Value and Capital An Inquiry into some Fundamental Principles of Economic Theory

, by Hicks, J. R.

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ISBN: 9780198282693 | 0198282699
Cover: Paperback
Copyright: 7/7/1975

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INTRODUCTION

(10)

Plan of the work. A double inquiry (i) into value theory, comprising a study of the interrelations and mutual interactions of markets; (ii) into dynamic economics-the theory of capital and interest-the study of the economic system as a process in time.

PART I THE THEORY OF SUBJECTIVE VALUE

I. UTILITY AND PREFERENCE

(15)

1. Marshall's theory of utility.

2. Pareto and indifference curves.

3, 4. The ordinal character of utility.

5. Need for a theory consistently based upon ordinal utility.

6. Marginal rate of substitution.

7. Diminishing marginal rate of substitution.

8. Logical foundation of deductive economics.

9. Generalization to the case of many goods.

II. THE LAW OF CONSUMER'S DEMAND

(16)

1. Marshall's deduction of the law.

2. Effects of income changes.

3. Effects of price changes. Income effects and substitution effects.

4. Extension of the concept of a commodity.

5. Market demand.

6. The Giffen case.

7. The supply curve.

Note to Chapter II. CONSUMER'S SURPLUS

(4)

III. COMPLEMENTARITY

(13)

1. The Edgeworth-Pareto definition.

2. A revised definition.

3, 4, 5. Effects of a change in one price on the layout of expenditure in general.

6. The demand for a group of commodities.

PART II GENERAL EQUILIBRIUM

IV. THE GENERAL EQUILIBRIUM OF EXCHANGE

(7)

1. Range of application of the foregoing analysis.

2. The theory of exchange in its Walrasian form.

3. Determinateness of exchange equilibrium.

4. Reasons for apparent sterility of the Walrasian system.

V. THE WORKING OF THE GENERAL EQUILIBRIUM SYSTEM

(16)

1. Laws of change and stability conditions.

2. Stability of simple exchange.

3. Stability of multiple exchange. Perfect and imperfect stability.

4, 5. Conditions for stability in multiple exchange.

6. The working of a system of multiple exchange.

7. Elasticities of supply and demand (all secondary repercussions allowed for).

VI. THE EQUILIBRIUM OF THE FIRM

(11)

1. Parallelism between the theory of subjective value and the theory of the firm.

2. Equilibrium conditions in a simple case.

3. The difficulty of increasing returns.

4. The solution by imperfect competition considered.

5. Many factors and many products.

VII. TECHNICAL COMPLEMENTARITY AND TECHNICAL SUBSTITUTION

(10)

1. Effects of price changes on the equilibrium of the firm.

2. Substitution among factors.

3. Complementarity among factors.

4. The relation between factor and product. Regression.

5. The dominance,of complementarity among factors alone, and among products alone.

6. The general case.

VIII. THE GENERAL EQUILIBRIUM OF PRODUCTION

(16)

1. Synthesis of static equilibrium theory.

2. Determinateness of the extended equilibrium system.

3. Stability of the system.

4. Working of the system.

5, 6, 7. Some examples in the application of the general equilibrium method.

Note to Chapter VIII. CONVENTIONAL OR RIGID PRICES

110

(5)

PART III THE FOUNDATIONS OF DYNAMIC ECONOMICS

IX. THE METHOD OF ANALYSIS

115

(15)

1. Statics and dynamics.

2, 3. The traditional approaches: (i) the stationary state; (ii) Marshall's short and long periods.

4. Adaptation of Marshall's method. Fundamental notions of a general dynamic theory: (i) the week;

5. (ii) the plan;

6. (iii) expectations.

7. Preserving the essentials of static analysis.

Note to Chapter IX. THE FORMATION OF PRICES

127

(3)

1. Marshall's theory of the formation of prices in temporary equilibrium.

2. The generalization of Marshall's theory needed for our purposes.

X. EQUILIBRIUM AND DISEQUILIBRIUM

130

(11)

1, 2. Two senses of equilibrium. The economic system is always in temporary equilibrium, always more or less out of equilibrium over time.

3. Causes of disequilibrium.

4. Forward trading as a means of overcoming some causes of disequilibrium. Its limitations.

5. Some model systems. The 'Spot Economy' and the 'Futures Economy'.

XI. INTEREST

141

(12)

1. Commodity rates of interest and money rates.

2. The system of interest rates. Default risk.

3. Short rates and long rates.

4. The long-term market as a forward market in short loans.

5. Further models : the 'Spot Economy with short lending' and the 'Spot Economy with long lending'.

6. The short-term market as a forward market in long loans.

XII. THE DETERMINATION OF THE RATE OF INTEREST

153

(10)

1. Recent controversy.

2. Some preliminary difficulties.

3, 4. Determination of the Rate of Interest under conditions represented by our various models.

5. The traditional dichotomy between 'real' and 'monetary' economics.

6. Mr. Keynes's approach.

XIII. INTEREST AND MONEY

163

(8)

1. Money as a kind of security.

2. Substitution between money and bills.

3. Substitution between money and long-term securities.

4, 5. The chain of substitutes.

XIV. INCOME

171

(20)

1. Elusiveness of the income concept.

2. Income in practice.

3, 4, 5. Successive approximations to the 'ideal' income concept.

6. Its ultimate unintelligibility.

7. Income ex ante and ex port.

8. Estimates of social income. Their true nature.

Notes to Chapter XIV.

A. SAVING AND INVESTMENT

181

(3)

Senses in which they are equal or unequal

B. INTEREST AND THE CALCULATION OF INCOME

184

(61)

1. Interest and depreciation.

2. The average period of a stream of values.

3. The average period as a measure of crescendo or diminuendo.

PART IV THE WORKING OF THE DYNAMIC SYSTEM

XV. THE PLANNING OF PRODUCTION

191

(11)

1. Programme of Part IV.

2. The Austrian theory of capital.

3. The production plan.

4. What does the entrepreneur maximize?

5. Equilibrium of the production plan.

6. Stability of the production plan. Increasing returns reconsidered.

7. The average period of the plan.

XVI. PRICES AND THE PRODUCTION PLAN

202

(11)

1. Parallel with Chapter VII above.

2. The static rules translated.

3. Effect of current prices on price-expectations.

4. Short and long periods.

5, 6. Substitution and complementarity over time.

7. The input lag.

XVII. INTEREST AND THE PRODUCTION PLAN

213

(14)

1. Why interest changes are more difficult to deal with than price changes.

2. Particular changes in interest.

3. General changes in interest; the 'tilting' of the plan.

4. The average period as an index of tilting.

5. A fall in the rate of interest lengthens the average period.

6. The error of Bohm-Bawerk.

7. The impotence of interest.

XVIII SPENDING AND LENDING

227

(10)

1. The consumption plan. Weaknesses of the conception, and means to remedy them.

2. Equilibrium of the consumption plan.

3. Income effects in dynamic theory.

4, 5. Effects of (i) price, (ii) interest changes.

6. Two sorts of income effects.

XIX. THE DEMAND FOR MONEY

237

(8)

1. Money as a durable consumers' good.

2. Money as a security.

3. The demand for money in stationary conditions.

4. The demand for money in changing conditions.

5. Demand for money from the firm.

XX. THE TEMPORARY EQUILIBRIUM OF THE WHOLE SYSTEM.

(I) ITS IMPERFECT STABILITY

245

(13)

1. Scope of temporary equilibrium theory.

2. The notion of imperfect stability recalled.

3. When expectations are inelastic, stability is maintained by substitution over time.

4. The critical case where such substitution ceases to be possible. Wicksell and the 'Cumulative Process'.

5. General proof of the imperfect stability of the system in the critical case.

6. Mr. Keynes's proof.

XXI. THE TEMPORARY EQUILIBRIUM OF THE WHOLE SYSTEM.

(II) POSSIBLE STABILIZERS

258

(15)

1. Our model threatens to exhibit a higher degree of instability than we find in fact; one must therefore seek for possible stabilizers.

2. Interest as a stabilizer.

3. Long and short rates.

4. The unreliability of interest.

5. Past contracts are a destabilizer.

6. Price rigidities.

7. Reasons for the particular importance of rigid wages.

8. Why should wages be rigid?

9. The sense of normal prices

(i) as a cause of wage rigidities,

(ii) as a stabilizer in its own right.

XXII. THE TEMPORARY EQUILIBRIUM OF THE WHOLE SYSTEM.

(III) THE LAWS OF ITS WORKING

273

(10)

1. Effects of hoarding, of saving, and of investment.

2, 3. Consequences with inelastic expectations.

4, 5. Consequences with elastic price-expectations.

6. Consequences with elastic interest-expectations.

XXIII. THE ACCUMULATION OF CAPITAL

283

(11)

1. Beyond temporary equilibrium theory.

2. The depressing effect of capital accumulation.

3. Capital accumulation and distribution.

Note to Chapter XXIII. INCOME DURING A PROCESS OF CAPITAL ACCUMULATION

292

(2)

XXIV. CONCLUSION-THE TRADE CYCLE

294

(20)

1. Some tentative reflections.

2. The boom as a process of capital accumulation.

3. Why the slump does not lead to complete collapse.

4. Inventions and innovations.

5. The secular problem.

MATHEMATICAL APPENDIX

1. Introductory.

2. A fundamental mathematical proposition.

303

(2)

Appendix to Chapter I.

305

(2)

3. Equilibrium of the consumer.

4. Stability conditions.

5. The ordinal character of utility.

Appendix to Chapters II and III.

307

(7)

6. The effect on demand of an increase in income.

7. The effect of a change in price with constant income.

8. Properties of the substitution term.

9. Complementarity.

10. The demand for a group of goods.

11. The supply side.

12. Market demand.

Appendix to Chapter IV.

314

(1)

13. Equilibrium of exchange.

Appendix to Chapter V.

315

(4)

14, 15. The stability of exchange equilibrium.

16, 17. Effects of an increase in demand.

Appendix to Chapter VI.

319

(1)

18. Equilibrium of the firm. The conditions of equilibrium.

Appendix to Chapter VII.

320

(3)

19. Equilibrium of the firm. Effect of a change in price.

20. The tendency towards dominance of complementarity among factors.

Appendix to Chapter VIII.

323

(2)

21. The general equilibrium of production.

22. The stability of general equilibrium.

Appendix to Chapter XV.

325

(1)

23. The determination of the production plan.

Appendix to Chapter XVII.

326

(3)

24. The effect of interest on the production plan.

25. The average period of the plan.

ADDITIONAL NOTES

A. The Generalized Law of Demand.

329

(4)

B. The Imperfect Stability of the Temporary Equilibrium System.

333

(2)

C. Professor Samuelson's Dynamic Theory.

335

(3)

INDEX

338

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