Accomulation of capital

The paper deals with the ‘Keynesian’ theories of accumulation, i.e. those sharing the premise that in the long period, no less than in the short, it is investment that generates the corresponding amount of savings, and thus aggregate demand what ultimately determines growth. The Distribution-based Long-period Keynesian Approach, which is synthesized in the Cambridge equation and which maintains that adjustment of savings to investments comes about through changes in distribution between wages and profits, is shown to be founded on the doubtful premise that long-period output is basically inelastic to changes in demand. The long-period changes in the amount of capacity, together with the possibility that capacity utilization differs from normal also in the long period, entail that adjustment of saving may occur through changes in the level of aggregate output, without any need of changes in distribution, as is maintained in the Output-based Long-period Keynesian Approach.