By Michio Morishima
Modern common equilibrium concept is routinely short-run, separated from financial facets of the economic system, and as such doesn't care for long-run difficulties comparable to capital accumulation, innovation, and the ancient move of the economic climate. those phenomena are mentioned through development thought, which being brief time period, can't take care of the basic challenge of ways the creation functionality is derived. This booklet offers a much-needed synthesis of development and financial concept, drawing at the paintings of Schumpeter, Keynes and the prewar neoclassical economists to formulate a capital-theoretic normal equilibrium concept.
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Extra info for Capital and Credit: A New Formulation of General Equilibrium Theory
Sample text
Theory of Demand: Real and Monetary, Clarendon Press, Oxford, 1973, pp. 271-84. 31 Finally, this book deals with an economy where no futures market is open. International trade is also ruled out. Chapter 8 puts GET in the perspective of the twenty-first century. 31 It may be very natural that R. Hilferding, the author of Das Finanzkapital, Eine Studie iiber diejungste Entwicklung des Kapitalismus, 1910, which had been concerned with the linkage between industry and banks, later advocated the idea of organized capitalism.
The price of share /, andrf*1the amount of share i which k wants to buy from h. All of these are the quantities and prices at date 1. 10) we implicitly assume that k does not buy any capital goods. Let v, be the vector of current prices of shares and rx the vector of current rates of dividends, while vt and p, are the vectors of expected share prices and expected rates of dividends at date 1, respectively. Both x'k and sf*1 depend onp\, v,, u,, r,, and p,. Taking u, and p,, as depending upon their respective current values, V!
But it is not concerned with the problem of how the firms are provided with the initial purchasing power which is necessary for establishing facilities for production and for employing workers and staff members for the start. The longrun theory simply regards the number of active firms as a variable of the model and concludes that there are ri new entrants into the industry where the equilibrium value of the number exceeds the existing number n by «'. It is indeed a weak point of neoclassical economists that they have traditionally been holding aloof from the problem of analysing how potential entrepreneurs are enabled to make an actual start in their businesses.