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A Tale of Three Theorems

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  • Robin Hahnel

Abstract

In combination the Okishio theorem (1961) and a theorem due to John Roemer (1981) imply that a capital-saving technical change could simultaneously (1) reduce production costs and therefore be adopted by profit-maximizing capitalists, (2) make the economy less productive because it is retrogressive, yet (3) raise the rate of profit even while the real wage remains constant. But how can a technical change which makes the economy less productive make capitalists better off if workers are no worse off? This article resolves this conundrum, and goes on to prove a third theorem which provides a way in the Sraffian framework to calculate precisely how much any individual technical change, introduced in any particular industry, increases labor productivity in the economy as a whole .

Suggested Citation

  • Robin Hahnel, 2017. "A Tale of Three Theorems," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(1), pages 125-132, March.
    • Handle: RePEc:sae:reorpe:v:49:y:2017:i:1:p:125-132
    DOI: 10.1177/0486613415616213
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    References listed on IDEAS

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    1. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676.
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    More about this item

    Keywords

    technical change; efficiency; rate of profit;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis

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