Page 10 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.73, # 1, 2016, pp. 4-37

According to Karl Marx, the answer to this question has been provided by the
dynamic theory of macroeconomic analysis. John B. Clark wrote, ―It is obvious that
all changes entail the two common consequences: first of all, values, wages, and
interest will divert from static norms, secondly, the static norms will also change.
The end result of the dynamic theory is the ability to explain the direction and
parameters of such changes‖ [Clark James.,2000] .We may highlight here that John
B. Clark‘s prime focus was mainly on identifying the direction and measurements of
annual increments. He ascertained us that harmonization of each particular share in
major production factors in the national income is possible by means of the
economic marginal utility law.
Whilst analyzing the macroeconomic dynamics, Karl Marx introduced the
fourth autonomous factor: ‗growth‘ and its concurrent factor – ‗source of income‘,
which in effect is an incremental profit. This step has been justified.
―In order to illustrate this case, the most suitable type of the dynamic change
would be one that is caused by improvements in production technologies. Thus, an
invention makes production of any good cheaper. At the beginning, it generates
profit for entrepreneurs, then increments the wages and an interest in a manner,
described, in detail, earlier. Such process is equal to the creation of a new wealth‖
[Clark James.,2000]
J. B. Clark named the above mentioned factor as the ‗social progress factor‘.
That is associated with improvements in the methods of production. The notion of
the ‗social progress‘ is commensurate to the similar notion that had been customized
at ‗ex-soviet times‘, i.e. – ‗scientific and technical progress’. Under the current
realities where the development of High Tech and Information Technologies that
tend to change production processes, we may name the above process as the ‗science
and technology progresses‘.
Within the dynamic process of investing in the production, the development of
organizational methods of management, growth of labor productivity and of national
income is possible. Such possibility reflects the empirical analysis of all developed
countries. It entails positive changes pertaining to the levels of worker wages, interest,
and rent.
Thus, a capital owner and an owner of work skill are equally interested in the
increase of production and, consequently, their benefits from this process are the same.
John B. Clark is unique in his analysis of macroeconomic dynamics. His uniqueness
stems from his linking the process of cost generation with the five production factors
(not the three). The additional two factors out of the total five have been grouped under
the generic name of the ‗social progress‘.

10