Abstract
Standard postulates concerning the aggregate production function are about marginal productivities and the associated demands for labour and capital. These demands are supposed to be negatively related to the factor prices, namely the wage rate and the interest rate. The theoretical cases in which these neoclassical properties fail to hold are regarded as anomalies. We compute the aggregate values for production, capital and labour and find that the neoclassical postulates do not hold for the detailed dataset that we consider. The obvious implication of this result is that the models and analysis based on the aggregate neoclassical production functions are ill founded, as they are based on something that does not exist.
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