Classical Economists, Marx and Marshall on Dominant Technique

Abstract

The focal point of this paper is the notion of the dominant technique and its treatment in the theories of value and distribution. Our argument is that neither the average nor the minimum cost production are necessarily identified with the dominant technique in an industry. The dominant technique is in fact approximated with the types of capital, where expansion or contraction of accumulation actually takes place, and in this sense, the dominant is perceived as marginal technique used by firms entering (or leaving), and, therefore, expanding (or contracting) industry’s supply. Such a concept is absolutely consistent with the classical theory of value and is at odds with the neoclassical (not necessarily Marshall’s) theory despite of the adoption of marginal analysis.