Die Beziehungen zwischen eigentlicher und historischer Substitutionselastizität bei technischem Fortschritt

• Published in: Weltwirtschaftliches Archiv 1967-01, Vol.99, p.175-224
• Main Authors: Hesse, Helmut, Gahlen, Bernhard
• Format: Article
• Language: ger
• ISSN: 0043-2636

This paper aims at three things: Its first aim is to increase our knowledge of Germany's economic development before 1913 by making use of the statistical data on German economic growth, supplied by Hoffmann, Grumbach and Hesse, in order to calculate the substitution elasticity of the production factors labour and capital. In doing so, the following results for the period from 1850 to 1913 have been obtained: (a) The historical substitution elasticity was greater than 1, (b) The actual substitution elasticity was about 0.2, (c) Progress was labour-saving in Hick's and Harrod's sense. The second aim of this paper is to explain the various relationships from the production-theory point of view, in so far as this is necessary for an interpretation of the statistical results obtained. Thus, the relations between the historical and the actual substitution elasticities, and between the various kinds of technical progress, are geometrically expounded. The third aim is to warn against taking the substitution elasticity figures, as given in economic literature, to be a true indication of the facility with which production factors may be substituted for one another. It is shown that what has been calculated (if anything) is in most cases only the historical substitution elasticity, which cannot tell us very much about the actual possibilities of substitution.