Economics Dictionary of ArgumentsHome
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| Cambridge Capital Controversy: The Cambridge Capital Controversy was a debate between economists from Cambridge, UK (e.g., Joan Robinson, Piero Sraffa) and Cambridge, US (e.g., Paul Samuelson) in the 1950s–70s. It questioned the neoclassical concept of aggregate capital, highlighting issues like reswitching and capital reversing, ultimately challenging the validity of marginal productivity theory in determining income distribution. See also Capital theory, Capital structure, Production theory, Neo-Keynesianism, Neo-Neoclassicals._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Geoffrey C. Harcourt on Cambridge Capital Controversy - Dictionary of Arguments
Harcourt I 119 Cambridge Capital Controversy/Harcourt: (…) [the] discussions, (…), technically, relate to simple (!) questions such as: 'Can factor-price frontiers cross more than once?' and 'What is the shape of the factor-price frontier?' (…) >Factor price frontier, >Neo-neoclassicals, >Neo-Keynesianism, >Production function, >Aggregate production function, >R.M. Solow, >Joan Robinson. Harcourt: The controversies arise because of political and ideological differences between the two sides, differences which are thrown into sharp relief when the implications of the results of certain logical exercises become apparent. Neoclassicals/Keynesians: Both sides of the debate have examined heterogeneous capital-goods models in which any one technique of production does not allow substitution between factors, i.e. fixed input-output coefficients prevail and proportions of factors may vary only by going over to another technique as a result of changing factor prices.* The objects of the exercises differed as between the two groups. Harcourt I 120 Neo-Keynesianism: To the neo-Keynesians they represent an attack on the marginalist method, an attack which has been led, in spirit anyway, by Sraffa, who, (…) subtitled his book(1), Prelude to a Critique of Economic Theory, by which he meant marginalist theory. >Marginalism, >P. Sraffa. Neo-neoclassicals: To the other side, the object was to justify neoclassical marginalist procedures, an object which is not identical with one of providing a rigorous defence of the concepts of an aggregate production function and the associated input of 'capital'. Idealization/simplification/economic models: A puzzle that arises, nevertheless, is whether the stories associated with smooth, one-commodity, malleable capital models can 'stand in' as analogies for comparisons using these more 'realistic' models. The aggregate production function must now refer to the relationship between value capital and other variables within the whole set of techniques (though Bruno, Burmeister and Sheshinski [1968](2) have argued recently that the term, 'production function', should be confined to the engineering aspects of each technique, which seems to me a fudge based on hindsight). If the neoclassical stories as told, for example, by Swan [1956](5) and Solow [1957(4)] did in fact hold for heterogeneous capital-goods models, this would be an enormous simplification for economic theory and econometric specification alike (see Brown [1968(6), 1969(7)]). It is to this question that the double-switching debate is especially addressed. >Reswitching, >Economic models, >Idealization. * When input-output coefficients vary as between activities in any one technique, the aggregate factor proportions associated with a given technique may change in value. 1. Sraffa, Piero[1960] Production of Commodities by Means of Commodities. Prelude to a Critique of Economic Theory (Cambridge: Cambridge University Press). 2. Bruno, M., Burmeister, E. and Sheshinski, E. [1966] 'Nature and Implications of the Reswitching of Techniques', Quarterly Journal of Economics, LXXX, pp. 526-53. 3. Swan, T. W. [1956] 'Economic Growth and Capital Accumulation', Economic Record, xxxn, pp. 334-61. 4. Solow, R. M. [1957] 'Technical Change and the Aggregate Production Function', Review of economics and Statistics, xxxix, pp. 312-20. 5. Swan, T. W. [1956] 'Economic Growth and Capital Accumulation', Economic Record, xxxn, pp. 334-61. 6. Brown, Murray [1968] 'A Respecification of the Neoclassical Production Model in the Heterogeneous Capital Case', Discussion Paper No. 29, State University of New York at Buffalo. 7. Brown, Murray [1969] 'Substitution-Composition Effects, Capital Intensity Uniqueness and Growth', Economic Journal, LXXIX, pp. 334-47._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
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