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Theory of Economic Growth$
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Michio Morishima

Print publication date: 1969

Print ISBN-13: 9780198281641

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198281641.001.0001

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An Alternative Approach: Remodelling and Refinements

An Alternative Approach: Remodelling and Refinements

(p.268) XV An Alternative Approach: Remodelling and Refinements
Theory of Economic Growth

Michio Morishima

Oxford University Press

The argument developed in the previous chapter was based on the tacit assumption that the production of goods by means of goods and labour is independent of the feeding of labour, and was described in terms of the matrices of input and output coefficients and the vector of labour‐input coefficients, all of which were considered as technologically given constants. However, it is difficult to obtain precise figures of these coefficients, especially for the labour‐input coefficients, without knowing how and at what level people are fed; the productivity of labour depends not only on technology in the narrowest sense but also on the workers’ state of health, their living and working conditions, etc. Further, in a slave economy, with the wages fixed at a subsistence level, the productivity of labour was low, and it is this that led to its replacement by a more productive system—the capitalist economy. It is not surprising that outputs of goods might increase, even though the allocation of available goods among industries and families became unfavourable for the former; in fact, the positive indirect effect on outputs of a transfer of goods from industries to families causing an improvement in the welfare of the workers might be so strong as to overcome the negative direct effect on outputs of the decrease in industrial inputs. Thus, the production of goods and the feeding of men should be treated as an inseparable process, and this is the approach taken in this chapter, which discusses: the production of goods and ‘men’ by means of goods and ‘men’; the properties of aggregate production processes; conditions for the Silvery Equilibrium; modification of the rule of competitive pricing such that Keynesian involuntary unemployment is allowed for; the existence of ‘quasi‐equilibrium’ processes and prices; the upper semicontinuity of quasi‐equilibrium prices; the equilibration of quasi‐equilibrium; efficiency and optimality in an economy with a flexible labour force; instantaneous efficiency and Pareto optimality of the Silvery Equilibrium; the possibility of optimum cyclical growth of production of goods and men; and the intertemporal efficiency and Pareto optimality of the Golden Equilibrium.

Keywords:   aggregate production processes, capitalist economy, competitive pricing, cyclical growth, economic growth, efficiency, feeding, flexible labour force, food, Golden Equilibrium, goods, health, input, input coefficients, J. M. Keynes, Keynesian involuntary unemployment, labour, living conditions, optimality, output, output coefficients, Pareto optimality, production, productivity of labour, quasi‐equilibrium prices, quasi‐equilibrium processes, Silvery Equilibrium, slave economy, unemployment, welfare, working conditions

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