Alexander Mahr, “Einige Grundprobleme der Theorie der wachsenden Wirtschaft”

This is a single-author theoretical article in monetary growth theory. Its five sections move from saving and investment, through multiplier dynamics and the function of saving, to formal growth representation and the relation between monetary and real national income. Mahr’s main target is the static post-Keynesian notion of an “equilibrium income” defined by equality of saving and investment. For a growing economy, he argues, equilibrium cannot mean a fixed level of income, but only a coordinated movement of flows.

Soweit man bei der wachsenden Wirtschaft von einem Gleichgewicht sprechen kann, bezieht es sich nicht auf gegebene Größen, wie Volkseinkommen, Ersparungen, Investitionen, in ihrer absoluten Höhe, sondern nur auf die harmonische Weiterentwicklung dieser Größen, weshalb man besser den Ausdruck „gleichmäßiges Wachstum“ (balanced growth) verwendet.

English translation: Insofar as one can speak of an equilibrium in the growing economy, it refers not to given magnitudes—such as national income, savings, and investments—in their absolute levels, but only to the harmonious further development of these magnitudes, which is why the expression "balanced growth" is preferable.

The first conceptual move is therefore to replace point-equilibrium with process-equilibrium. Against Samuelson’s tabular model, Mahr insists that if investment merely equals saving out of current income, the income stream is reproduced rather than enlarged. Growth requires additional purchasing power: investment must exceed current saving, with the excess financed by monetary expansion through credit.

Es gehört geradezu zu den Voraussetzungen eines störungsfreien Wachstumsprozesses, daß die Investitionen höher sind als die Ersparungen, wobei das Mehr an Investitionen durch Erweiterung des Zahlungsmittelumlaufs finanziert wird.

English translation: It belongs, indeed, among the prerequisites of an undisturbed growth process that investments be higher than savings, the excess of investments being financed through an expansion of the circulation of means of payment.

This does not make the essay a simple plea for inflationary finance. Section II reinterprets the multiplier as a temporal process tied to the income velocity of money. The “infinite” multiplier is not an impossible instantaneous magnitude, but a way of describing effects extended indefinitely over time. Mahr’s point is that multiplier theory must be periodized and monetarily grounded.

So betrachtet, ergeben sich sehr enge Zusammenhänge zwischen Einkommensumlaufgeschwindigkeit des Geldes und Multiplikatorwirkung.

English translation: Viewed in this way, very close connections emerge between the income velocity of money and the multiplier effect.

Section III then gives saving its special, stabilizing function. Saving cannot be the sole source of growth finance, because that would prevent an expansion of monetary income. Yet saving is necessary when investment projects—power stations, housing, factories, durable capital goods—create incomes long before they enlarge consumer-goods supply. In such cases, saving withdraws purchasing power that would otherwise press on consumer markets and raise prices. The required ratio of saving to monetary finance depends on the kind and time-structure of investment.

Section IV formalizes this dynamic view. Mahr substitutes growth paths for intersection diagrams, using equations such as (E_n = E_0 + nI_m) for linear monetary-income growth and distinguishing investment from saving, monetary creation, and reserve mobilization: (I = I_s + I_m + I_r). Hoarding and dishoarding belong to cyclical, not ideally balanced, growth.

Einen Gleichgewichtspunkt gibt es hier nicht, denn, wie schon eingangs betont, ist es für die gleichmäßig wachsende Wirtschaft wesentlich, daß die maßgebenden Gesamtgrößen sich stets in der gleichen Richtung weiterentwickeln.

English translation: There is no equilibrium point here, for, as emphasized at the outset, it is essential for the steadily growing economy that the decisive aggregate magnitudes continue to develop always in the same direction.

The final section widens the analysis from money income to real income. Mahr asks when rising monetary income actually represents rising output rather than price change. Stable prices are most plausible under “horizontal” expansion with unchanged cost structures; technical change, differing demand elasticities, monopoly prices, wage pressure, and structural shifts break this parallelism.

Vor allem taucht aber hier das Problem auf, ob und unter welchen Voraussetzungen die Vergrößerung des volkswirtschaftlichen Geldeinkommens auch eine analoge Zunahme des Realeinkommens und damit indirekt der Güterproduktion zum Ausdruck bringt.

English translation: Above all, however, the problem arises here whether, and under what conditions, the increase of the aggregate money income of the economy also expresses an analogous increase in real income and thereby, indirectly, in the production of goods.

The article’s relevance lies in this synthesis: it criticizes static Keynesian income determination while rejecting laissez-faire confidence in automatic smooth growth. Neutral money, value-stable money, fiscal policy, and anti-monopoly policy are assessed as instruments for approximating balanced growth under unavoidable disturbances. Mahr’s conclusion is explicitly policy-oriented and anticipates the framework of the social market economy.

Eine entscheidende Rolle spielt hier, wie ich gezeigt zu haben glaube, eine auf möglichste Wertstabilität gerichtete Währungspolitik, wozu im Bedarfsfalle auch noch die Anwendung des Instruments der Fiskalpolitik und Maßnahmen gegen den Mißbrauch monopolistischer Machtstellungen treten müssen.

English translation: A decisive role here is played, as I believe I have shown, by a monetary policy directed at the greatest possible stability of value, to which, when needed, must be added the application of the instrument of fiscal policy and measures against the abuse of monopolistic positions of power.