The Accumulation of Capital

463 Pages·1969·38.35 MB·English

by  Joan Robinson (auth.)

The Accumulation of Capital
Palgrave Classics in Economics
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The Accumulation
of Capital
Third Edition
Joan Robinson
© Joan Robinson, 1956, 1965, 1969
Introduction © Geoff Harcourt and Prue Kerr, 2013
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First edition 1956,
Reprinted 1956, 1958,
Second edition 1965,
Reprinted 1966,
Third edition 1969,
Reprinted 1986, 2013
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DOI 10.1007/978-0-230-30666-0
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Contents
Introduction vii
Geoff Harcourt and Prue Kerr
Preface xxxi
Acknowledgements xxxii
Author’s Note to the Second Edition xxxvii
Book I Introduction
1 The Classes of Income 3
2 The Meaning of Wealth 15
3 The Meaning of Money 25
4 Capital and Income 33
5 Consumption and Investment 41
6 The Meaning of Equilibrium 57
Book II Accumulation in
the Long Run
7 A Simple Model 63
Section I — Accumulation with One Technique
8 Accumulation with Constant Technique 73
9 Technical Progress 85
Section II — The Technical Frontier
10 T he Spectrum of Techniques 101
11 T he Evaluation of Capital 114
12 T he Technical Frontier in a Golden Age 124
13 P roductivity and the Real Capital Ratio 132
14 A ccumulation without Inventions 139
15 A Surplus of Labour 153
Section III — Accumulation and Technical Progress
16 A ccumulation with Neutral Technical Progress 159
17 A ccumulation with Biased Progress 164
18 S ynopsis of the Theory of Accumulation in
the Long Run 173
v
vi Contents
Book III The Short Period
19 P rices and Profits 179
20 W ages and Prices 193
21 F luctuations in the Rate of Investment 198
22 C ycles and Trends 213
Book IV Finance
23 M oney and Finance 225
24 T he Rates of Interest 237
Book V The Rentier
25 C onsumption of Profits 247
26 C onsumption and Accumulation in the Long Run 255
27 R entiers and the Trade Cycle 264
28 R entiers and Finance 274
Book VI Land
29 L and and Labour 283
30 F actor Ratios and Techniques. A Digression 298
31 L and and Accumulation 313
32 L and, Labour and Accumulation 329
33 I ncreasing and Diminishing Returns 336
Book VII Relative Prices
34 S upply and Demand 351
Book VIII International Trade
35 E xternal Investment 367
36 I nternational Investment 372
Conclusion 386
Notes on various topics 389
Diagrams 411
Postscript 426
The value of invested capital 433
Index 441
Introduction
Geoff Harcourt and Prue Kerr1
The Accumulation of Capital, Joan Robinson (1956), is Joan Robinson’s
magnum opus. It grew out of the advances she was making on many
fronts in the years of World War II and afterwards. The major influ-
ences on her were John Maynard Keynes; her work on Karl Marx placed
within a fruitful setting and approach by Michał Kalecki (Piero Sraffa
teased her that she seemed to regard ‘Marx as a little-known forerunner
of Kalecki’, see Joan Robinson 1942; 1966, vi); her Introduction (1951)
to the English translation of Rosa Luxemburg’s Accumulation of Capital;
Roy Harrod’s seminal work on dynamic theory just before (1939) and
soon after the end of the war (1948); pressing real-world problems asso-
ciated with the postwar reconstruction of Europe; and the emergence
of consciousness about development in underdeveloped societies in the
economics profession of developed societies.
Keynes’s revolution was increasingly being accepted in both academia
and government. Attention was turning from the employment-creating
effects of accumulation to its capacity-creating effects. In the view of his
immediate colleagues and disciples in Cambridge, he had conquered
the short period in a macroeconomic sense so that they, taking into
account these other influences, turned their attention to the generalisa-
tion of The General Theory to the long period (see Robinson [1952a and
1956: vi]).
From the 1920s on, Sraffa was developing his own revolutionary new
path in economic theory, criticising the conceptual and logical bases
of the supply and demand theories in all their forms while simulta-
neously rehabilitating classical and Marxian political economy. His
findings were not fully in the public domain until the publication of
Production of Commodities in 1960. Hints were in the Introduction in
1951 to the Sraffa with Dobb edition of The Works and Correspondence
of David Ricardo. The Introduction brought a great flash of illumination
1 This Introduction arises from our volume Joan Robinson (2009) which we
wrote for Tony Thirlwall’s series ‘Great Thinkers in Economics’, published by
Palgrave Macmillan. All references containing only page numbers refer to Joan
Robinson (1956) or, when indicated, later editions thereof.
vii
viii Introduction
to Robinson about the nature and role of profits in advanced capitalist
economies. When reprinting her ‘Essays 1953’ in her Collected Economic
Papers, vol IV, 1973, she wrote:
These essays were written in a hilarious mood after reading Piero
Sraffa’s Introduction …, which caused me to see that the concept
of the rate of profit on capital is essentially the same in Ricardo,
Marx, Marshall and Keynes; … the essential difference between
them … and Walras, Pigou and the latter-day textbook writers is that
the Ricardians are describing an historical process of accumulation
in a changing world while the Walrasians dwell in a timeless equi-
librium where there is no distinction between the future and the
past. (247)
There was also considerable attention given to methodological issues,
stimulated by Harrod’s desire to replace static by dynamic analysis, a
natural complement to the revived interest in distribution and growth
over time, reinterpreted in the light of Keynes’s and, in Robinson’s
case, Kalecki’s new theories. For Harrod this new, exciting way of doing
economics made ‘the old static formulation of problems [seem] stale, flat
and unprofitable’ (Harrod 1939: 15). These concerns, the original prov-
ince of classical political economy and Marx, were suppressed by the
rise of neoclassical economics with its concentration on price formation
and resource allocation in mostly competitive, static settings. Robinson
was typically forthright about this. In the Preface to her 1956 volume,
she writes:
Economic analysis, serving for two centuries to win an understanding
of the Nature and Causes of the Wealth of Nations, has been fobbed
off with another bride — a Theory of Value … deep seated political
reasons for the substitution … also a purely technical reason … exces-
sively difficult to conduct an analysis of over-all movements of an
economy through time, involving changes in population, capital
accumulation and technical change, at the same time as an anal-
ysis of the detailed relations between output and price of particular
commodities … Economists for the last hundred years have sacrificed
dynamic theory in order to discuss relative prices … unfortunate
[because] such a drastic departure from reality [makes verification
of results impossible and rules out] discussion of most of the prob-
lems that are actually interesting [, condemning] economics to … arid
formalism. (1956: v)
Introduction ix
This led her to reappraise what equilibrium meant in the short period
and the long period in a macroeconomic setting. She coupled this
with her increasing dissatisfaction with both neoclassical concepts
and methods, as she saw them, especially in the theory of distribu-
tion and its accompanying relevance for a discussion of the choice
of technique in the economy as a whole in analysing the process of
growth. The outcome was both a sustained attack on neoclassical and
neo-neoclassical procedures and results and the development of distri-
bution and growth theory in a classical Marxian-Kaleckian-Keynesian
setting.
With this background it is not surprising that The Accumulation of
Capital was published when its author was the same age as Keynes when
he published The General Theory. Just as she wrote Introduction to the
Theory of Employment (1937), her ‘told-to-the-children’ book (Keynes
1973: 148), to help to explain his new theory, she wrote her Essays in the
Theory of Economic Growth (1962a) to explain The Accumulation of Capital
to those who were mystified, or irritated, or both by the 1956 volume.
The 1962 volume was a great help in extracting messages that were over-
laid or not brought out clearly in her ‘big book’.
The above themes may be found in articles and chapters in books
preceding the publication of The Accumulation of Capital. In The Rate of
Interest and Other Essays (1952a) we are told that
the theme of these essays is the analysis of a dynamic economic
system [ — dynamic analysis in the sense] that it cannot explain how
an economy behaves in given conditions, without reference to past
history; … static analysis purports to describe a position of equilib-
rium which the system will reach … if the given conditions remain
unchanged for long enough no matter where it started from. (Ibid.: v)
She adds:
Short-period analysis is concerned with the equilibrium of a system
with a given stock of capital and … given expectations about the
future. Past history is thus put into the initial conditions, so the anal-
ysis is static in itself … yet part of a dynamic theory. [Thus] Keynes’
General Theory, [though] strictly static in form, … opened the way for
a great outburst of analysis of dynamic problems.
The collection was preceded by her long introduction to the English
translation of Luxemburg’s The Accumulation of Capital in 1951.