INDUSTRIAL INVESTMENT IN FIXED CAPITAL: A RECONSIDERATION1
| DOI | http://doi.org/10.1111/j.1467-9485.1956.tb01173.x |
| Date | 01 October 1956 |
| Author | R. F. Henderson |
| Published date | 01 October 1956 |
SCOTTISH
JOURNAL
OF
POLITICAL
ECONOMY
OCTOBER
1956
INDUSTRIAL INVESTMENT IN FIXED CAPITAL
:
A RECONSIDERATION
MANY
of
our ideas about investment are derived, directly or indirectly,
from Keynes. His
General
Theory
serves as a convenient starting
point. In it investment played an important part. ‘Thus to justify
any given amount of employment there must
be
an amount
of
current
investment sufficient to absorb the excess of total output over what
the community chooses to consume when employment is at the given
level.’
‘
The amount
of
current investment will depend. in turn, on
what we shall call the inducement to invest; and the inducement to
invest will be found to depend on the relation between the schedule
of
the marginal efficiency
of
capital and the complex of rates of
interest on loans of various maturities and risks.’ ‘But
I
suggest
that the essential character
of
the Trade Cycle and, especially, the
regularity of time sequence and
of
duration which justifies us in
calling it a cycle is mainly due to the way in which the marginal
efficiency of capital fluctuates.’
Yet Keynes specifically excluded from consideration in that
book
a number of factors relevant to any study of investment:
‘
We take
as given the existing skill and quantity
of
available labour, the exist-
ing quality and quantity
of
available equipment, the existing
technique, the degree of competition, the tastes and habits
of
the
consumer,
. .
.’
‘
That changes in population, changes in tastes, and
changes in the methods and techniques
of
production are all excluded
Some of the material contained in this essay was included in lectures
given
to
the Glasgow and Dundee Branches of the Scottish Economic Society
in December
1955.
I
am much indebted to Mr. P.
T.
Bauer. Dr.
A.
R.
Prest,
Professor Sir Dennis Robertson and Professor
R.
S.
Sayers for critical com-
ments on an earlier draft: the mistakes which remain are of course my own.
*P. 27.
Pp. 27, 28.
4P.
313.
P. 245.
177
1
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