A good parabola

from Wikipedia, the free encyclopedia

One-good parable is a term in economic theory that describes economic models in which a distinction is not made between the production of different goods, but instead, for the sake of simplicity, it is assumed that only one good is produced, which is then either an investment or a consumer good can serve. Usually this critical term is directed against the neoclassical growth theory , against the Solow model . One-good parables can also appear in other than the neoclassical school. The Harrod-Domar model is also a one-good parabola.

A first one-good parable is the "grain model" of the English economist David Ricardo . Grain in its capacity as food serves on the one hand as a consumer good, on the other hand as an investment good if grain is sown in its capacity as a seed.

If the neoclassical theory is questioned as a one-good parable, then important conclusions of this theory are also questioned, for example the thesis that rising wages lead to production techniques being replaced in one direction by other production techniques that do less work , need more means of production ("capital"). Piero Sraffa and his students, on the other hand, were able to show in the reswitching debate with an additional product model that when wages rise, there is a switch to other production techniques, but that when wages continue to rise, under certain circumstances they switch back to the old production techniques ("reswitching"). This is a result that cannot be represented in a neoclassical model.

If the economy can be represented as a one-good parabola, then the aggregation problem is also solved. The size of the capital stock is given simply by the amount of goods that are used as a means of production, i.e. the number of seeds in the grain model. In the capital controversy , this was also called into question by the Sraffa school by showing that in more-good models the desired aggregation of capital goods into a capital stock, which can be understood as a purely material, physical quantity regardless of price variables, is not is durable.

Economic policy implications

It is questionable whether a theoretical refutation also leads to other economic policy conclusions. In growth models based on Sraffa models, similar to the Harrod-Domar model , the economy potentially grows faster the lower the wages. With reswitching there is a switch back to production techniques that have already been used at a lower wage level, but at the same time the proportions of the various branches of the economy have changed in such a way that higher wages go hand in hand with comparatively lower labor input, as the proportion of labor-intensive branches decreases capital-intensive industries has increased.

literature

  • Lutz Arnold: Growth Theory . Vahlen Verlag Munich 1997. ISBN 3-8006-2242-4
  • Piero Sraffa : Goods production using goods. Afterwords by Bertram Schefold (1976 [first published in 1960]), Suhrkamp-Verlag Frankfurt / Main