Development and Underdevelopment in the History of Economic Thought

“Rediscovering the Burchardt-Lowe Model and its Contributions Toward Structural Economic Dynamics”

MURRAY MICHAEL, Bemidji State University

Our task here is to analyze Fritz Burchardt (1931-32) and Adolf Lowe’s (1976) somewhat neglected, but albeit insightful contributions toward the development of a non-neoclassical theory of production. Particular focus is on Burchardt’s critique of Böhm Bawerk vertical model and Adolf Lowe’s critique of the “extreme position” adopted in Piero Sraffa’s (1960) Production of Commodities by Means of Commodities. These critiques led Burchardt and Lowe to integrate the circular “surplus approach” of production and distribution found in the classical economists and Marx with the “vertical” approach of the Austrians. This integration sets Fritz Burchardt and Adolf Lowe apart in the history of economic analysis as being the sole contributors of a structural model of production that incorporates both circular and vertical exchanges. To date, contemporary non-neoclassical theories of production have failed to embrace the Burchardt-Lowe synthesis and thus have yet to escape the historical separation of structural production modeling. The integration of circular and linear exchanges is of importance because the model articulates the production of output and the distribution of income as an institutionalized process. Production occurs in historical time. Changes in the structure of production are not instantaneous and occur over time. Further the integration of circular and vertical stages introduces two degrees of capital specificity creating structural bottlenecks at the ``basic-sector'' or machine tools sector and at the industry level. The former creates a bottleneck for the entire production process while the latter creates structural bottlenecks that derail the multiplier process thus posing problems for Keynesian-type public policies.


Keywords: Adolph Lowe, Fritz Burchardt, Circular Production Modeling, Vertical Production Modeling

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