No, I got the smiley, just that I'm a believer in flat cost curves
and wanted to get what you and Jim have helped me with.
Gene Coyle
On Feb 28, 2007, at 11:16 PM, Gassler Robert wrote:
Moreover, with the production functions that generate flat cost
curves, one cannot satisfy Euler's theorem. If labor is paid the
value of its marginal product, there is nothing left over for
capital. Therefore income distribution becomes political, not
economic in the neoclassical sense. This then becomes true at the
macro level as well.
I guess this is what happens when I forget to include the smiley
icon. :)
On 2/28/07, Eugene Coyle <[EMAIL PROTECTED]> wrote:
Would you elaborate on the cost curves? What is the PK position on
cost curves that leads to the flat-earth society?
And how does "cost curves" tie to the macro side?
as Sraffa & Kalecki pointed out, there are no diminishing returns
as a
variable input increases, because all of the inputs are variable,
until you get to the capacity constraint. (The amount of fixed
capital
is fixed, yes, but its utilization rate is not.) This implies a flat
supply curve until capacity is hit.
Of course, with heterogeneous production processes, as aggregate
demand increases we should see an increasing number of them hitting
capacity constraints and creating bottlenecks for others, until we
hit
"potential output" where bottlenecks become general. This implies
something of an upward slope to aggregate supply, except under
depression conditions.
--
Jim Devine / "The truth is more important than the facts." --
Frank Lloyd Wright
