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Capital Theory
This comprehensive three-volume edition brings together the most important contributions in capital theory, from its classical origins to its modern manifestation in endogenous growth models. The readings examine the recurring controversies, and the two incisive, and sharply contrasting introductions by Bliss and by Cohen and Harcourt provide the reader with context and guidance for making sense of this central, contentious and often difficult literature.
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Critical Acclaim
Contributors
Contents
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This comprehensive three-volume edition brings together the most important contributions in capital theory, from its classical origins to its modern manifestation in endogenous growth models. The readings examine the recurring controversies, and the two incisive, and sharply contrasting introductions by Bliss and by Cohen and Harcourt provide the reader with context and guidance for making sense of this central, contentious and often difficult literature.
These authoritative volumes will be an invaluable source of reference for all of those with an interest in this subject.
These authoritative volumes will be an invaluable source of reference for all of those with an interest in this subject.
Critical Acclaim
‘. . . a book like this one is very welcome and much needed to recall old unsolved debates. . . Capital Theory should be on the shelves of all libraries and should be read particularly by our younger colleagues. . .’
– EAEPE Newsletter
‘Capital theory has been the most difficult and contentious area in the whole of economics for a long time. That is why it keeps falling out of favour. But no matter how hard they try to bypass its many pitfalls, up-to-date economic theorists and historians of economic thought alike can never quite manage the trick. Bliss, Cohen and Harcourt’s collection addresses the topic’s intrinsic difficulties head on, but because it is beautifully balanced and thoughtfully organised, it makes the many complexities of capital theory accessible to anyone willing to make the effort to work through it. And that ought to be all of us.’
– David Laidler, University of Western Ontario, Canada
– EAEPE Newsletter
‘Capital theory has been the most difficult and contentious area in the whole of economics for a long time. That is why it keeps falling out of favour. But no matter how hard they try to bypass its many pitfalls, up-to-date economic theorists and historians of economic thought alike can never quite manage the trick. Bliss, Cohen and Harcourt’s collection addresses the topic’s intrinsic difficulties head on, but because it is beautifully balanced and thoughtfully organised, it makes the many complexities of capital theory accessible to anyone willing to make the effort to work through it. And that ought to be all of us.’
– David Laidler, University of Western Ontario, Canada
Contributors
77 articles, dating from 1891 to 2001
Contributors include: P. Aghion, C.W. Cobb, P.H. Douglas, P. Howitt, L. Pasinetti, J. Robinson, P. Romer, P.A. Samuelson, R.M. Solow, P. Sraffa, K. Wicksell
Contributors include: P. Aghion, C.W. Cobb, P.H. Douglas, P. Howitt, L. Pasinetti, J. Robinson, P. Romer, P.A. Samuelson, R.M. Solow, P. Sraffa, K. Wicksell
Contents
Contents:
Volume I
Acknowledgements
Introduction: The Theory of Capital: A Personal View Christopher Bliss
Introduction: Capital Theory Controversy: Scarcity, Production, Equilibrium and Time Avi J. Cohen and G.C. Harcourt
PART I CLASSICAL AND MARXIAN CONCEPTIONS OF CAPITAL
1. K.H. Hennings ([1987] 1990), ‘Capital as a Factor of Production’
2. David Ricardo (1951), ‘IV. The Chapter on Value in Edition I’ excerpt from ‘Introduction’, excerpt from ‘On Value’ and ‘On Machinery’
3. Karl Marx ([1891] 1972), ‘Wage Labour and Capital’
4. Luigi L. Pasinetti (1983), ‘The Accumulation of Capital’
PART II FOUNDATIONS OF NEOCLASSICAL CAPITAL THEORY: IMPATIENCE AND PRODUCTIVITY
5. Nassau William Senior ([1836] 1938), ‘Instruments of Production’ and ‘Capital’
6. Ian Steedman (1972), ‘Jevons’s Theory of Capital and Interest’
7. Syed Ahmad (1998), ‘Rae, Böhm-Bawerk, and Fisher on the Supply and Demand of Capital’
8. Eugen von Böhm-Bawerk (1959), ‘The Problem of Interest’, ‘Final Conclusions’ and ‘Present and Future in Economic Life’
9. John B. Clark (1891), ‘Distribution as Determined by a Law of Rent’
10. John Bates Clark (1899), ‘Kinds of Capital and of Capital-Goods’
11. Christopher Bliss (1990), ‘Alfred Marshall and the Theory of Capital’
12. Knut Wicksell ([1934] 1961), ‘Capitalistic Production’
13. Knut Wicksell ([1934] 1961), ‘Real Capital and Interest (continued): A Mathematical Analysis of Dr. Åkerman’s Problem’
14. Paul A. Samuelson (1967), Excerpts from ‘Irving Fisher and the Theory of Capital’
15. Joseph A. Schumpeter ([1934] 1983), ‘Interest on Capital’
PART III SOME AUSTRIAN AND NEO-AUSTRIAN CONTRIBUTIONS TO CAPITAL THEORY
16. Carl Menger ([1871] 1976), Excerpt from ‘The Laws Governing the Value of Goods of Higher Order’
17. Frank A. Fetter (1902), ‘The “Roundabout Process” in the Interest Theory’
PART IV EARLY NEOCLASSICAL CAPITAL CONTROVERSIES
18. Thorstein Veblen (1908), ‘Professor Clark’s Economics’
19. Avi J. Cohen (1998), ‘Frank Knight’s Position on Capital and Interest: Foundation of the Knight/Hayek/Kaldor Debate’
20. Ian Steedman (1994), ‘On The Pure Theory of Capital by F.A. Hayek’
21. Murray Milgate (1979), ‘On the Origin of the Notion of “Intertemporal Equilibrium”’
22. J. Fred Weston (1951), ‘Some Perspectives on Capital Theory’
Name Index
Volume II
Acknowledgements
Introductions by the editors to all three volumes appear in Volume I
PART I CAPITAL IN ONE-COMMODITY NEOCLASSICAL GROWTH MODELS
1. D.G. Champernowne (1945–1946), ‘A Note on J. v. Neumann''s Article on “A Model of Economic Equilibrium”’
2. F.P. Ramsey (1928), ‘A Mathematical Theory of Saving’
3. Robert M. Solow (1956), ‘A Contribution to the Theory of Economic Growth’
PART II VARIATIONS ON SIMPLE NEOCLASSICAL GROWTH MODELS: HETEROGENEOUS CAPITAL GOODS, TWO-SECTOR MODELS AND MORE
4. R. Dorfman, P.A. Samuelson and R.M. Solow (1971), ‘Efficient Programmes of Capital Accumulation’
5. Robert M. Solow (1963), ‘The Rate of Return on Investment’
6. W.E.G. Salter (1966), ‘A Model of the Delay in the Utilisation of New Techniques of Production’
7. F.H. Hahn and R.C.O. Matthews (1964), ‘Two-sector Models'', excerpt from ''The Theory of Economic Growth: A Survey’
8. Milton Friedman (1976), ‘The Theory of Capital and the Rate of Interest’
PART III PRODUCTION FUNCTIONS AND AGGREGATE CAPITAL
9. Charles W. Cobb and Paul H. Douglas (1928), ‘A Theory of Production’
10. Joan Robinson (1953–1954), ‘The Production Function and the Theory of Capital’
11. D.G. Champernowne (1953–1954), ‘The Production Function and the Theory of Capital: A Comment’
12. Robert M. Solow (1955–56), ‘The Production Function and the Theory of Capital’
13. Franklin M. Fisher (1971), ‘Aggregate Production Functions and the Explanation of Wages: A Simulation Experiment’
PART IV KEYNES AND THE CAMBRIDGE SCHOOL
14. R.F. Kahn (1959), ‘Exercises in the Analysis of Growth’
15. Colin Rogers (1989), excerpts from ‘Wicksellian Monetary Theory’
PART V SRAFFA AND SRAFFIANS
16. Piero Sraffa (1936), Letter to Joan Robinson, 27 October, Archives, King’s College, Cambridge
17. Piero Sraffa (1960), ‘Reduction to Dated Quantities of Labour'' and ''Fixed Capital’
18. Duncan K. Foley (2001), ‘Value, Distribution and Capital: A Review Essay’
PART VI DISAGGREGATED CAPITAL, ACCUMULATION AND GENERAL EQUILIBRIUM
19. Edmond Malinvaud (1953), ‘Capital Accumulation and Efficient Allocation of Resources’
20. F.H. Hahn (1966), ‘Equilibrium Dynamics with Heterogeneous Capital Goods’
21. C.J. Bliss (1975), ‘The Orthodox Vision’
22. Avinash Dixit (1977), ‘The Accumulation of Capital Theory’
PART VII CAPITAL AND OVERLAPPING GENERATIONS
23. Paul A. Samuelson (1958), ‘An Exact Consumption-Loan Model of Interest With or Without the Social Contrivance of Money’
24. Peter A. Diamond (1965), ‘National Debt in a Neoclassical Growth Model’
25. J.E. Stiglitz (1969), ‘Distribution of Income and Wealth Among Individuals’
Name Index
Volume III
Acknowledgements
Introductions by the editors to all three volumes appear in Volume I
PART I RESWITCHING AND CAPITAL REVERSING
1. Paul A. Samuelson (1962), ‘Parable and Realism in Capital Theory: The Surrogate Production Function’
2. Luigi L. Pasinetti (1966), ‘Changes in the Rate of Profit and Switches of Techniques’
3. P. Garegnani (1970), ‘Heterogeneous Capital, the Production Function and the Theory of Distribution’
4. Paul A. Samuelson (1966), ‘A Summing Up’
5. Luigi L. Pasinetti (1969), ‘Switches of Technique and the “Rate of Return” in Capital Theory’
6. Robert M. Solow (1970), ‘On the Rate of Return: Reply to Pasinetti’
7. Luigi L. Pasinetti (1970), ‘Again on Capital Theory and Solow’s “Rate of Return”’
8. Edwin Burmeister (1976), ‘Real Wicksell Effects and Regular Economies’
PART II ASSESSMENTS OF THE CAMBRIDGE CAPITAL THEORY CONTROVERSIES
9. G.C. Harcourt ([1969] 1986), ‘Some Cambridge Controversies in the Theory of Capital’
10. Mark Blaug (1975), ‘A Final Judgement’
11. Amit Bhaduri (1969), ‘On the Significance of Recent Controversies on Capital Theory: A Marxian View’
12. Joan Robinson ([1974] 1979), ‘History versus Equilibrium’
13. Joan Robinson (1975), ‘The Unimportance of Reswitching’
14. G.C. Harcourt (1976), ‘The Cambridge Controversies: Old Ways and New Horizons – Or Dead End?’
15. Frank Hahn (1982), ‘The Neo-Ricardians’
16. Avi J. Cohen (1989), ‘Prices, Capital, and the One-commodity Model in Neoclassical and Classical Theories’
PART III CAPITAL, INCREASING RETURNS AND ENDOGENOUS GROWTH
17. Frank H. Knight (1944), ‘Diminishing Returns from Investment’
18. Kenneth J. Arrow (1962), ‘The Economic Implications of Learning by Doing’
19. Paul M. Romer (1986), ‘Increasing Returns and Long-Run Growth’
20. Paul M. Romer (1990), ‘Endogenous Technological Change’
21. Kevin M. Murphy, Andrei Shleifer and Robert W. Vishny (1989), ‘Industrialization and the Big Push’
22. Robert J. Barro and Xavier Sala-i-Martin (1992), ‘Convergence’
23. Philippe Aghion and Peter Howitt (1998), ‘Market Structure’
24. Robert M. Solow (2000), ‘Lessons and Suggestions for Aggregative Growth Theory’
Name Index
Volume I
Acknowledgements
Introduction: The Theory of Capital: A Personal View Christopher Bliss
Introduction: Capital Theory Controversy: Scarcity, Production, Equilibrium and Time Avi J. Cohen and G.C. Harcourt
PART I CLASSICAL AND MARXIAN CONCEPTIONS OF CAPITAL
1. K.H. Hennings ([1987] 1990), ‘Capital as a Factor of Production’
2. David Ricardo (1951), ‘IV. The Chapter on Value in Edition I’ excerpt from ‘Introduction’, excerpt from ‘On Value’ and ‘On Machinery’
3. Karl Marx ([1891] 1972), ‘Wage Labour and Capital’
4. Luigi L. Pasinetti (1983), ‘The Accumulation of Capital’
PART II FOUNDATIONS OF NEOCLASSICAL CAPITAL THEORY: IMPATIENCE AND PRODUCTIVITY
5. Nassau William Senior ([1836] 1938), ‘Instruments of Production’ and ‘Capital’
6. Ian Steedman (1972), ‘Jevons’s Theory of Capital and Interest’
7. Syed Ahmad (1998), ‘Rae, Böhm-Bawerk, and Fisher on the Supply and Demand of Capital’
8. Eugen von Böhm-Bawerk (1959), ‘The Problem of Interest’, ‘Final Conclusions’ and ‘Present and Future in Economic Life’
9. John B. Clark (1891), ‘Distribution as Determined by a Law of Rent’
10. John Bates Clark (1899), ‘Kinds of Capital and of Capital-Goods’
11. Christopher Bliss (1990), ‘Alfred Marshall and the Theory of Capital’
12. Knut Wicksell ([1934] 1961), ‘Capitalistic Production’
13. Knut Wicksell ([1934] 1961), ‘Real Capital and Interest (continued): A Mathematical Analysis of Dr. Åkerman’s Problem’
14. Paul A. Samuelson (1967), Excerpts from ‘Irving Fisher and the Theory of Capital’
15. Joseph A. Schumpeter ([1934] 1983), ‘Interest on Capital’
PART III SOME AUSTRIAN AND NEO-AUSTRIAN CONTRIBUTIONS TO CAPITAL THEORY
16. Carl Menger ([1871] 1976), Excerpt from ‘The Laws Governing the Value of Goods of Higher Order’
17. Frank A. Fetter (1902), ‘The “Roundabout Process” in the Interest Theory’
PART IV EARLY NEOCLASSICAL CAPITAL CONTROVERSIES
18. Thorstein Veblen (1908), ‘Professor Clark’s Economics’
19. Avi J. Cohen (1998), ‘Frank Knight’s Position on Capital and Interest: Foundation of the Knight/Hayek/Kaldor Debate’
20. Ian Steedman (1994), ‘On The Pure Theory of Capital by F.A. Hayek’
21. Murray Milgate (1979), ‘On the Origin of the Notion of “Intertemporal Equilibrium”’
22. J. Fred Weston (1951), ‘Some Perspectives on Capital Theory’
Name Index
Volume II
Acknowledgements
Introductions by the editors to all three volumes appear in Volume I
PART I CAPITAL IN ONE-COMMODITY NEOCLASSICAL GROWTH MODELS
1. D.G. Champernowne (1945–1946), ‘A Note on J. v. Neumann''s Article on “A Model of Economic Equilibrium”’
2. F.P. Ramsey (1928), ‘A Mathematical Theory of Saving’
3. Robert M. Solow (1956), ‘A Contribution to the Theory of Economic Growth’
PART II VARIATIONS ON SIMPLE NEOCLASSICAL GROWTH MODELS: HETEROGENEOUS CAPITAL GOODS, TWO-SECTOR MODELS AND MORE
4. R. Dorfman, P.A. Samuelson and R.M. Solow (1971), ‘Efficient Programmes of Capital Accumulation’
5. Robert M. Solow (1963), ‘The Rate of Return on Investment’
6. W.E.G. Salter (1966), ‘A Model of the Delay in the Utilisation of New Techniques of Production’
7. F.H. Hahn and R.C.O. Matthews (1964), ‘Two-sector Models'', excerpt from ''The Theory of Economic Growth: A Survey’
8. Milton Friedman (1976), ‘The Theory of Capital and the Rate of Interest’
PART III PRODUCTION FUNCTIONS AND AGGREGATE CAPITAL
9. Charles W. Cobb and Paul H. Douglas (1928), ‘A Theory of Production’
10. Joan Robinson (1953–1954), ‘The Production Function and the Theory of Capital’
11. D.G. Champernowne (1953–1954), ‘The Production Function and the Theory of Capital: A Comment’
12. Robert M. Solow (1955–56), ‘The Production Function and the Theory of Capital’
13. Franklin M. Fisher (1971), ‘Aggregate Production Functions and the Explanation of Wages: A Simulation Experiment’
PART IV KEYNES AND THE CAMBRIDGE SCHOOL
14. R.F. Kahn (1959), ‘Exercises in the Analysis of Growth’
15. Colin Rogers (1989), excerpts from ‘Wicksellian Monetary Theory’
PART V SRAFFA AND SRAFFIANS
16. Piero Sraffa (1936), Letter to Joan Robinson, 27 October, Archives, King’s College, Cambridge
17. Piero Sraffa (1960), ‘Reduction to Dated Quantities of Labour'' and ''Fixed Capital’
18. Duncan K. Foley (2001), ‘Value, Distribution and Capital: A Review Essay’
PART VI DISAGGREGATED CAPITAL, ACCUMULATION AND GENERAL EQUILIBRIUM
19. Edmond Malinvaud (1953), ‘Capital Accumulation and Efficient Allocation of Resources’
20. F.H. Hahn (1966), ‘Equilibrium Dynamics with Heterogeneous Capital Goods’
21. C.J. Bliss (1975), ‘The Orthodox Vision’
22. Avinash Dixit (1977), ‘The Accumulation of Capital Theory’
PART VII CAPITAL AND OVERLAPPING GENERATIONS
23. Paul A. Samuelson (1958), ‘An Exact Consumption-Loan Model of Interest With or Without the Social Contrivance of Money’
24. Peter A. Diamond (1965), ‘National Debt in a Neoclassical Growth Model’
25. J.E. Stiglitz (1969), ‘Distribution of Income and Wealth Among Individuals’
Name Index
Volume III
Acknowledgements
Introductions by the editors to all three volumes appear in Volume I
PART I RESWITCHING AND CAPITAL REVERSING
1. Paul A. Samuelson (1962), ‘Parable and Realism in Capital Theory: The Surrogate Production Function’
2. Luigi L. Pasinetti (1966), ‘Changes in the Rate of Profit and Switches of Techniques’
3. P. Garegnani (1970), ‘Heterogeneous Capital, the Production Function and the Theory of Distribution’
4. Paul A. Samuelson (1966), ‘A Summing Up’
5. Luigi L. Pasinetti (1969), ‘Switches of Technique and the “Rate of Return” in Capital Theory’
6. Robert M. Solow (1970), ‘On the Rate of Return: Reply to Pasinetti’
7. Luigi L. Pasinetti (1970), ‘Again on Capital Theory and Solow’s “Rate of Return”’
8. Edwin Burmeister (1976), ‘Real Wicksell Effects and Regular Economies’
PART II ASSESSMENTS OF THE CAMBRIDGE CAPITAL THEORY CONTROVERSIES
9. G.C. Harcourt ([1969] 1986), ‘Some Cambridge Controversies in the Theory of Capital’
10. Mark Blaug (1975), ‘A Final Judgement’
11. Amit Bhaduri (1969), ‘On the Significance of Recent Controversies on Capital Theory: A Marxian View’
12. Joan Robinson ([1974] 1979), ‘History versus Equilibrium’
13. Joan Robinson (1975), ‘The Unimportance of Reswitching’
14. G.C. Harcourt (1976), ‘The Cambridge Controversies: Old Ways and New Horizons – Or Dead End?’
15. Frank Hahn (1982), ‘The Neo-Ricardians’
16. Avi J. Cohen (1989), ‘Prices, Capital, and the One-commodity Model in Neoclassical and Classical Theories’
PART III CAPITAL, INCREASING RETURNS AND ENDOGENOUS GROWTH
17. Frank H. Knight (1944), ‘Diminishing Returns from Investment’
18. Kenneth J. Arrow (1962), ‘The Economic Implications of Learning by Doing’
19. Paul M. Romer (1986), ‘Increasing Returns and Long-Run Growth’
20. Paul M. Romer (1990), ‘Endogenous Technological Change’
21. Kevin M. Murphy, Andrei Shleifer and Robert W. Vishny (1989), ‘Industrialization and the Big Push’
22. Robert J. Barro and Xavier Sala-i-Martin (1992), ‘Convergence’
23. Philippe Aghion and Peter Howitt (1998), ‘Market Structure’
24. Robert M. Solow (2000), ‘Lessons and Suggestions for Aggregative Growth Theory’
Name Index