The Results of the Capital Theory Controversies and General Equilibrium Theory: Some Reflections on Concepts and History

I am happy that the organisers of the conference asked me to give a paper under the rubric of the results of the capital theory controversies and general equilibrium theory. I once got into hot water with Christopher Bliss when in a draft of a paper which eventually appeared in two versions (Harcourt, 1975, 1976) (one with a title, which, in retrospect, I regret having chosen), I tried to reconcile the clash between Christopher Bliss (1970) and Pierangelo Garegnani over Garegnani’s (1970) Review of Economic Studies article. Bliss had written a comment on it in which he expressed surprise at some of Garegnani’s results because, within an Arrow-Debreu framework, the results were not likely to occur. Garegnani’s results related to comparisons of values of relative factor prices and shares following a ‘change’ in accumulation which he thought were unable to be reconciled with any real-world observations. (In his PhD dissertation (1959), Garegnani had made much the same point about marginal productivity theory and had used Walras and Wicksell as his guinea pigs.) I suggested that perhaps their difference in opinion might be traced to the fact that Garegnani concentrated (à la Ricardo) on the ultimate long-period outcomes of ‘changes’ in the values of specific variables, while Bliss had put more emphasis (à la Malthus) on immediate, short-period results. Bliss interpreted my comments (made in a footnote and subsequently removed) as an assertion that he did not know the difference between the short period and the long period — oh dear me! We eventually sorted out our differences and resumed our restored friendship.