666. Joan Robinson to Harrod , 7 May [1937] [a]

[Replies to a letter not found, the exchange continues at 668 ]

3, Trumpington Street, Cambridge

7 May [1937]

My dear Roy,

I wonder if it is time to reply to your letter about inventions. [1] I find I have a difficulty at the first step. You say two things of a "neutral" invention. (1) that it raises the m[arginal]. p[roductivity]. of labour and of capital in the same proportions (this is Hick's definition [2] which follows) (2) that (with constant rate of interest) it leaves the period of production unchanged.

How are these two conditions compatible? And which is your definition of neutrality & which a consequence?

My simple minded way of looking at things is that if the m.p. of capital is raised, and the rate of interest is constant then there must be an addition to capital per head in order to reduce m.p. of capital to equality with the rate of interest.

I am always a bit dubious about measuring capital by the period of production, but surely in whatever way you measure it an increase in m.p. requires an addition to capital in order to restore equilibrium?

I cannot get any further until you have put me on the track at this point.

Yours

Joan Robinson

Did you like Kalecki in R.E.S.? [3]

  1. 1. Harrod wrote while reviewing Joan Robinson's Essays in the Theory of Employment (London: Macmillan, 1937). The review (Harrod 1937:9 ) was sent to Robinson before it appeared in the Economic Journal (see letter 668 ), but Harrod's criticism was thoroughly discussed only after an "armistice" (footnote i to page [jump to page] ) in force while publication was pending (letters 671 and following).

    2. As given in J. R. Hicks, Theory of Wages (1932), chapter VI, § 3.

    3. M. Kalecki, "A Theory of the Business Cycle", Review of Economic Studies 4, February 1937, pp. 77-97.

    1. a. ALS, two pages on one leaf, in HP IV-1089-1107. The front page is marked in Harrod's handwriting as "Concerning her book". Reproduced by kind permission of the Provost and Scholars, King's College, Cambridge.


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