Fund–flow versus flow–flow in production theory: Reflections on Georgescu-Roegen’s contribution

The inverted pyramid: A neo-Ricardian view on the economy–environment relationship

“…Sraffa (1960) argued that the proper treatment of capital requires a model with joint production, as the best way to treat depreciation is to view depreciated capital as the output of a production process. More generally, it is possible to treat the relatively invariant parts of production -what Georgescu-Roegen (1970) referred to as "funds" -as part of the "flow" (Kurz and Salvadori, 2003). Land, in this case, might enter production in one form (plowed, seeded, and fertilized) and exit in another (the soil surface compacted by the harvester and with some nutrients removed with the harvest).…”

The Fund-Flow Approach: A Critical Survey

“…First of all, the above claim that no economic model included tired workers or used tools among the products is actually false. As pointed out by Kurz and Salvadori (2003), there were models that allowed for used tools in a joint-product framework, namely those by von Neumann (1945) and Sraffa (1960), and Georgescu-Roegen knew for sure the former (see Georgescu-Roegen, 1966, p.311).…”

“…The limitations of the fund-flow model connected with the crucial assumption of "economic invariableness" for funds have been throughly analyzed by Kurz and Salvadori (2003).…”

“…4.3 Fund-flow model special case of the flow-flow model Kurz and Salvadori (2003) concludes that the fund-flow approach is more restrictive than the von Neumann-Sraffa approach, because the former cannot properly deal with the problems of "fund depreciation". The point is taken up by Lager (2000), who starts from an extension of the latter to deal with production processes lasting more the one period.…”

“…A hint of the conceptual problems involved in capturing the very same idea of line production systems within a von Neumann-Sraffa framework is provided by Kurz and Salvadori (2003) themselves when they quote Georgescu-Roegen (1970):…”