Scholar
  2. Bruno, M. (1969), ‘Fundamental Duality Relations in the Pure Theory of Capital and Growth’, Review of Economic Studies, vol. 36.Google Scholar
  3. Burkill, J. C. (1962), A First Course in Mathematical Analysis (Cambridge University Press).Google Scholar
  4. Burmeister, E. (1974), ‘Synthesising the NeoAustrian and Alternative Approaches to Capital Theory: A Survey’, Journal of Economic Literature, vol. 12.Google Scholar
  5. Burmeister, E., and Kuga, K. (1970), ‘The Factor Price Frontier, Duality and Joint Production’, Review of Economic Studies, vol. 37.Google Scholar
  6. Craven, J. A. G. (1975), ‘Capital Theory and the Process of Production’, Economica, vol. 42.Google Scholar
  7. Craven, J. A. G. (1977) ‘On the Marginal Product of Capital’, Oxford Economic Papers, vol. 29.Google Scholar
  8. Dorfman, R., Samuelson, P. A., Solow, R. M. (1958), Linear Programming and Economic Analysis (New York: McGraw-Hill).Google Scholar
  9. Gale, D. (1960), The Theory of Linear Economic Models (New York: McGraw-Hill).Google Scholar
  10. Harcourt, G. C. (1972), Some Cambridge Controversies in the Theory of Capital (Cambridge University Press).Google Scholar
  11. Hawkins, D. and Simon, H. A. (1949), ‘Note: Some Conditions of Macroeconomic Stability’, Econometrica, vol. 17.Google Scholar
  12. Hicks, J. R. (1965), Capital and Growth (Oxford University Press).Google Scholar
  13. Hicks, J. R. (1973), Capital and Time (Oxford University Press).Google Scholar
  14. Lancaster, K. (1968), Mathematical Economics (London: Macmillan). Marx, K., Capital, first published 1867.Google Scholar
  15. Mirrles, J. A. (1969), ‘The Dynamic Nonsubstitution Theorem’, Review of Economic Studies, vol. 36.Google Scholar
  16. Morishima, M. (1973), Marx’s Economics (Cambridge University Press).Google Scholar
  17. Morishima, M. (1975), ‘Marx in the Light of Modern Economic Theory’, Econometrica, vol. 42.Google Scholar
  18. Morishima, M. (1976), ‘Positive Profits with Negative Surplus Value: A Comment’, Economica Journal, vol. 86.Google Scholar
  19. Nuti, D. M. (1970), ‘Capitalism, Socialism and Steady Growth’, Economic Journal, vol. 80.Google Scholar
  20. Samuelson, P. A. (1962), ‘Parable and Realism in Capital Theory: the Surrogate Production Function’, Review of Economic Studies, vol. 39.Google Scholar
  21. Samuelson, P. A. and von Weisacker, C. C. (1971), ‘A New Labor Theory of Value, for Rational Planning Through the Use of the Bourgeoise Profit Rate’, Proceedings of the National Academy of Science, vol. 68.Google Scholar
  22. Steedman, I. (1975), ‘Positive Profits with Negative Surplus Value’, Eco-nomic Journal, vol. 85.Google Scholar
  23. Steedman, I. (1976), ‘Positive Profits with Negative Surplus Value: A Reply’, Economic Journal, vol. 86.Google Scholar
  24. Stiglitz, J. E. (1970), ‘Nonsubstitution Theorems with Durable Capital Goods’, Review of Economic Studies, vol. 37.Google Scholar
  25. Wolfstetter, E. (1973), ‘Surplus Labour, Synchronised Labour Costs and Marx’s Labour Theory of Value’, Economic Journal, vol. 83.Google Scholar

Copyright information

© John Craven 1979

Authors and Affiliations

  • John Craven
    • 1
  1. 1.University of Kent at CanterburyUK

Personalised recommendations