I wrote: >>the aggregate production function, which Samuelson admitted years ago was fallacious <<
Doug: >Where'd he do that? Paul A. Samuelson, 1966, "A Summing Up," QUARTERLY JOURNAL OF ECONOMICS, vol. 80, pp. 568-83. (Reprinted in G.G. Harcourt & N.F. Laing, CAPITAL AND GROWTH, Penguin 1971. "There often turns out to be no unambiguous way of characterizing different processes as more 'capital intensive', more 'mechanized' more 'roundabout', except in the _ex post_ tautological sense of being adopted at a lower interest rate and involving a higher real wage. Such a tautological labeling is shown, in the case of reswitching [which he explains very clearly], to lead to inconsistent ranking between pairs of unchanged technologies, depending upon which interest rate happens to prevail in the market." (in Harcourt & Laing, p. 250.) If this is the status of aggregate measures of "capital intensity," then the aggregate production function (in which labor productivity is a simple & smooth function of aggregate capital intensity) is fallacious. This is why serious neoclassicals decided to drop the aggregate production function and to go for general equilibrium theory. Speaking of fallacies, this is where Samuelson says that "Under perfect competition, either workers can hire capital goods or capitalists hire workers" (and get equivalent results). (In H&L, p. 241.) Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
