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On The Second Stage Of The Cambridge Capital Controversy

Author

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  • Saverio M. Fratini

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, that is 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

  • Saverio M. Fratini, 2019. "On The Second Stage Of The Cambridge Capital Controversy," Journal of Economic Surveys, Wiley Blackwell, vol. 33(4), pages 1073-1093, September.
    • Handle: RePEc:bla:jecsur:v:33:y:2019:i:4:p:1073-1093
    DOI: 10.1111/joes.12312
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    Cited by:

    1. Icefield, William, 2020. "On treatment of interests, profits and equilibrium non-existence in general equilibrium models," MPRA Paper 99625, University Library of Munich, Germany.
    2. 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.
    3. 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.
    4. 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.
    5. Attilio Trezzini & Daria Pignalosa, 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.

    More about this item

    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

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