Some Cambridge Controversies in the Theory of Capital

Abstract

Capital theory traditionally spans two major compartments of economic theory: the theory of production of both individual products and the total product, and the theory of the distribution of the aggregate product between the different classes of capitalist society. It has always been controversial, partly because the subject matter is difficult and partly because rival ideologies and value systems impinge directly on the subject matter. In the present book the various topics associated with the exchanges between the 'neo-Keynesians' and the 'neo-neoclassicals' are discussed and evaluated. The topics include the measurement of capital, the revival of interest in Irving Fisher's rate of return on investment, the double-switching debate, Sraffa's prelude to a critique of neoclassical theory, and the 'new' theories of the rate of profits in capitalist society.

Technology and economic theory

“…The idea that time elapsing has a cost which constrains investment activity, is reflected in Marshall's concept of waiting, and in Fisher's notion of time preference or impatience. 23 For contrasting views, the standard references are Harcourt (1972), Bliss (1975) and Kurz and Salvadori (1995) #0909 composition of a functionally differentiated stock is as significant as its magnitude. From an economic viewpoint capital goods find their meaning in production plans and it is in the context of such plans that they acquire a forward looking value.…”

Integrating Physical and Social Modelling: The Example of Climate Change

“…We have also focussed on the models and modelling techniques used and developed by Nordhaus as a representative of the view of economists such as Solow that theories are not tested by their assumptions. We have shown that results obtained by economists concerning economic theories and models imply a number of clear features of agent cognition (Radner, 1968), the effects of economic policies on social welfare (Lancaster and Lipsey) and the nature of production (chronicled by Harcourt, 1972). None of these results are obscure and their implications are well understood.…”

“…The conditions of application of the Cobb-Douglas and similar functions was drawn from the theory itself during the course of an extensive controversy in the 1960s chronicled in detail by Harcourt (1972). Apart from certain curious examples of steady-state equilibrium, a function of the Cobb-Douglas type would describe the economic processes involved only if labour unassisted by any capital equipment were to use some malleable, homogenous substance to produce more of the same substance.…”

Continuidade e ruptura em economia política ou quantidade e qualidade na teoria do valor

“…A apresentação tradicional deste debate é feita por Harcourt (1972). Referimonos aqui à controvérsia específica entre seguidores de Sraffa e Marx que se populariza com Samuelson (1971) e é formalmente aceita pela escola marxista com Steedman (1977).…”