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Marx, the Production Function and the Old Neoclassical Equilibrium: Workable under the Same Assumptions? With an Appendix on the Likelihood of Reswitching and of Wicksell Effects

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  • Schefold, Bertram

    (Goethe University, Frankfurt am Main)

Abstract

A stochastic approach has been introduced to explain the empirically observed fact that wage curves calculated from input-output systems tend to be nearly linear and that the paradoxes of capital appear to be rare. The stochastic approach allows to justify the simplifying treatment of normal prices common to 19th and early 20th century authors as diverse as Marx (transformation problem), Wicksell (old neoclassical equilibrium), J.B. Clark (neoclassical production function). It is shown that the likelihood of reverse capital deepening is much lower than that of Wicksell effects. With this, the likely characteristics of the wage frontier obtained from a multiplicity of input-output tables are derived. The conclusion summarises what we know and do not know about the validity of the Cambridge critique of capital.

Suggested Citation

  • Schefold, Bertram, 2016. "Marx, the Production Function and the Old Neoclassical Equilibrium: Workable under the Same Assumptions? With an Appendix on the Likelihood of Reswitching and of Wicksell Effects," Centro Sraffa Working Papers CSWP19, Centro di Ricerche e Documentazione "Piero Sraffa".
    • Handle: RePEc:ris:sraffa:0019
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    References listed on IDEAS

    as
    1. Bertram Schefold, 1979. "Capital, Growth, And Definitions Of Technical Progress," Kyklos, Wiley Blackwell, vol. 32(1‐2), pages 236-250, February.
    2. Zonghie Han & Bertram Schefold, 2006. "An empirical investigation of paradoxes: reswitching and reverse capital deepening in capital theory," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(5), pages 737-765, September.
    3. Stefano Zambelli, 2004. "The 40% neoclassical aggregate theory of production," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 28(1), pages 99-120, January.
    4. Paul A. Samuelson, 1966. "A Summing Up," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(4), pages 568-583.
    5. Bertram Schefold, 2008. "Savings, Investment and Capital in a System of General Intertemporal Equilibrium — an Extended Comment on Garegnani with a Note on Parrinello," Palgrave Macmillan Books, in: Guglielmo Chiodi & Leonardo Ditta (ed.), Sraffa or An Alternative Economics, chapter 6, pages 127-186, Palgrave Macmillan.
    6. Fabio Petri, 2004. "General Equilibrium, Capital and Macroeconomics," Books, Edward Elgar Publishing, number 3438.
    7. Schefold, B, 1988. "The Dominant Technique in Joint Production Systems," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 12(1), pages 97-123, March.
    8. Bertram Schefold, 2016. "Profits equal surplus value on average and the significance of this result for the Marxian theory of accumulationBeing a new contribution to Engels’ Prize Essay Competition, based on random matrices a," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 40(1), pages 165-199.
    9. Salvadori, Neri & Steedman, Ian, 1988. "No Reswitching? No Switching!," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 12(4), pages 481-486, December.
    10. Schefold, Bertram, 1979. "Capital, Growth, and Definitions of Technical Progress," Kyklos, Wiley Blackwell, vol. 32(1/2), pages 236-250.
    11. Theodore Mariolis & Lefteris Tsoulfidis, 2014. "On Br�Dy'S Conjecture: Theory, Facts And Figures About Instability Of The Us Economy," Economic Systems Research, Taylor & Francis Journals, vol. 26(2), pages 209-223, June.
    12. Stefano Zambelli, 2014. "Aggregate Production Functions and Neoclassical Properties: An Empirical Verification," ASSRU Discussion Papers 1405, ASSRU - Algorithmic Social Science Research Unit.
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    Cited by:

    1. Luis Daniel Torres Gonzalez, 2017. "Regularities in Prices of Production and the Concentration of Compositions of Capitals," Working Papers 1709, New School for Social Research, Department of Economics.
    2. Jacobo Ferrer-Hernández & Luis Daniel Torres-González, 2021. "Eigenvalues and Eigenlabors: On Iliadi’s, Mariolis’, Soklis’, and Tsoulfidis’ Explanation of the Empirical Regularities in Price Curves," Working Papers 2119, New School for Social Research, Department of Economics.
    3. Theodore Mariolis & Lefteris Tsoulfidis, 2018. "Less Is More: Capital Theory And Almost Irregular-Uncontrollable Actual Economies," Contributions to Political Economy, Oxford University Press, vol. 37(1), pages 65-88.
    4. Mariolis, Theodore & Tsoulfidis, Lefteris, 2016. "Capital theory: Less is more," MPRA Paper 75923, University Library of Munich, Germany.
    5. Kersting, Götz & Schefold, Bertram, 2021. "Best techniques leave little room for substitution. A new critique of the production function," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 509-533.
    6. Schefold, Bertram, 2022. "What Remains of the Cambridge Critique? Potential Conclusions and Directions for Further Research Following from Recent Investigations in Capital Theory," Centro Sraffa Working Papers CSWP53, Centro di Ricerche e Documentazione "Piero Sraffa".
    7. Luis Daniel Torres-González, 2020. "The Characteristics of the Productive Structure Behind the Empirical Regularities in Production Prices Curves," Working Papers 2016, New School for Social Research, Department of Economics.
    8. Petri, Fabio, 2021. "What Remains of the Cambridge Critique? On Professor Schefold's Theses," Centro Sraffa Working Papers CSWP50, Centro di Ricerche e Documentazione "Piero Sraffa".
    9. Bertram Schefold, 2021. "The transformation of values into prices on the basis of random systems revisited: reply to my commentators," Evolutionary and Institutional Economics Review, Springer, vol. 18(1), pages 317-334, April.

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    More about this item

    Keywords

    Capital theory; Random matrices; Aggregate Production Function; Transformation problem; Wicksell effects;
    All these keywords.

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B14 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Socialist; Marxist
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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