Scope

The object of this book is to present a systematic and thorough statement of the neoclassical theory of production and distribution. A decade or so ago this would not have required much space; and whatever the final product, it could only have been an embellishment of Carlson and Shephard, or of Samuelson's beautifully concise ‘Comprehensive Restatement of the Theory of Cost and Production.’ To be sure, one would have had to add something on the microeconomic theory of distribution; but this could have been easily done by relying upon the works of Hicks, Stigler, Chamberlin, and others.

But matters have changed dramatically within the past few years. Emphasis and professional interest have shifted significantly. Now most research centers on macroeconomic theory, on aggregate production functions and their implications for aggregate input substitution, distribution and technological progress (even though there now seems to be a trend toward microeconomics again). Since the behavior of these aggregates has a material effect upon the national economy, there has been a concomitant rise in the interest attached to econometric studies of production, distribution, and technological progress.

In a sense the chronical above is parochial because it concentrates upon developments whose origins are found predominantly on this side of the Atlantic. A group of English economists, centered around Cambridge, has taken an altogether different view of the macroeconomic aspects of distribution and technological progress. While there are certain differences within the group, the tenor of thought is reflected in the works of Kaldor. He argues that it is impossible, or at least meaningless, to distinguish between shifts of a production function and movements along it (i.e. the substitution of capital for labor).