Economuc sciences/14.Economic Theory

Graduate student Yukhnovskyi I.V.

Taras Shevchenko National Univercity of Kyiv, Ukraine

The reproduction of innovation-investment potential in models of public reproduction

Problems of public reproduction were investigated by famous economists: F. Kene, K. Marx, J.M. Keynes, V. Leontyev, V. Bazylevych and others.

Today public reproduction means: «…

permanent and continuous resumption of the result of public production – a product, and labor force, means of production natural resources, information, forms and methods of work organization» [1, 348].

A reproductive approach, which was represented in Kene’s Table, reveals a constant cycle of interaction of three classes of society in the process of changing the form of the product during its motion through the stages of «production-distribution-exchange-consumption» and transformation of the reproductive cycle according to the chain resources-products-resources. F. Kene firstly divided the capital into two groups: a fixed capital in form the «initial advances» - cattle, houses, means of work, and variable capital in the form of «annual advances» - salary of workers, seeds and other annual expenses.

A researcher in his model described the costs of compensation of fixed capital, which in fact is its wear. Thus, by revealing the compensation of fixed capital depreciation, which was produced in industry and used in agriculture, the scientist explained the need of periodic expenditures for capital replenishment, that are investments. Besides that, depreciation - is a source of investment funds. So, the the Kenes’ model shows a reproduction of innovation-investment potential at the level of economic sectors in the form of investment that refers to the depreciation of fixed capital.

K. Marx said that any process of production, implementation of innovation or investment, regardless of public form must be continuous, that must periodically undergo same stages. He considered a public reproduction as: «... the process of public production, considered as a permanent connection and a continuous flow of its recovery ...» [2, 579]. It should be noted that K. Marx considered the simple and extended reproduction, depending on the purpose of public production.

Immediately, it should be noted that the reproduction schemes of K. Mars have some assumptions (restrictions):

- the degree exploitation of workers is constant and is m / v = 1;

- limited interpretation of the influence of scientific and technological progress in the process of reproduction;

- interpretation of the tendency to decrease of value added by capital accumulation;

- not taking into account all sectors and factors of production.

Let’s investigate the place and reprofuction of IIP in system of extended reproduction.

The general scheme of extended reproduction is like:

(1)

Let's investigate the IIP reproduction in the process of public reproduction without the implementation of scientific and technical progress. Let the extended reproduction system has the form:

(2)

The basic condition of extended reproduction is: . This inequality means for reimbursing the fixed capital of the II-d division in the process of production at the expense of labor income and added value of I-t division, and the surplus of this compensation (or better an unused value) will be directed to expanding production, or, enlarging the fixed capital and the appropriate enlarging variable capital (for guarenty of continued production in conditions of maintaining the organic constructuion of capital). Consequently, 500m of capitalist surplus of I-t division added value will go to increase a fixed and variable capital, and c: v = const. But, because of conditions in the I-t division c: v = 4000: 1000, so after capital accumulation this ratio does not change, according to this c will increase by 400 units, and v by 100. Thus, subjects of the I-t division (capitalists and workers) will direct 500m + 1000v + 100v = 1600 cash income for consumption, that is offset IIc. Therefore, IIc will increase by 100 units and v will get additional 33 units (to maintain the technical structure of capital at the same level) by reducing the consumption of added value of the capitalists of the II-d division. Then on expenditures for commodities will go only 367 units of additional costs of capitalist.

So, after I cycle of public reproduction, the system has a form:

(3)

Thus, at the end of next year (assuming of abcence of S-T progress implementation) we’ll get:

(4)

The total capital that was directed to compensation and accumulation at the I-t and II-d divisions equals: 4400 + 1100 + 1600 + 533 = 7633, and the total product was: 6600 + 2666 = 9266. Accordingly, a gain of capital for the period was: 400 + 100 + 100 + 33 = 633, while a gain of total product was: 9266 - 8500 = 766. So, investment multiplier will be: m = 766 / 633 = 1,21.

Let's examine an expanded reproduction under conditions of scientific and technological progress results implementation.

So, look at the system (2). Under these conditions let’s look an income distribution for expenditures at products. Revenues Iv and half of Im will be spent for commodities in the I-t division in amount of IIc. The rest of the 500m of I-t division will go to replenish fixed and variable capital. However, let’s suppose that as a result of technical progress a ratio of c: v will change to 89: 21. Therefore, under these conditions, a replenishment of fixed capital will be 450 units, and variable capital – 50 units. Where c: v = 4450c: 4050v = 89: 21. Thus, as Iv was increased by 50 units respectively, they will be spent on food consumption of the II-d division and will affect an increase of IIc. Thus, if the STP implementation affected only of the I-t division, the organic structure of capital will not change in the II-d division and equals 3: 1. Therefore, if IIc equals 1550c, hen IIv will be 517v, and capitalist consumption fund will be: 500 - 17 - 50 = 433. Then, after the 1 cycle of reproduction, a system has the form of consumption:

(5)

Therefore, under conditions of influence of STP at the level of labour exploitation, an added value will increase in relation to total capital. So if , and if a fixed capital will increase to 4450 and variable capital to 1050v, the total capital will be to 5500, then, if n1 will nod reduce in relation to n0, let m1 equals 1200 units, then . Thus, at the end of next year (assuming no STP results implementation in this period) we will get:

(6)

The total capital that was directed to compensation and accumulation at the I-t and II-d divisions was: 4450 + 1050 + 1550 + 517 = 7567, and the total product was: 6700 + 2584 = 9284. Accordingly, a gain of capital for this period was: 450 + 50 + 50 + 17 = 567 and a gain of total producrt were: 9284 - 8500 = 784. So an investment multiplier will be: m = 784 / 567 = 1.38.

So, a conclusion of analysis is:

1) A IIP reproduction takes place during a process of capital accumulation and production, ie during implementation of STP achievements.

2) Models of extended reproduction leads to extension of production, but without STP total product was 9266, and under conditions of STP - 9284.

3) Under conditions of STP achievements implementation a capital return is higher than under conditions of STP absence. Because of STP caused a value of investment multiplier equaled 1,38, but without STP – 1,21. In other words, under our conditions, the influence of an investment potential reproduction at the growth of output is reflected in the increase of output by 21%, and the influence of an innovation potential reproduction is reflected by the increase of output as the difference between growth under conditions of STP and without STP, ie 38% - 21% = 19%. Thus, with our conditions, an extention of production was mostly caused by capital accumulation rather than by STP achievements implementation.

4) An increase of level of exploitation of workers at the I-t division became a result of STP achievements implementation. Therefore, if the 1-t period charachterised m : v = 100%, at the 2-d period this ratio had changed to m : v = 1200 : 1050 = 114%.

Influential contribution for reproduction theory development was made by J.M. Keynes and his followers – neokeynsan’s. The model of the accelerator / multiplier proves a growth of induction investments at certain increase of yield. Thus, the accelerator calculates:

, where A – accelerator, I – Investments, Y – yield, t - time (period).

This formula explains the principle of acceleration, according to it any increase / decrease of yield (or demand) causes / leads to a much larger increase / decrease of inductive investments. This principle was developed by Aftalon and J.M. Clark at 1919 year, and also became a basis of economic growth of R. Harrod, J. Hicks and P. Samyuelson. The reason of difference between tempo of dynamics of investmentd and yield is duration of production period of the equipment. Since between an increase of demand or yield and production of new additional equipment for covering of this demand there is an unsatisfied extra demand that requires satisfaction. Therefore, in order to meet an extra demand investments are overstimulated. In this model a reproductuion of IIP is in the process of allocation and use of investment funds and an increase of investment attractiveness. In fact, this model automatically creates guarantees for capital absorption, because an extension of production and output is supported by extra effective demand. Also, it is worthy to look at an influence of investment multiplier at public reproduction and reproduction of IIP. Because of, due to investment multiplier investment expenditures and public expenditures cause not only extention of production and investments of only some economic sector (for satisfaction of increased demand), but also it cause some additional extention of production and investments in connected sectors, whose production is needed to extant production of first sector and etc.

Noteworthy is a model interindustry balances “Input-Output” of V. Leontiev:

, where X - vector-column of the output; Y - vector-column of the total product; A - matrix of coefficients of direct costs:

In this model, the coefficients of direct costs represent a relation between an amount of production and costs of products. Accordingly, in this model a reproduction of IIP occurs at: consumption of products of some industries for production in certain sector, which actually means capital consumption in natural form; an implementation of achievements of STP, which reduces coefficients of direct costs and consequently causes an increase of the final production and extension of production.

Thus, the analysis shows that IIP reproduction causes significant influence at public reproduction.

Literature:

1. Economic Theory: Political economy. Manual / [After ed. By V.D. Bazylevych]. –– К.: Znannia, 2001. – 581 p.

2. Marx К. Capital / Karl Marx // C. 1, C. 21 «Simple reproduction» : [On-line resource]. – access mode: http://esperanto-mv.pp.ru/Marksismo/Kapital1/kapital1-21.html#d7