tailieunhanh - History of Economic Analysis part 92

History of Economic Analysis part 92. At the time of his death in 1950, Joseph Schumpeter-one of the major figures in economics during the first half of the 20th century-was working on his monumental History of Economic Analysis. A complete history of humankind's theoretical efforts to understand economic phenomena from ancient Greece to the present, this book is an important contribution to the history of ideas as well as to economics. | History of economic analysis 872 then that the product of a given quantity of labor increases with every increase in Jevons amount of investment of capital. But he also postulated that this increase proceeds at a decreasing This amounts to setting up a law of decreasing physical returns that is formally analogous to the law of decreasing marginal productivity of any other factor in the arithmetical tables by which Bohm-Bawerk illustrated his ideas see . Kapital und Kapitalzins II p. 463 et seq. of the 3rd ed. he applied as it were successive units of time to a given amount of resources actually a month s labor . The restriction involved is stronger than necessary but made the going much easier for Bohm-Bawerk than it would have been without it. In appraising the standing of this postulate we must however never forget this lesson from the practice of the physicist a postulate may be justified not only by establishing observationally the facts it asserts but also by its results. Finally Jevons amount of investment of capital which has a time dimension divided by his amount of capital invested which has no time dimension gives Bohm-Bawerk s famous Period of Production. This quantity is to characterize by a single figure the structure of production if possible of total national production and to serve as the fundamental variable of capital theory. Formally it represents a gravitational center. Think of n particles of the masses m1 m2 .mn that lie on a straight line. Choosing this line for axis and denoting the co-ordinates of the particles on this axis by x1 x2 .xn we find that the co-ordinate X of their center of gravity is my 4- - - m let us but only in order to simplify the argument further assume that productive resources are given constant and this is really a pleonasm optimally allocated. The only reason why in these conditions there could be methods of production that are known to be superior to those in use and yet are not being used instead .