Acta Oeconomica 1. (1966)
1966 / 3-4. szám - BOOK REVIEWS - Szakolczai György: Bródy, A.: A termelés tőkeigényessége a kapitalizmusban (Capital Requirement of Production in Capitalism); Rácz, J.: Az állóalapok és a termelés összefüggése a magyar iparban (Interrelation between Fixed Capital and Production in the Hungarian Industry)
394 BOOK.-REVIEWS can in no way be explained by changes in capacity utilization. Nor do aspects of technology give a satisfactory answer, as choices between technological possibilities are obviously based on economic considerations. The difference between the first and the second phases of industrialization is that the former is dominated by an extensive and the latter by an intensive development, which may be of decisive significance. According to the author, changes of the quotient are basically determined by the fact that the transition from smallscale commodity production to capitalist production brings about a sudden increase in capital intensity followed, however, by a possibility of reducing the quotient. Rácz’ paper endeavours to make it possible to plan production by starting from the side of fixed capital. To achieve this he uses the formula of ’’production = fixed capital X production per fixed capital ratio”* as a starting point. This formula, together with the formula of ’’production = employment X productivity”, provides two methods for the planning of output, which are independent from each other and so there is a possibility of cross-checking the results. This method enables us, as the author claims, to do the work without making use of the production functions towards which the author feels — particularly as far as socialist countries are concerned — some mistrust. The greatest difficulty with his method is that the production per fixed capital ratio greatly depends on fluctuations in the capacity utilization of fixed capital, so that the ratio must be netted of this fluctuation before being used for planning purposes. The mainly introductory first chapter is followed by Chapter II devoted to describing the time series used and how it was compiled. This time series is to depict the utilization of gross official worktime (according to calendar days) of fixed capital or — using the author’s terminology — the extensive utilization of fixed capital. The time series is composed for the period of I960 to 1963 and embraces all groups of Hungarian industry. In Chapter III production per fixed capital coefficients and their computation are described. A great deal of work has gone into using and connecting series of various data available, some of them differing even in their nature, to elaborate several time series on fixed capital, again for all groups of Hungarian industry in 1950-1963. Confronting these time series with those of the extensive utilization of fixed capital he computes the volume of fixed capital utilized. He defines the capital per production ratio with the help of this volume of fixed capital utilized, and this ratio reflects — according to his own terminology — but the fluctuations in the intensive utilization of fixed capital. Based on these results it is now possible to find out the contributions to the growth of production by the increase in fixed capital and by changes in utilization, both intensive and extensive. Plans of changes in extensive utilization and projections for the intensive one may be used in calculations to greatly improve the precision of long-range plans. The importance of distinguishing the two indicators from one another is well illustrated — the author claims — by the fact that a 1 per cent improvement in the extensive utilization of fixed capital will be equal to about 20 per cent of a year’s investment. Accordingly, the planned measure of extensive utilization may necessarily become one of the most important indicators of planning work. In Chapter IV the same problem is analysed from the point of view of live labour inputs and of productivity. The increment of production may be decomposed into factors also from this aspect. It is possible to find out to what extent the increase in the number of workers and in productivity contributed to the increase of production. It is, further, possible to calculate the role of fixed capital per Acta Oeconomica Academiae Scientiarum Hungaricae 1, 1966 * the inverse of the capital-output ratio