IDEAS home Printed from https://ideas.repec.org/p/ris/sraffa/0030.html
   My bibliography  Save this paper

On the Second Stage of the Cambridge Capital Controversy

Author

Listed:
  • Fratini, Saverio M.

    (Roma Tre University)

Abstract

The second stage of the Cambridge capital controversy concerns the neo-Walrasian theory of value and distribution. Since production is not understood in this theory as employing factors of production but rather commodities, i.e. goods and services with date and place of delivery, some scholars maintained that it is not affected by the problems that emerged, during the first stage of the controversy, as regards the conception of capital as a factor of production and the rate of interest as the price for its use. The reply of the ‘neo-Ricardians’ was based on two arguments. The first regarded the relevance of the new notions of equilibrium adopted in the neo-Walrasian approach, with particular reference to temporary and Arrow-Debreu equilibria, and the second the possibility that the phenomena of re-switching and reverse capital deepening, by affecting the working of the saving-investment market, could cause equilibrium multiplicity and instability also in a neo-Walrasian framework.

Suggested Citation

  • Fratini, Saverio M., 2018. "On the Second Stage of the Cambridge Capital Controversy," Centro Sraffa Working Papers CSWP30, Centro di Ricerche e Documentazione "Piero Sraffa".
    • Handle: RePEc:ris:sraffa:0030
    as

    Download full text from publisher

    File URL: http://www.centrosraffa.org/public/a197c02b-0561-4439-b3f3-2bea32334fc2.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. J. A. Kregel (ed.), 1983. "Distribution, Effective Demand and International Economic Relations," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-17177-4, December.
    2. Christian Gehrke, 2003. "On the Transition from Long-period to Short-period Equilibria," Review of Political Economy, Taylor & Francis Journals, vol. 15(1), pages 85-106.
    3. Bliss, C. J., 1975. "Capital Theory and the Distribution of Income," Elsevier Monographs, Elsevier, edition 1, number 9780720436044 edited by Bliss, C. J..
    4. David Levhari, 1965. "A Nonsubstitution Theorem and Switching of Techniques," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 79(1), pages 98-105.
    5. Saverio M. Fratini, 2015. "A Note on Reswitching and Intertemporal Prices," Review of Political Economy, Taylor & Francis Journals, vol. 27(4), pages 666-678, October.
    6. Pierangelo Garegnani, 2005. "Capital And Intertemporal Equilibria: A Reply To Mandler," Metroeconomica, Wiley Blackwell, vol. 56(4), pages 411-437, November.
    7. Andrés Lazzarini, 2015. "Some Unsettled Issues in a Second Phase of the Cambridge-Cambridge Controversy," Review of Radical Political Economics, Union for Radical Political Economics, vol. 47(2), pages 256-273, June.
    8. F. H. Hahn, 1975. "Revival of Political Economy: The Wrong Issues and the Wrong Argument," The Economic Record, The Economic Society of Australia, vol. 51(3), pages 360-364, September.
    9. Joan Robinson, 1953. "The Production Function and the Theory of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(2), pages 81-106.
    10. Pierangelo Garegnani, 2005. "Further On Capital And Intertemporal Equilibria: A Rejoinder To Mandler," Metroeconomica, Wiley Blackwell, vol. 56(4), pages 495-502, November.
    11. Saverio M. Fratini, 2013. "Real W icksell Effect, Demand for Capital and Stability," Metroeconomica, Wiley Blackwell, vol. 64(2), pages 346-360, May.
    12. Michael Mandler, 2002. "Classical and Neoclassical Indeterminacy in One-shot Versus Ongoing Equilibria," Metroeconomica, Wiley Blackwell, vol. 53(3), pages 203-222, August.
    13. P. Garegnani, 1970. "Heterogeneous Capital, the Production Function and the Theory of Distribution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 37(3), pages 407-436.
    14. Saverio M. Fratini, 2008. "Economic Generality Versus Mathematical Genericity: Activity‐Level Indeterminacy And The Index Theorem In Constant Returns Production Economies," Metroeconomica, Wiley Blackwell, vol. 59(2), pages 266-275, May.
    15. Fabio Petri, 2004. "General Equilibrium, Capital and Macroeconomics," Books, Edward Elgar Publishing, number 3438.
    16. Petri, Fabio, 1978. "The Difference between Long-Period and Short-Period General Equilibrium and the Capital Theory Controversy," Australian Economic Papers, Wiley Blackwell, vol. 17(31), pages 246-260, December.
    17. repec:bla:ecorec:v:51:y:1975:i:135:p:360-64 is not listed on IDEAS
    18. repec:bla:econom:v:46:y:1979:i:181:p:1-10 is not listed on IDEAS
    19. Wagner, Alfred, 1891. "Marshall's Principles of Economics," History of Economic Thought Articles, McMaster University Archive for the History of Economic Thought, vol. 5, pages 319-338.
    20. Bertram Schefold, 2005. "Reswitching As A Cause Of Instability Of Intertemporal Equilibrium," Metroeconomica, Wiley Blackwell, vol. 56(4), pages 438-476, November.
    21. E. Malinvaud, 1961. "The Analogy Between Atemporal and Intertemporal Theories of Resource Allocation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 28(3), pages 143-160.
    22. Saverio M. Fratini, 2019. "Neoclassical theories of stationary relative prices and the supply of capital," Metroeconomica, Wiley Blackwell, vol. 70(4), pages 723-737, November.
    23. Hahn, Frank, 1982. "The Neo-Ricardians," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 6(4), pages 353-374, December.
    24. Kehoe, Timothy J, 1980. "An Index Theorem for General Equilibrium Models with Production," Econometrica, Econometric Society, vol. 48(5), pages 1211-1232, July.
    25. Michael Mandler, 2005. "Well‐Behaved Production Economies," Metroeconomica, Wiley Blackwell, vol. 56(4), pages 477-494, November.
    26. Michio Morishima, 1966. "Refutation of the Nonswitching Theorem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(4), pages 520-525.
    27. Sergio Parrinello, 2008. "The Stability Of General Intertemporal Equilibrium: A Note On Schefold," Metroeconomica, Wiley Blackwell, vol. 59(2), pages 305-312, May.
    28. F. A. Lutz, 1961. "The Theory of Capital," International Economic Association Series, Palgrave Macmillan, number 978-1-349-08452-4 edited by D. C. Hague.
    29. Paul A. Samuelson, 1962. "Parable and Realism in Capital Theory: The Surrogate Production Function," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 29(3), pages 193-206.
    30. Sergio Parrinello, 2005. "Intertemporal Competitive Equilibrium, Capital And The Stability Of Tâtonnement Pricing Revisited," Metroeconomica, Wiley Blackwell, vol. 56(4), pages 514-531, November.
    31. Pierangelo Garegnani, 2013. "On the Present State of the Capital Controversy," Palgrave Macmillan Books, in: Enrico Sergio Levrero & Antonella Palumbo & Antonella Stirati (ed.), Sraffa and the Reconstruction of Economic Theory: Volume One, chapter 1, pages 15-37, Palgrave Macmillan.
    32. Gaetano Bloise & Pietro Reichlin, 2009. "An Obtrusive Remark On Capital And Comparative Statics," Metroeconomica, Wiley Blackwell, vol. 60(1), pages 54-76, February.
    33. D. G. Champernowne, 1953. "The Production Function and the Theory of Capital: A Comment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(2), pages 112-135.
    34. Michael Bruno & Edwin Burmeister & Eytan Sheshinski, 1966. "The Nature and Implications of the Reswitching of Techniques," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(4), pages 526-553.
    35. Saverio M. Fratini, 2007. "Reswitching of Techniques in an Intertemporal Equilibrium Model with Overlapping Generations," Contributions to Political Economy, Cambridge Political Economy Society, vol. 26(1), pages 43-59.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jonathan F. Cogliano & Roberto Veneziani & Naoki Yoshihara, 2022. "Computational methods and classical‐Marxian economics," Journal of Economic Surveys, Wiley Blackwell, vol. 36(2), pages 310-349, April.
    2. Icefield, William, 2020. "On treatment of interests, profits and equilibrium non-existence in general equilibrium models," MPRA Paper 99625, University Library of Munich, Germany.
    3. Stefano Di Bucchianico, 2021. "Negative Interest Rate Policy to Fight Secular Stagnation: Unfeasible, Ineffective, Irrelevant, or Inadequate?," Review of Political Economy, Taylor & Francis Journals, vol. 33(4), pages 687-710, October.
    4. Attar, M. Aykut, 2021. "Growth, distribution and dynamic inefficiency in Turkey: An analysis of the naïve neoclassical theory of capital," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 20-30.
    5. Trezzini, Attilio & Pignalosa, Daria, 2021. "The Normal Degree of Capacity Utilization: The History of a Controversial Concept," Centro Sraffa Working Papers CSWP49, Centro di Ricerche e Documentazione "Piero Sraffa".
    6. Stefano Di Bucchianico & Riccardo Pariboni, 2022. "Garegnani, dieci anni dopo: introduzione al numero speciale (Garegnani, ten years after: introduction to the special issue)," Moneta e Credito, Economia civile, vol. 75(299), pages 227-231.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. G. C. Harcourt, 2015. "On the Cambridge, England, Critique of the Marginal Productivity Theory of Distribution," Review of Radical Political Economics, Union for Radical Political Economics, vol. 47(2), pages 243-255, June.
    2. Carlo Milana, 2019. "Solving the Reswitching Paradox in the Sraffian Theory of Capital," Applied Economics and Finance, Redfame publishing, vol. 6(6), pages 97-125, November.
    3. Enrico Bellino & Christian Bidard & Saverio M. Fratini & G.C. Harcourt & Arrigo Opocher & Ian Steedman & Naoki Yoshihara & Heinz D. Kurz, 2017. "Symposium on Arrigo Opocher and Ian Steedman (," Metroeconomica, Wiley Blackwell, vol. 68(4), pages 586-624, November.
    4. Luigi L. Pasinetti, 2000. "Critique of the neoclassical theory of growth and distribution," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 53(215), pages 383-431.
    5. Luigi L. Pasinetti, 2000. "Critique of the neoclassical theory of growth and distribution," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 53(215), pages 383-431.
    6. J. Barkley Rosser, 2020. "Austrian themes and the Cambridge capital theory controversies," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 33(4), pages 415-431, December.
    7. Kazuhiro Kurose & Naoki Yoshihara, 2018. "The Heckscher—Ohlin—Samuelson Trade Theory and the Cambridge Capital Controversies: On the Validity of Factor Price Equalisation Theorem," Working Papers SDES-2018-17, Kochi University of Technology, School of Economics and Management, revised Nov 2018.
    8. Kurose, Kazuhiro & Yoshihara, Naoki, 2016. "The Heckscher-Ohlin-Samuelson Model and the Cambridge Capital Controversies," UMASS Amherst Economics Working Papers 2016-05, University of Massachusetts Amherst, Department of Economics.
    9. Fabio Petri, 2009. "On the Recent Debate on Capital Theory and General Equilibrium," Department of Economics University of Siena 568, Department of Economics, University of Siena.
    10. Kurose, Kazuhiro & Yoshihara, Naoki, 2018. "The Heckscher—Ohlin—Samuelson Trade Theory and the Cambridge Capital Controversies: On the Validity of Factor Price Equalisation Theorem," Discussion Paper Series 686, Institute of Economic Research, Hitotsubashi University.
    11. Avi J. Cohen, 2003. "Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 199-214, Winter.
    12. Saverio M. Fratini, 2019. "Neoclassical theories of stationary relative prices and the supply of capital," Metroeconomica, Wiley Blackwell, vol. 70(4), pages 723-737, November.
    13. Saverio M. Fratini, 2015. "A Note on Reswitching and Intertemporal Prices," Review of Political Economy, Taylor & Francis Journals, vol. 27(4), pages 666-678, October.
    14. Stefano Di Bucchianico, 2021. "Negative Interest Rate Policy to Fight Secular Stagnation: Unfeasible, Ineffective, Irrelevant, or Inadequate?," Review of Political Economy, Taylor & Francis Journals, vol. 33(4), pages 687-710, October.
    15. Fabio Petri, 2021. "None so deaf as those that will not hear: on Garegnani’s contributions to the capital-theoretic critique and the resistances to accepting them," Bulletin of Political Economy, Bulletin of Political Economy, vol. 15(2), pages 187-207, December.
    16. Garbellini, Nadia, 2020. "Measurement without theory, and theory without measurement: What's wrong with Piketty's capital in the XXI century?," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 50-62.
    17. Saverio M. Fratini, 2020. "Interest, profit and saving in Arrow-Debreu equilibrium models," Bulletin of Political Economy, Bulletin of Political Economy, vol. 14(1), pages 39-53, June.
    18. Harvey Gram & Geoffrey Harcourt, 2015. "Joan Robinson and MIT," Working Papers 9, City University of New York Graduate Center, Ph.D. Program in Economics.
    19. Nadia Garbellini, 2018. "Inequality in the 21st Century:A Critical Analysis of Piketty`s Work," Working Papers Series 69, Institute for New Economic Thinking.
    20. Rahim, Sikander, 2018. "Capital, technical progress and international trade," MPRA Paper 94432, University Library of Munich, Germany.

    More about this item

    Keywords

    Cambridge capital controversy; neo-Walrasian theory; Arrow-Debreu equilibrium; saving-investment market;
    All these keywords.

    JEL classification:

    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:sraffa:0030. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Saverio M. Fratini (email available below). General contact details of provider: https://edirc.repec.org/data/sraffit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.