A Tale of Three Theorems

Robin Hahnel

Review of Radical Political Economics, 2017, vol. 49, issue 1, 125-132

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 .

Keywords: technical change; efficiency; rate of profit (search for similar items in EconPapers)
JEL-codes: C3 D33 D57 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:reorpe:v:49:y:2017:i:1:p:125-132

DOI: 10.1177/0486613415616213

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