Dictionary of Arguments

Philosophical and Scientific Issues in Dispute

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Disputed term/author/ism	Author	Entry	Reference
Aggregate Production Function	Robinson	Harcourt I 11 Measurements/capital/Aggregate Production Function/RobinsonVsNeoclassical Economics/Robinson/Harcourt: In 1953 Joan Robinson wrote The Production Function and the Theory of Capital' (Robinson [1953-4])⁽¹⁾ in which she made a number of specific complaints about the state of economic theory and the state of some economic theorists, who soon were to become identified as the latter-day neoclassical whose [headquarter] is now Cambridge, Mass. Her complaints related to the ambiguity concerning the unit in which capital was measured in the neoclassical aggregate production function, the concentration on factor proportions and the neglect of factor supplies and technical progress in the explanation of distributive prices and shares, and what she saw as the deficiencies of the neoclassical definition of equilibrium. >Equilibrium, >Capital, >Measurements. Harcourt I 15 RobinsonVsWicksell: Joan Robinson's first complaint related to the fuzzy nature of the capital variable in the aggregate production function, the concept of which, she argued, was used by the neoclassicals to explain the distribution of income between profit-receivers and wage-earners in capitalist economies, taking as given the stocks of labour and capital and the knowledge of how one may be substituted for the other, so that their respective marginal productivities were known. >Capital/Wicksell. Harcourt I 16 Robinson⁽²⁾: „The dominance in neoclassical economic teaching of the concept of a production function, in which the relative prices of the factors of production are exhibited as a function of the ratio in which they are employed in a given state of technical knowledge, has had an enervating effect upon the development of the subject, for by concentrating upon the question of the proportions of factors it has distracted attention from the more difficult but more rewarding questions of the influences governing the supplies of the factors and of the causes and consequences of changes in technical knowledge. Moreover, the production function has been a powerful instrument of miseducation. The student of economic theory is taught to write Q = f(L,K) where L is a quantity of labour, K a quantity of capital and Q a rate of output of commodities. He is instructed to assume all workers alike, and to measure L in man-hours of labour; he is told something about the index-number problem involved in choosing a unit of output; and then he is hurried on to the next question, in the hope that he will forget to ask in what units K is measured. Before ever he does ask, he has become a professor, and so sloppy habits of thought are handed on from one generation to the next.“⁽²⁾* Harcourt I 17 RobinsonVsNeoclassical economics: The neoclassical way of looking at the problem, Joan Robinson argues, directed interest away from the forces that determine the growth of capital and labour, and how technical advances affect growth, accumulation and income shares. Robinson/Harcourt: By contrast, her own interest in capital theory was in order to analyse what she regarded as a secondary factor in the list of factors which explain growth and distribution over time, namely, the role of the choice of techniques of production in the investment decision. The main propositions of The Accumulation of Capital, Robinson [1956]⁽³⁾, are established in a model in which there is only one technique of production available at any moment of time;(…) >Capital/Robinson. Harcourt I 25 Aggregate production function/Robinson/Harcourt: The costing and valuation process is repeated for all equipments, ws and rs and then the relationship between output per head and real capital is plotted to give Joan Robinson's version of the aggregate production function - her pseudo-production function - which has (…) a rather bizarre appearance relative to the smooth curves of the textbooks. RobinsonVsSolow: „It is an absurd, though unfortunately common, error to suppose that substitution between labour and capital is exhibited by a movement from one point to another along a pseudo-production function (see, for example, Solow [1970]⁽⁴⁾). Each point represents a situation in which prices and wages have been expected, over a long past, to be what they are today, so that all investments have been made in the form that promises to yield the maximum net return to the investor. The effect of a change in factor prices cannot be discussed in these terms. Time, so to say, runs at right angles to the page at each point on the curve. To move from one point to another we would have either to rewrite past history or to embark upon a long future.“ (Robinson [1971⁽⁵⁾], pp. 103-4. Harcourt I 25/26 Harcourt: Moreover (…) neither the wage rate nor the reward to capital can be obtained by suitable partial differentiation of the factor ratio relationship. Harcourt I 29 Equilibrium: It has been stressed that an implication of Joan Robinson's definition of equilibrium is that points on the pseudo-production function are equilibrium positions and that comparisons between points are just that, comparisons of one equilibrium position with another. >Equilibrium/Robinson. Time/process/accumulation/Harcourt: The comparisons are certainly not a description of a process - a change - whereby accumulation occurs and new, or, rather, different techniques (technical progress is ruled out by assumption) replace old ones as a result, for example, of changes in relative factor prices. >Factor price. Neo-Keynesianism: Moreover, a point which has been reiterated again and again in the literature by neo-Keynesians, especially by Joan Robinson, is that the application of results obtained from such equilibrium comparisons to long-period analyses of actual changes can be, at the least, most seriously misleading and, usually, just plain wrong. Neo-neoclassical economics: This fact vitiates many analyses of the past and, to be fair, has been countered in recent years by an enormous growth of models in which out-of-equilibrium processes are explicitly analysed, often (but not exclusively) by neo-neoclassical economists equipped with the appropriate techniques to do so. Harcourt: I have changed the notation of the original article in order to make it consistent with the notation of this book. 1. Robinson, Joan (1953-4). 'The Production Function and the Theory of Capital', Review of Economic Studies, xxi, pp. 81-106. 2. Ibid. p. 81 3. Robinson,* Joan [1956] The Accumulation of Capital (London: Macmillan). 4. Solow, R.M. [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8. 5. Robinson, J. [1971] Economic Heresies: Some Old-fashioned Questions in Economic Theory (New York: Basic Books).	EconRobin I James A. Robinson James A. Acemoglu Why nations fail. The origins of power, prosperity, and poverty New York 2012 Robinson I Jan Robinson An Essay on Marxian Economics London 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Aggregate Production Function	Solow	Harcourt I 29 Aggregate production function/equilibrium/SolowVsRobinson/Solow/Harcourt: „It doesn't seem to bother her [Joan Robinson] much that on [her] definition two physically identical outfits of capital equipment can represent different amounts of 'capital'. It wouldn't bother me either except that from the point of view of production two identical plants represent two identical plants.“ (Solow [1956a]⁽¹⁾, p. 101.) >Aggregate production function/Robinson, >Equilibrium/Robinson, >Aggregate production function/Champernowne. Harcourt I 30 HarcourtVsSolow: This objection is valid from the point of view of the theory of production, i.e. the ability to predict the rate of flow of output from a knowledge of factor supplies, but it is neither valid nor relevant for 'capital' viewed as value property, i.e. as reflecting the institutions of capitalist society. There is a real difference between the two situations and value capital ought to reflect it. The economic significance of a given plant may vary from one economic environment to another. 1. Solow, R. M. [1956a] 'The Production Function and the Theory of Capital', Review of Economic Studies, xxin, pp. 101-8.	Solow I Robert M. Solow A Contribution to the Theory of Economic Growth Cambridge 1956 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Austrian School	Solow	Harcourt I 92 Austrian School/Solow/Harcourt: Solow (…) argue[s] that only someone who is naively identifying the many aspects of capitalistic production with one of them (he mentioned the Austrian's 'time' as 'an inspired simplification' which did not come off) would believe that the theory could be summed up by defining something called 'capital' and calling the rate of interest the marginal product of 'it'. HarcourtVsSolow: But a head count of articles in the relevant literature surely would show that this is just what a large proportion of the trade is doing. >Capital/Robinson, >Production function.	Solow I Robert M. Solow A Contribution to the Theory of Economic Growth Cambridge 1956 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Capital	Brown	Harcourt I 172 Capital/Brown/Harcourt: Brown [1966]⁽¹⁾, (…) just because he wishes to retain maximizing behaviour, has suggested neoclassical exploitation as a compromise. Moreover, in his later papers [1968⁽²⁾,1969⁽³⁾], while he accepts the logic of the neo-Keynesian critics, as an econometrician, he, possibly rightly and certainly understandably, tries to find common ground between linear models and neoclassical ones. He works out the conditions which ensure capital-intensity uniqueness (CIU) at an aggregate level in two two-sector models, one linear, the other neoclassical, i.e. one in which each sector has a well-behaved production function. The tools which he uses are substitution and composition effects (…). „The basic result that emerges from the neoclassical analysis is that the substitution and composition effects (as defined within that system) determine the uniqueness of the relationship between the aggregate labour-capital ratio and relative factor prices. The parallel is then taken: substitution-composition effects (as defined within the linear system) determine CIU as well as other things; and substitution-composition effects (as defined within the marginal productivity system) determine, uniquely, the aggregate capital-labour and factor-price relationship.“ (Brown [1969]⁽³⁾, p. 355.) Harcourt: This leads him to conjecture that answers to certain large questions may not be substantially different, a philosophy and strategy which, for obvious reasons, is akin to those of Solow on his busman's holiday. Solow/Harcourt: The latest statement of Solow's philosophy, one which is entirely consistent with his earlier ones, is as follows: „So far as I know, I have never in rigorous work adopted Pasinetti's 'unobtrusive' postulate - which is intimately connected with his special version of orthodox theory - that if one of two techniques is more profitable than the other at a higher real wage and less profitable at a lower wage it will have a higher value of capital goods per man. It is true that one-capital-good models behave that way, but they are merely cheap vehicles for interpreting data (which seem to behave that way).“ (Solow [1970]⁽⁴⁾, p. 424.) Harcourt I 173 Pasinetti: Pasinetti [1970]⁽⁵⁾, p. 429, rightly points out the 'surprisingly high proportion of current economic literature [that is] carried out in terms of "neoclassical production functions" and one-commodity-models', which, whether rigorous or not, certainly do depend for their validity on the 'unobtrusive postulate'. Secondly, he points to the 'ancients' and 'moderns' who also have used the 'unobtrusive postulate' in order to get an index of scarcity in a general equilibrium system, and so a marginal productivity theory of capital. For: „It made 'capital' appear to be like a scarce resource, and the rate of profits to be like any other general-equilibrium price - an index of scarcity. It is this construction that has fallen down. For that unobtrusive postulate was essential to it.“ (Pasinetti [1970]⁽⁵⁾, p. 429.) Demand/Ferguson/Allen: Ferguson and Allen [1970]⁽⁶⁾ have carefully analysed the conditions under which the construction does break down when changes in the composition of demand due to changes in relative product prices are taken into account. They derive some comfort from their results. Their approach seems open to at least two criticisms. First, as they candidly admit, they use a model which favours the neoclassical position, as intermediate goods are ignored and the capital good is the only basic. Secondly, they do not investigate whether the changes in the composition of demand are consistent with their assumption of full employment. Moreover, as their analysis consists only of comparisons, their appeal to the facts to decide seems to be beside the point. RobinsonVsBrown/RobinsonVsSolow: Joan Robinson [1970a⁽⁷⁾, 1970b⁽⁸⁾], of course, would accept neither Brown nor Solow's approach, nor Samuelson's rationalization of it. To her, Samuelson's surrogate production function, even though it allows the simple parables to be told, does so only in the form of comparisons, so that it remains a spoof-a pseudo-production function. Only when capital is actually jelly (or leets) can substitution and the other neoclassical processes occur and full employment of all factors be maintained in competitive economies. But, in her view, such constructions assume away all the real difficulties associated with the existence of heterogeneous capital goods and the implications of the disappointed expectations of atomistic economic actors in competitive situations. 1. Brown, Murray [1966] 'A Measure of the Change in Relative Exploitation of Capital and Labor', Review of Economics and Statistics, XLvm, pp. 182-92. 2. 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. 3. Brown, Murray [1969] 'Substitution-Composition Effects, Capital Intensity Uniqueness and Growth', Economic Journal, LXXIX, pp. 334-47. 4. Solow, R M. [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8. 5. Pasinetti, L. L. [1970] 'Again on Capital Theory and Solow's "Rate of Return" ', Economic Journal, LXXX, pp. 428-31. 6. Ferguson, C. E. and Allen, Robert F. [1970] 'Factor Prices, Commodity Prices, and the Switches of Technique', Western Economic Journal, vin, pp. 95-109. 7. Robinson, Joan, [1970a] 'Capital Theory Up to Date', Canadian Journal of Economics, in, pp. 309-17. 8. Robinson, Joan, [1970b] 'Review of C. E. Ferguson, The Neoclassical Theory of Production and Distribution, 1969', Economic Journal, LXXX, pp. 336-9.	BrownMurray I Murray Brown On the theory and measurement of technological change Cambridge 1968 PolBrown I Wendy Brown American Nightmare:Neoliberalism, neoconservativism, and de-democratization 2006 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Capital	Solow	Harcourt I 7 Capital/Measurements/return on investment/Fisher/SolowVsFisher/Solow/Harcourt: Solow [1963a⁽¹⁾, 1966⁽²⁾, 1967⁽³⁾, 1970⁽⁴⁾]: Solow's purpose was, in part, to get away from the obstacles of the measurement of capital and its related problems by developing instead the concept of the rate of return on investment. His own contributions were to graft technical progress on to Fisher's analysis and to apply the resulting concepts empirically, in order to obtain estimates of the orders of magnitude of the rates of return on investment in post-war U.S.A. and West Germany. >Irving Fisher. Joan RobinsonVsSolow: It is argued that neither in theory nor in empirical work has Solow been able completely to escape from the need to define and measure aggregate capital and to work within the confines of a one-commodity model. >Aggregate Capital. Harcourt I 46 Capital/SolowVsRobinson/Solow/Harcourt: Solow's comment in Solow [1956a]⁽⁵⁾ on Joan Robinson's [1953-4]⁽⁶⁾ article: Solow investigated the conditions under which it would be legitimate to aggregate heterogeneous capital items into a single figure, no doubt having in mind his subsequent econometric studies. >Econometrics. He found that the conditions were very stringent - the rate at which one capital good could be substituted for another had to be independent of the amounts of labour which subsequently would be used with each. (He discusses in this context a neoclassical model in which continuous substitution is possible, not the discrete case of Joan Robinson's article, but he also looks at the latter towards the end of his article.) >Neoclassical economics. His conclusion is quoted in full below because it is an extremely clear statement of the stand that he takes in the debates that followed: „I conclude that discreteness is unlikely to help matters. Only in very special cases will it be possible to define a consistent measure of capital-in-general. Some comfort may be gleaned from the reflection that when capital-labour ratios differ widely we hardly need a subtle index to tell us so, and when differences are slight we are unlikely to believe what any particular index says.“ (p. 108.)⁽⁵⁾ Harcourt: For Solow, 'Capital as a number is not an issue of principle. All rigorously valid results come from n-capital-good models. In particular there is no justification ever for supposing that output can be made a function of labour and the VALUE of capital whose partial derivatives do the right thing.' Capital as a number is purely an aid to empirical work 'and you want to get away with the smallest dimensionality possible' (Solow [1969]⁽⁷⁾). >Capital, >Economic models. Harcourt: Had the contestants been content to leave the discussion here, the literature of the following years might have served to generate far more light - and certainly a lot less heat.* >Cambridge Capital Controversy. Harcourt I 92 Capital/Solow/Swan/Harcourt: Solow's basic puzzle concerning a simple, unique measure of capital which in fact has many dimensions and characteristics has been put splendidly by Swan [1956]⁽¹⁰⁾ as follows: „That there should be great difficulties in handling the concept of Capital in a process of change is not surprising. A piece of durable equipment or a pipe-line of work-in-progress has dimensions in time that bind together sequences of inputs and outputs jointly demanded or jointly-supplied at different dates. The aggregation of capital into a single stock at a point of time is thus the correlative of an aggregation of the whole economic process, not only in crosssection (which gives rise to the ordinary index-number problems), but also in time itself: in other words, the reduction of a very highorder system of lagged equations - in which each event, its past origins and its future consequences, could be properly dated and traced backward and forward in time-to a more manageable system with fewer lags. This second kind of aggregation introduces a further set of ambiguities, similar in principle to those of indexnumbers, but as yet hardly investigated . . . From the idea of capital as a single stock there is in principle no sudden transition to 'the enormous who's who of all the goods in existence'. Between the two extremes lies an ascending scale of nth-order dynamic systems, in which capital like everything else is more and more finely subdivided and dated, with ascending degrees of (potential) realism and (actual) complexity. In fact, most of us are left at ground-level, on ground that moves under our feet.“ (p. 345.) Solow/Harcourt: As a self-confessed middlebrow, Solow sees the rate of return on investment as the link between highbrow capital theory - Harcourt I 93 the microeconomic theory of resource allocation and prices which allows for the fact that commodities can be transformed into others over time and which is only complete when it also explains the distribution between factors - and lowbrow theory, which is concerned with aggregation and approximation and relates to the empirical implications of saving and investment decisions. By analysing these problems in terms of a rate of return, i.e. a price, we take cognizance of the fact that 'the theory of capital has as its "dual" a theory of intertemporal pricing . . .' (Solow [1963a]⁽¹¹⁾, p. 14.) >Return on investment/Solow. * Solow's latest statement of these views is in Solow [1970](8), pp. 424 and 427-8 (but see, also, Pasinetti [1970](9), pp. 428-9). 1. Solow, R. M [1963] 'Heterogeneous Capital and Smooth Production Functions: An Experimental Study', Econometrica, xxxi, pp. 623-45. 2. Solow, R. M., Tobin, J., von Weizsacker, C. C. and Yaari, M. [1966] 'Neoclassical Growth with Fixed Factor Proportions', Review of Economic Studies, xxxm, pp. 79-115. 3. Solow, R. M. [1967] 'The Interest Rate and Transition between Techniques', Socialism, Capitalism and Economic Growth, Essays presented to Maurice Dobb, ed. by C. H. Feinstein (Cambridge: Cambridge University Press), pp. 30-9. 4. Solow, R. M [1970] 'On the Rate of Return: Reply to Pasinetti.Economic Journal, LXXX, pp.423-8. 5. Solow, R. M. [1956a] 'The Production Function and the Theory of Capital', Review of Economic Studies, xxin, pp. 101-8. 6. Robinson, Joan (1953-4). 'The Production Function and the Theory of Capital', Review of Economic Studies, xxi. 7. Solow, R. M. [1969] Letter to author. 8. Solow, R. M. [1970] 'On the Rate of Return: Reply to Pasinetti Economic Journal, LXXX, pp.423-8. 9.Pasinetti, L.L. [1970] 'Again on Capital Theory and Solow's "Rate of Return" ', Economic Journal, LXXX, pp. 428-31. 10.. Swan, T. W. [1956] 'Economic Growth and Capital Accumulation', Economic Record, xxxn, pp. 334-61. 11. Solow, Robert M. [1963a] (Professor Dr. F. De Vries Lectures, 1963) Capital Theory and the Rate of Return (Amsterdam: North-Holland).	Solow I Robert M. Solow A Contribution to the Theory of Economic Growth Cambridge 1956 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Investments	Robinson	Harcourt I 109/110 Investments/Joan Robinson/VsSolow/Harcourt: Joan Robinson closes her comments on Solow's first lecture⁽¹⁾ by arguing that in a competitive capitalist economy, expected rates of profits guide the investment decisions of individual businessmen and that there will be a Marshallian tendency for them to approach equality. (Presumably they guided the investment expenditure of the utilization functions of the capitalist economies above.) >A. Marshall. The expected rate of profits, however, is of no interest to the planner, though the rate of return on investment is, while the latter is of no interest to the capitalist! This bait (which was also dangled by Dobb) was too much for Solow to resist, despite his own eminently sensible comments on it in Lecture 3 in Solow [1963a]⁽¹⁾, pp. 70-2, and it is the subject of his paper, Solow [1967]⁽²⁾, in the Dobb Festschrift⁽²⁾. >Return on investment/Solow. 1. Solow, Robert M. [1963a] (Professor Dr. F. De Vries Lectures, 1963) Capital Theory and the Rate of Return (Amsterdam: North-Holland). 2. Solow, R. M. [1967] 'The Interest Rate and Transition between Techniques', Socialism, Capitalism and Economic Growth, Essays presented to Maurice Dobb, ed. by C. H. Feinstein (Cambridge: Cambridge University Press), pp. 30-9.	EconRobin I James A. Robinson James A. Acemoglu Why nations fail. The origins of power, prosperity, and poverty New York 2012 Robinson I Jan Robinson An Essay on Marxian Economics London 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Marginal Product of Capital	Solow	Harcourt I 115 Marginal Product of Capital/Solow/Harcourt: Solow's emphasis on the equality of private and social rates of return, especially in the embodied case((s) where the technical progress is embodied in maschines), is not intended to give the impression that they are equal. For „embodied“ see >Terminology/Harcourt. (Most of his analysis, though, in Capital Theory and the Rate of Return(1), the Dobb Festschrift paper and his subsequent reply to Pasinetti's criticisms, is directed to this end, while his wise asides continue to deny it.) Harcourt I 116 The emphasis is meant, rather, to demonstrate 'the much weaker proposition that if the private and social marginal products of capital coincide, then the private and social rates of return will coincide', Solow [1963a]⁽¹⁾, p. 65. HarcourtVsSolow: Two puzzles then arise: first, are marginal products of aggregate capital definable and important after all? Secondly, what is the significance of the equalities: could we - should we - in fact without qualms leave investment decisions to private businessmen (and saving to private individuals)? >Return on investments/Solow. 1. Solow, Robert M. [1963a] (Professor Dr. F. De Vries Lectures, 1963) Capital Theory and the Rate of Return (Amsterdam: North-Holland).	Solow I Robert M. Solow A Contribution to the Theory of Economic Growth Cambridge 1956 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Measurements	Solow	Harcourt I 7 Capital/Measurements/return on investment/Fisher/SolowVsFisher/Solow/Harcourt: Solow [1963a⁽¹⁾, 1966⁽²⁾, 1967⁽³⁾, 1970⁽⁴⁾]: Solow's purpose was, in part, to get away from the obstacles of the measurement of capital and its related problems by developing instead the concept of the rate of return on investment. His own contributions were to graft technical progress on to Fisher's analysis and to apply the resulting concepts empirically, in order to obtain estimates of the orders of magnitude of the rates of return on investment in post-war U.S.A. and West Germany. >Irving Fisher. Joan RobinsonVsSolow: It is argued that neither in theory nor in empirical work has Solow been able completely to escape from the need to define and measure aggregate capital and to work within the confines of a one-commodity model. >Aggregate Capital. Harcourt I 116 Measurements/Solow/Harcourt: Realized expectations and perfect foresight are needed strictly to justify all Solow's results. >Expectations. Capital, rates of profits, etc., cannot be measured unless this is so, for past investments could not be weighted by their appropriate [values] (which themselves might no longer be appropriate). The calculations of the man of words would have irretrievably - and forever - parted company with those of the man of deeds, as Joan Robinson would say. >Joan Robinson. Comparisons taken from pseudo-production functions bear not at all on the out-of-equilibrium processes that have occurred. >Pseudo-production function, >Aggregate production function, >Cobb-Douglas production function. Harcourt: This approach to analysis is not, of course, confined to one side alone. And it should also be pointed out that the calculations are carefully hedged round with appropriate qualifications and a fine sense of the empirical orders of magnitude involved. Harcourt I 117 HarcourtVsSolow: Nevertheless, the analysis is an illegitimate extrapolation of results that hold only for a one commodity, malleable capital world in which the short run and the long run collapse into one and perfect foresight and realized expectations are guaranteed. >One-commodity model. With social rates of return somewhere in between, the inevitable implication is that something or someone needs to give a nudge to bring them all closer together. Otherwise the divergencies between social and private risks will continue to have unfortunate consequences for the social wellbeing of the economies concerned. >Return on investment/Solow. 1. Solow, R. M [1963] 'Heterogeneous Capital and Smooth Production Functions: An Experimental Study', Econometrica, xxxi, pp. 623-45. 2. Solow, R. M., Tobin, J., von Weizsacker, C. C. and Yaari, M. [1966] 'Neoclassical Growth with Fixed Factor Proportions', Review of Economic Studies, xxxm, pp. 79-115. 3. Solow, R. M. [1967] 'The Interest Rate and Transition between Techniques', Socialism, Capitalism and Economic Growth, Essays presented to Maurice Dobb, ed. by C. H. Feinstein (Cambridge: Cambridge University Press), pp. 30-9. 4. Solow, R. M [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8.	Solow I Robert M. Solow A Contribution to the Theory of Economic Growth Cambridge 1956 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Perfect Competition	Robinson	Harcourt I 91 Perfect Competition/Robinson/Harcourt: (..) Solow believes that, sometimes, the best way to understand capitalism is to think about socialism. RobinsonVsSolow/Harcourt: There would be more agreement about the reverse proposition: see Robinson [1960]⁽¹⁾, part 5, Robinson [1964b]⁽²⁾, also Robinson (1965b]⁽³⁾, pp. 36-47. Harcourt I 92 Thus: „... the notion of factor allocation in conditions of perfect competition makes sense in a normative theory of a planned economy rather than in a descriptive theory for a capitalist economy, and . . . the notion of the marginal productivity of investment makes sense in the context of socialist planning.“ (Robinson [1964b](2), p. 410, also Robinson [1965b]⁽³⁾, p. 36.) >Socialism, >Capitalism. 1. Robinson, Joan [1960] Exercises in Economic Analysis (London: Macmillan). [1962a] Essays in the Theory of Economic Growth (London: Macmillan). 2. Robinson, Joan [1964b] 'Solow on the Rate of Return', Economic Journal, LXXIV, pp. 410-17. 3. Robinson, Joan [1965b] Collected Economic Papers, Vol. Ill (Oxford: Basil Blackwell).	EconRobin I James A. Robinson James A. Acemoglu Why nations fail. The origins of power, prosperity, and poverty New York 2012 Robinson I Jan Robinson An Essay on Marxian Economics London 1947 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Return on Investment	Neo-Keynesianism	Harcourt I 95 Return on investment/VsSolow/Neo-Keynesianism/Harcourt: Solow claims that calculating the rate of return requires no measure of the stock of capital, not even necessarily a mention of it, although in some of his theoretical examples and in his empirical work he is unfaithful to himself. He also claims that neoclassical theory, in so far as it centres around the rate of return, can escape from the malleability assumption and 'can accommodate fixity of form and proportions both' (p. 27)⁽¹⁾. Harcourt I 66 Terminology/Harcourt: (…) [we distinguish between] the malleable capital world in which technical progress is disembodied and the vintage world where it is embodied (…). Harcourt I 96 Neo-Keynesianism/Harcourt: It is much better, especially when dealing with the problems that Solow has in mind in the present context, to get away from the neoclassical stationary state with its given total factor supplies and into the vintage world where investment decisions are made on the basis of the ex ante production function, at the margins of the capital stock, which does not, however, have to be measured. It is in this world, as we have seen, that Marshall's long-period analysis properly breathes and moves and has its being.* Malleability: Ferguson [1969]⁽²⁾, however, sees the malleability assumption as a convenient way of analysing tendencies associated with substitution possibilities untrammelled by the constraints of the short period. This highlights a fundamental disagreement between the two sides. One argues that a grip on the real world must always be kept in analysis, though simplifications are, of course, needed, while the other argues that tendencies may be analysed in isolation even though they will not, of necessity, ever show up in their pure form in actual situations. Actions/time/Robinson: Hence Joan Robinson, for example, stresses that, by definition, actions always take place in the short run, so that only rarely should it be abstracted from. * Stigler [1941]⁽³⁾, p. 303, makes the same point as Solow in his discussion of J. B. Clark's concept of capital. See also Hicks [1932]⁽⁴⁾, pp. 19-22. 1. Solow, R. M. [1967] 'The Interest Rate and Transition between Techniques', Socialism, Capitalism and Economic Growth, Essays presented to Maurice Dobb, ed. by C. H. Feinstein (Cambridge: Cambridge University Press), pp. 30-9. 2. Ferguson, C. E. [1969] The Neoclassical Theory of Production and Distribution (Cambridge: Cambridge University Press). 3. Stigler, George J. [1941] Production and Distribution Theories: The Formative Period (New York: Macmillan). 4. Hicks, J. R. [1932] The Theory of Wages (London: Macmillan).	Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Return on Investment	Solow	Harcourt I 7 Capital/Measurements/return on investment/Fisher/SolowVsFisher/Solow/Harcourt: Solow [1963a⁽¹⁾, 1966⁽²⁾, 1967⁽³⁾, 1970⁽⁴⁾]: Solow's purpose was, in part, to get away from the obstacles of the measurement of capital and its related problems by developing instead the concept of the rate of return on investment. His own contributions were to graft technical progress on to Fisher's analysis and to apply the resulting concepts empirically, in order to obtain estimates of the orders of magnitude of the rates of return on investment in post-war U.S.A. and West Germany. >Irving Fisher. Joan RobinsonVsSolow: It is argued that neither in theory nor in empirical work has Solow been able completely to escape from the need to define and measure aggregate capital and to work within the confines of a one-commodity model. >Aggregate Capital. Harcourt I 94 Return on investment/Solow/Harcourt: What, then, is the rate of return on investment? Consider a planned economy which has a stock of heterogeneous capital goods, produces a certain volume of one consumption good and is at full employment with its inputs efficiently allocated. (Efficient means only that it is impossible to have more of anything without less of something else.) Compare this situation with possible neighbourhood efficient arrangements in which there is a little less consumption and therefore more capital goods (in physical, not necessarily in value terms). Now change over to an alternative arrangement by saving, i.e. reducing consumption. This allows a one-period gain (the next) in consumption over what it would have been. Make sure that the biggest gain is chosen for a given reduction in consumption now. Finally suppose that in the period after the next the economy reaches the position that it intended to be at by that period anyway. That is, the economy over the three periods has had decided for it - we are all technocrats now - a consumption stream C₀ -h, C₁+j, C2, .. . instead of one of C₀, C₁, C₂, . . . Then a natural definition of the one-period rate of return on investment (R1) is R₁ = j-h/ h = j/h -1 . . .perfectly natural usage. For „technocrats“ see >Capital theory/Solow. Harcourt I 95 Saving/prices/implicit assumptions/Harcourt: We should note the vital importance in all these definitions of an implicit assumption either that saving may be transformed into investment without affecting relative prices or that we are analysing a one-commodity model. Without these assumptions, saving, in the sense of consumption forgone, will not necessarily add the additional consumption because, depending on how prices change, it will be associated with different amounts and types of investment. Hence Solow concentrates on small changes - the notional changes of the neoclassical procedure – and the prices corresponding to a switch-point rate of profits: see Solow [1967⁽⁵⁾, 1970⁽⁶⁾]. Measurements: Solow claims that calculating the rate of return requires no measure of the stock of capital, not even necessarily a mention of it, although in some of his theoretical examples and in his empirical work he is unfaithful to himself. He also claims that neoclassical theory, in so far as it centres around the rate of return, can escape from the malleability assumption and 'can accommodate fixity of form and proportions both' (p. 27). Malleability: As an aside but very much related to the malleability assumption, he comments that J. B. Clark's jelly assumption (see Stigler [1941]⁽⁷⁾, chapter xi, and Samuelson [1962]⁽⁸⁾) makes the analysis easier (…). Substitution: Moreover it contains the important kernel of truth that substitution possibilities are easier over longer periods of time even though at any moment of time capital goods may be highly specific and substitution possibilities ex post (if not ex ante) limited: see Hicks [1932]⁽⁹⁾, pp. 19-21. Harcourt I 96 SalterVsSolow: This seems to be literally true only if we are considering the working out in actual time of the possibilities which exist at the beginning of a Marshallian long period, while not allowing anything to change, other han what was expected to change at the start of the period. The application of results from this analysis to real-world happenings is, therefore, suspect, as Salter [1960⁽¹⁰⁾, 1965⁽¹¹⁾], for example, has so clearly shown. >Return on investment/Neo-Keynesianism. Harcourt I 96 SolowVsNeo-Keynesianism: Rates of return on investment are calculated by Solow for two 'poles apart' models of planned economies. The first is an all-purpose onecommodity model with a smooth, well-behaved, constant-returns-toscale production function; the second is Worswick's stockade dictator version of Joan Robinson's model of accumulation (see Worswick [1959]⁽¹²⁾). One-period and perpetuity rates of return are obtained and these are shown, in the neoclassical case, to equal the net marginal product of capital. Harcourt: The two extreme cases are chosen in order to show '. . . that the rate of return . . . does not depend for its existence and meaning on the possibility of defining "marginal productivities" or having smoothly variable proportions between the factors of production' (Solow [1963a],⁽¹³⁾ p. 30). Harcourt I 97 Saving/investments: These results are offered as the answer (or, rather, an answer) to the important question: What is the pay-off to society from an extra bit of saving transformed into capital formation? Harcourt I 110 Return on investment/Solow/Harcourt: Solow uses a Ricardo-Sraffa system with circulating capital; (…) he shows that the rate of interest is an accurate measure of the social rate of return on investment, provided only that the economy is at full employment and uses competitive pricing, and that we are comparing one stationary state with another which has the same labour force but uses, at the given rate of profits, a different equi-viable technique, namely one that requires more circulating capital, commodity by commodity. Both stationary states are in long-run competitive equilibrium; their net products consist entirely of consumption goods. In order for one economy to move (technocratically) from its technology to the other's, consumption must be cut in one period (or for a number of periods in more complicated cases). Solow shows that the extra consumption per period obtained in perpetuity as a result of this move, when expressed in terms of the common set of prices at the given rates of interest (and wages) and as a proportion of the consumption forgone, similarly measured, equals the rate of interest. Harcourt I 111 This ratio, (…) is Solow's measure of the rate of return in perpetuity, R_∞= p/h. 1. Solow, R. M [1963] 'Heterogeneous Capital and Smooth Production Functions: An Experimental Study', Econometrica, xxxi, pp. 623-45. 2. Solow, R. M., Tobin, J., von Weizsacker, C. C. and Yaari, M. [1966] 'Neoclassical Growth with Fixed Factor Proportions', Review of Economic Studies, xxxm, pp. 79-115. 3. Solow, R. M. [1967] 'The Interest Rate and Transition between Techniques', Socialism, Capitalism and Economic Growth, Essays presented to Maurice Dobb, ed. by C. H. Feinstein (Cambridge: Cambridge University Press), pp. 30-9. 4. Solow, R. M [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8. 5. Solow, R. M. [1967] 'The Interest Rate and Transition between Techniques', Socialism, Capitalism and Economic Growth, Essays presented to Maurice Dobb, ed. by C. H. Feinstein (Cambridge: Cambridge University Press), pp. 30-9. 6. Solow, R. M [1970] 'On the Rate of Return: Reply to Pasinetti. Economic Journal, LXXX, pp.423-8. 7. Stigler, George J. [1941] Production and Distribution Theories: The Formative Period (New York: Macmillan). 8. Samuelson, P. A. [1962] 'Parable and Realism in Capital Theory: The Surrogate Production Function', Review of Economic Studies, xxix, pp. 193-206. 9. Hicks, J. R. [1932] The Theory of Wages (London: Macmillan). 10. Salter, W. E. G. [1960] Productivity and Technical Change (Cambridge: Cambridge University Press). 11. Salter, W. E. G. [1965] 'Productivity Growth and Accumulation as Historical Processes', Problems in Economic Development, ed. by E. A. G. Robinson (London: Macmillan), pp. 266-91. 12. Worswick, G. D. N. [1959] 'Mrs. Robinson on Simple Accumulation. A Comment with Algebra', Oxford Economic Papers, xi, pp. 125-41. 13. Solow, Robert M. [1963a] (Professor Dr. F. De Vries Lectures, 1963) Capital Theory and the Rate of Return (Amsterdam: North-Holland).	Solow I Robert M. Solow A Contribution to the Theory of Economic Growth Cambridge 1956 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Solow, Robert	Harcourt	Harcourt I 89 Robert Solow/Harcourt: [Solow’s] views are set out in the 1963 De Vries Lectures, Solow [1963a]⁽¹⁾, in his contribution to the Dobb Festschrift, Solow [1967]⁽²⁾, and in the subsequent exchanges with Pasinetti in Solow [1970]⁽³⁾ and Pasinetti [1970]⁽⁴⁾. (In the company of Tobin, von Weizsäcker and Yaari [1966]⁽⁵⁾, he added further thoughts in the analysis of 'quickening'.) These sources, together with Joan Robinson's review article of Solow [1963a]⁽¹⁾ (Robinson [1964b]⁽⁶⁾, reprinted as Robinson [1965b]⁽⁷⁾, pp. 36-47), help to crystallize the nature of the approach and to highlight some of the causes of the controversies between Cambridge, England, and Cambridge, Mass. >Return on investment/Solow. Harcourt I 90 Accumulation/growth/Solow: Solow wished to analyse the empirical relationship between capital accumulation and economic growth in industrialized countries today. He argues that the appropriate (or only) theoretical tools are 'a modernized version of neoclassical or late-Wicksellian capital theory' (Solow [1963a](1), p. 8), elsewhere described 'as a modern amalgamation of Wicksell and Irving Fisher'(p. 17).* Solow believes the key concept of capital theory to be the rate of return on investment. His own contribution is to introduce technical progress and to consider the relationship between saving and investment and the long-run growth of productive capacity. Harcourt I 91 Solow: (…) all that is necessary, according to Solow, 'is to draw a conceptual line between the imputed return to capital and the income of capitalists', to have 'a theory of distribution among factors of production, if not among persons'. HarcourtVsSolow: It is possible to accept the logic of Solow's distinction without accepting the implication that controversy will thereby vanish. Moreover, economists ought to ask: 'Is profit justified?' - as well as the equally valid questions: 'How does it arise and what determines its size?' Indeed the answers to the last two questions may be extremely relevant for the answer to the first question. Economists ought to examine the institutions of particular societies and, in addition to analysing their implications for the workings of the economy, ask whether they are good or bad, just or unjust and what may be done about them. >Economic ethics, >Keynesianism, >Capital/Solow, >Return on investment/Solow. * The best modern account of Fisher's theory (apart, that is, from Fisher's own, see Fisher [1930]⁽⁸⁾) is to be found in Hirshleifer's well-known article, Hirshleifer [1958]⁽⁹⁾. Dewey [1965]⁽¹⁰⁾ gives a simplified version which, while technically sound, is marred by his method of presentation, which is unfair to Fisher's predecessors or rivals and to those of Dewey's contemporaries with whom he happens to disagree. Blaug [1968] has an excellent chapter on Wicksell, as has Stigler [1941]⁽¹¹⁾), provided that the reader can work out for himself Stigler's rarely explicit statements of what to Stigler is truth. 1. Solow, Robert M. [1963a] (Professor Dr. F. De Vries Lectures, 1963) Capital Theory and the Rate of Return (Amsterdam: North-Holland). 2.Solow, R. M. [1967] 'The Interest Rate and Transition between Techniques', Socialism, Capitalism and Economic Growth, Essays presented to Maurice Dobb, ed. by C. H. Feinstein (Cambridge: Cambridge University Press), pp. 30-9. 3. Solow, R. M [1970] 'On the Rate of Return: Reply to Pasinetti Economic Journal, LXXX, pp.423-8. 4. Pasinetti, L.L. [1970] 'Again on Capital Theory and Solow's "Rate of Return" ', Economic Journal, LXXX, pp. 428-31. 5. Solow, R. M., Tobin, J., von Weizsäcker, C. C. and Yaari, M. [1966] 'Neoclassical Growth with Fixed Factor Proportions', Review of Economic Studies, xxxm, pp. 79-115. 6. Robinson, Joan [1964b] 'Solow on the Rate of Return', Economic Journal, LXXIV, pp. 410-17. 7. Robinson, Joan [1965b] Collected Economic Papers, Vol. Ill (Oxford: Basil Blackwell). 8. Fisher, Irving [1930] The Theory of Interest (New York: Macmillan). 9. Hirshleifer, J. [1958] 'On the Theory of Optimal Investment Decision', Journal of Political Economy, LXVI, pp. 329-52. 10. Dewey, Donald [1965] Modern Capital Theory (New York: Columbia University Press). 11. Stigler, George J. [1941] Production and Distribution Theories: The Formative Period (New York: Macmillan).	Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Technical Progress	Jorgenson	Harcourt I 83 Technical progress/productivity/Jorgenson/Griliches/Harcourt: (…) Jorgenson and Griliches [1966⁽¹⁾ 1967⁽²⁾] on overall factor productivity and technical change: Though neoclassical to their finger tips - they assume perfect competition and constant returns to scale, factors are paid their marginal products and price ratios of commodities equal marginal rates of transformation - they argue that the finding that the bulk of the rise in output per man is due to 'technical progress' results from the faulty measurement of input services in the aggregate production function. (VsSolow). >Aggregate production function, >Neoclassical economics. Harcourt: Correcting for this they advance the (refutable) hypothesis that the rise in total output is largely explained by the growth of total inputs and not by improvements in them (or, rather, that the improvements are subsumed within the inputs by correct measurement). Their measure of the rate of growth of total factor productivity (which on their hypothesis should be approximately - nil) is a quantum index of growth in outputs, each weighted by ist value share in total output, less a similar index of the rates of growth of input services, weighted in a similar fashion. Aggregate production function: A shift in the aggregate production function occurs if this rate of growth is greater than zero, otherwise all growth is due to movements along a given production function (in n-dimensional space). The wheel has turned 360°: an implication of Solow's findings in 1957⁽³⁾ was that the traditional economic factors, capital accumulation and deepening, had bit parts only in the growth saga. The backlash, foreseen and partly cheered on by Hicks [1960]⁽⁴⁾, has come, first, through embodied technical progress and, now, through the Jorgenson-Griliches script. The traditional economic factors and neoclassical processes are again the stars and the other factors have been left with virtually no role at all - they have been written out of the script. A comment by Smithies [1962]⁽⁵⁾ on Solow's [1962b]⁽⁶⁾ paper on investment and the rate of economic growth seems relevant here: „Perhaps the whole problem is too complicated for adequate reflection in a formal model. In that event, we could do worse than re-read Adam Smith (or possibly read him for the first time). In Book I, he said that the division of labour was the mainspring of economic progress; and in Book II, that accumulation was a necessary condition for increased division of labour. How far have we got beyond that?“ (p. 92.) Harcourt: The essence of the approach of Jorgenson and Griliches is the hypothesis that all observed relative product and factor prices may be interpreted as pairs of marginal rates of transformation, such as would be thrown up by the workings of competitive markets containing utility-maximizing consumers and profit-maximizing, cost-minimizing businessmen. Harcourt I 84 If this identification of observed with theoretical variables is accepted, we may use the quantum index of the growth in total output and total inputs (or their 'dual', the indexes of their respective total prices) to test the hypothesis that the growth is nil. It must be stressed that this is a refutable hypothesis and not, as Denison [1966](7), p. 76, argued, a consequence of national-accounting identities. His confusion arose because he viewed the change in the inputs (and the outputs) as the sum of the increases in both prices and quantities whereas the essence of Jorgenson and Griliches's definition is that either the (changes in) quantities or (those in) prices {but not both together) are combined into aggregate indexes and compared one with another. It is therefore possible to start with the national-accounting identity, total output (in value terms) equals total input (similarly measured), and yet end with a refutable hypothesis, one which reflects moreover Jorgenson and Griliches's views as to how the values of the observed prices arose in the first place. Harcourt I 85 VsGriliches/VsJorgenson/Harcourt: The estimates of the capital services (which, in principle, should be, say, machine hours) have to be done by chains of inference and the use of assumptions, the most dubious of which are that competitive producer equilibrium conditions were in fact satisfied and that all machines worked to the same proportion of their capacities, as given by the power industries' performance. (The latter assumption is devastatingly criticized by Denison [1966]⁽⁷⁾, who gets his own back with interest.) The price of the capital service of each good is the price of each investment good multiplied by the rate of return on all capital plus the rate of depreciation and an adjustment for any capital gains on each capital good. The rate of return on all capital is the non-wage share of value added inclusive of capital gains divided by the value of the accumulated capital stocks; the whole procedure is a statistical reflection of the neoclassical procedure as outlined by Champernowne [1953-4⁽⁸⁾] and Swan [1956]⁽⁹⁾. >D. G. Champernowne, >T. W. Swan. This approach makes explicit the important point that flows of services, not stocks of factors, actually produce output, a point with which no one would disagree (but the practical significance of which is much reduced by' the assumption of uniform capacity working). Whether they would accept the method of aggregation of the services is another matter. 1. Griliches, Z. and Jorgenson, D. W. [1966] 'Sources of Measured Productivity Change: Capital Input', American Economic Review, Papers and Proceedings, LVI, 2. Jorgenson, D. W. and Griliches, Z. [1967] 'The Explanation of Productivity Change', Review of Economic Studies, xxxiv, pp. 249-83. 3. Solow, R. M. [1957] 'Technical Change and the Aggregate Production Function', Review of economics and Statistics, xxxix, pp. 312-20. 4. Hicks, J. R. [1960] 'Thoughts on the Theory of Capital-The Corfu Conference', Oxford Economic Papers, xn, pp. 123-32. 5. Smithies, A. [1962] 'Comment on Solow', American Economic Review, Papers and Proceedings, LII, pp. 91-2. 6. Solow, R. M. [1962b] 'Technical Progress, Capital Formation and Economic Growth', American Economic Review, Papers and Proceedings, LII, pp. 76-86. 7. Denison, E. F. [1966] 'Capital Theory: A Discussion', American Economic Review, Papers and Proceedings, LVI, pp. 76-8. 8. Champernowne, D. G. [1953-4] 'The Production Function and the Theory of Capital: A Comment', Review of Economic Studies, xxi, pp. 112-35 9. Swan, T. W. [1956] 'Economic Growth and Capital Accumulation', Economic Record, xxxn, pp. 334-61.	Jorgenson I Dale Jorgenson Productivity, Volume 1: Postwar U.S. Economic Growth (The MIT Press) Cambridge, MA 2008 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972
Technical Progress	Rymes	Harcourt I 86 Technical progress/Rymes/Harcourt: (…) Rymes [1968⁽¹⁾, 1971⁽²⁾] (…)has spelt out the dynamic implications of Sraffa's implied criticism of marginal analysis for the neoclassical measures of technical progress, i.e. of the relevance of Sraffa's concentration on the interdependence of the economic system for the concept of capital as a primary input: see Sraffa [1960]⁽³⁾ (…) VsNeoclassicals: Rymes shows that Joan Robinson and Harrod's measure of neutral technical progress - also Read's [1968]⁽⁴⁾ - reflect Sraffa's view, whereas the neoclassical measures do not. Essentially, if commodities are produced by commodities, measures of technical progress that treat the production process as a one-way flow from factors to products will fail to pick up the feed-back effects of technical progress from one activity to another. Harcourt: The point may be put in terms of Solow's all-purpose one commodity model of disembodied technical change: see Solow [1957]⁽⁵⁾ (Consider an economy which has a constant saving ratio and in which technical progress occurs in the sense that output per head at a given capital-labour ratio rises.) More is now saved than would have been otherwise so that the capital-labour ratio rises more than it would have, had the saving ratio been the same but the technical advance not occurred. Should we attribute the extra rise in capital per head to accumulation or to technical advance? It is achieved by saving more but the economy can save more because the technical advance has occurred. (Moreover, the impact of a given amount of saving on outputper head is now greater because of the technical advance.) Solow's measure of technical progress would attribute the rise solely to saving and the rise in productivity per man due to deepening would be assessed by the increment of output per head along the initial production function, with the residual change being due to technical progress (…). VsSolow: This robs technical progress of some of its contribution by failing fully to take into account its impact on capital as an input whereby the latter is improved, i.e. made more efficient. Read [1968]⁽⁴⁾ and Rymes [1968⁽¹⁾, 1971⁽²⁾] show that by measuring capital in real terms, this error may be avoided in both one- and two-commodity models. 1. Rymes, T. K. [1968] 'Professor Read and the Measurement of Total Factor Pro- ductivity', Canadian Journal of Economics, I, pp. 359-67. 2. Rymes, T. K. [1971] On Concepts of Capital and Technical Change (Cambridge: Cambridge University Press). 3. Sraffa, P.[1960] Production of Commodities by Means of Commodities. Prelude to a Critique of Economic Theory (Cambridge: Cambridge University Press). 4. Read, L. M. [1968] 'The Measure of Total Factor Productivity Appropriate to Wage-Price Guidelines', Canadian Journal of Economics, i, pp. 349-58. 5. Solow, R.M. [1957] 'Technical Change and the Aggregate Production Function', Review of economics and Statistics, xxxix, pp. 312-20.	Rymes I Thomas K. Rymes Welfare, Property Rights and Economic Policy Montreal 1991 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972

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