Joan Robinson, Cambridge University
On page 104, she offers a frank comment on marginal productivity theory:
There is the problem of the relative levels of different types of earned income. Here we have the famous marginal productivity theory... The real wage of each type of labour is supposed to measure its marginal product to society. The salary of a professor of economics measures his contribution to society and the wage of a garbage collector measures his contribution. Of course this is a very comforting doctrine for professors of economics but I fear that once more the argument is circular. There is not any measure of marginal products except the wages themselves. In short, we have not got a theory of distribution. We have nothing to say on the subject which above all others occupies the minds of the people whom economics is supposed to enlighten.Ouch!
RH
In her book The Economics of Imperfect Competition (1933), Joan Robinson applies calculus to demand and supply curves so that the differentials of total cost and total revenue are marginal cost and marginal revenue. Equilibrium of output and price are achieved where marginal cost equals marginal revenue. This comment is by Peter L. Griffiths.
ReplyDeleteJoan Robinson could have developed her ideas on demand curves further by recognising that demand curves could take the form of curve of a circle with centre at (+x, +y) in the case of a monopolistic curve , and (-x,-y) in the case of a competitive curve. A hyperbola converging at x=-1 and y=0 at the other end could also serve as a monopolistic demand curve, but not a hyperbola converging at x=0 and y=0 where the corresponding marginal revenue will be always nil. This comment is by Peter L. Griffiths.
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