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Still more on why we should bury the Marginal Productivity Theory of the Price of Capital: A Supplementary Note


  • Roy Grieve

    (Department of Economics, University of Strathclyde)


The purpose of this note is to supplement the author’s earlier remarks on the unsatisfactory nature of the neoclassical account of how the return on capital is determined. (See Strathclyde Discussion Paper 12-03: “The Marginal Productivity Theory of the Price of Capital: An Historical Perspective on the Origins of the Codswallop†). The point is made via a simple illustration that certain matters which are problematical in neoclassical terms are perfectly straightforward when viewed from a classical perspective. Basically, the marginalist model of the nature of an economic system is not fit for purpose in that it fails to comprehend the essential features of a surplus-producing economic system as distinct from one merely of exchange.

Suggested Citation

  • Roy Grieve, 2012. "Still more on why we should bury the Marginal Productivity Theory of the Price of Capital: A Supplementary Note," Working Papers 1215, University of Strathclyde Business School, Department of Economics.
  • Handle: RePEc:str:wpaper:1215

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    1. Grieve, Roy, 2012. "The Marginal Productivity Theory Of The Price Of Capital: An Historical Perspective On The Origins Of The Codswallop," SIRE Discussion Papers 2012-05, Scottish Institute for Research in Economics (SIRE).
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    marginal productivity theory of distribution; reswitching;

    JEL classification:

    • B13 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Neoclassical through 1925 (Austrian, Marshallian, Walrasian, Wicksellian)
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution

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