Some Income Theory

Abstract

Neo-classical economists tirelessly have reiterated that, in the long run, growth in output per head depends, by far the most part, on each worker becoming teamed up with more and more capital. An important part of that capital is contained in the worker himself; other sources of productivity-growth are more recondite. Neo-classical economists perceive the major impediments to growth in per capita output to be inadequate or misplaced investment. They blame investment-inadequacy on inedequate profitability: an underlying cause may be discriminatory taxation of business income and dividends; trade unions may be able to push up real wages while impeding productivity. They do not ascribe low marginal efficiency of capital to deficient aggregate demand. They stress thrift and productivity, the twin engines of economic growth. As for misplaced investment, neo-classical economists emphasize interferences—whether through subsidies or taxes or other discriminations—with the operation of the price system, the allocative mechanism of market economies.KeywordsIndustrial SectorCapital InflowCapital OutflowLiquidity PreferenceGrow Labour ForceThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.