[OPE-L:2884] Re: Value of LP // Real Wage

Duncan K Foley (dkf2@columbia.edu)
Tue, 27 Aug 1996 12:59:50 -0700 (PDT)

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On Tue, 27 Aug 1996, Gil Skillman wrote:
(in part)
> Second, a question. Duncan, do you think that English Cambridge must
> necessarily deny the principle of factor substitution in production (in the
> absence of technical change)? If so, how could they?

This is a complicated issue. My impression was that the Cambridge school
was very skeptical about substitution, both because of their attack on the
idea that profit was a measure of the "scarcity" of capital, and because
many of them opposed wage-cutting "solutions" to unemployment. There is
surely nothing logically inconsistent about assuming no substitution (and
maybe it's quite close to the truth over short time horizons).