[OPE-L:2882] Re: Value of LP // Real Wage

Patrick Maso (Patrick.L.Mason.20@nd.edu)
Tue, 27 Aug 1996 12:25:39 -0700 (PDT)

[ show plain text ]

Previously, I opined (in part):

>A useful outcome of the cambridge debate was that because of the
>possibilities of reswitching and reverse capital deepening, it is
logically>>impossible >to establish a positive monotonic function such that
K/L =
>f(w/r). Doesn't this alert us to look elsewhere regarding the incentives for
>technical change?

Thereby, Steve C. responded:
>I guess I'm lost here. The Cambridge debate was about the relationship
>between certain aggregate measures of capital and their respective
>distributional variables. Why wouldn't relative "factor prices" affect the
>choice of technique on a disaggregated level?

Well, of course, you're lost. And, for two very good reasons: A) you are a
celtics fan, and B) you live in California.

On a more serious note, there are several essays which discuss these issues
in Ed Nell's book, "Growth, Proftis, and Property." If by "aggregate
measures of capital" you mean that a firm's production function exists but
there is no production function for the economy as a whole then I strongly
disagree with your interpretation. And, the essays in Nell's volume also
make the argument that individual firms can't have an "aggregate" measure of

A logically consistent disaggregative neoclassical model utilizing activity
analysis can be constructed. But this type of model (if my memory is working
correctly) can't say anything about a general wage or profit rate.

peace, pat mason