[OPE-L:5335] Re: Ernst on RRI

Duncan K. Foley (dkf2@columbia.edu)
Sun, 13 Jul 1997 21:32:57 -0700 (PDT)

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Some comments on John's OPE-L:5327:

>I think that in some of his writing Marx, like most other economic
>analysts, ignores the stratification (or vintage) issue, especially when he
>is talking about large sweeps of time over which vintage effects tend to
>wash out. He does take it specifically into account, as I recall, in two
>other places: one is in the Volume II discussion of the circuits of
>capital, where the turnover of capital concept inherently keeps track of
>vintages; the other is in one of his theories of the business cycle, where
>he toys with the idea that a wave of investment can set off echoes (an idea
>that a lot of other people have spent time on before and after Marx,
>including Leontief, Schumpeter, Samuelson, and Goodwin.) The problem is
>that in a growing economy these echo effects will become relatively smaller
>and smaller over time.
>John (now):
>1. I'd be interested in those who spent time on the idea of waves of
>investment before Marx.


Well, I think it appears in Smith and possibly Malthus, but let me keep an
eye out.

>2. For me, it is unclear why the "echo effects will become relatively
>smaller and smaller over time" if investment as a proportion of capital
>remains constant or increases over time. My crude examination of the
>data in the back of Dumenil and Levy tells me that the proportion is
>more or less constant over time.

The proportion of investment is roughly constant over time, but the whole
economy grows, so the proportion of investment represented by replacement
of capital n years back constantly shrinks.


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu