Capital controversy one calls a debate in the economic theory of the 1960er years around the nature of the capital as factor of production. Main participants were Joan Robinson and Piero Sraffa of the University of Cambridge, England, and Paul Samuelson and Robert Solow of the Massachusetts Institute of Technology in Cambridge, Massachusetts. Also sometimes therefore one calls the capital controversy Cambridge Cambridge controversy.

Problem of the capital aggregation

A central thesis of the neoclassical theory means that the price for each factor of production (usually work and "„capital "“) is equal to its border product . The wage rate is thus equal the of the work and the interest rate (as price for the employment of capital) is equal to the border product of the factor of production capital. By of the work it is to be understood thereby, what would bring an additional hour (or second) at work on additional product, measured in euro. By of the capital would should accordingly to be understood, what an additional employment of a euro capital at additional product (measured in euro) would bring. The income of the factor of production work exists thus in the wage rate (per hour) multiplied by the number of performed working hours. The income of the factor of production capital is multiplied equal "„the interest rate "“by the quantity of assigned "„capital "“. What however is the quantity of assigned capital (capital Can goods train locomotives and drawing pins be

The neoclassical solution of this problem consists of adding the prices of the capital goods thus for example 5 cent for each drawing pin and 400,000 "€ for each goods train locomotive. One keeps then a certain capital stick in euro measured. Piero Sraffa and Joan Robinson (also called neoricaridanische school) mean that a circle conclusion is present here, if the price of the capital goods themselves depends again on the dominant profit rate (interest rate). The Neoklassikern depended it on "„material "“quantities required for work and capital, the quantity required should not on money sizes such as wage rate or profit rate depend. Exactly this is however after the Sraffamodell the case. If the profit rate is increased and lowered to reconciliation the wage rate, then the prices of the goods, also the prices of a drawing pin and a goods train locomotive change. "„The quantity "“of assigned capital changed, although "„material "“nothing should have changed nevertheless. (The number of assigned working hours does not change also alone by the fact that the wage rate is changed.) thereby however a basic assumption of the Neoklassik that the quantity required of capital lets itself be measured just as simply as the quantity required of work, is disproved. The circle conclusion can shortened be represented about in such a way: The price for capital, the interest rate or the profit rate, thus the price, which a capital owner for its capital wants to have, determine themselves according to the border product of the capital, thus which furnishes an additional quantity unit at capital at product. Thus then the profit rate would be certain.

Quantitatively however the capital consists of the prices of the capital goods. According to Neoricardianer the profit impact, thus the profit rate, enters these prices in addition. The profit rate depends thus (among other things) on (additional) the capital stick, these again as sum of the prices of the capital goods, into which again the profit impact is received, thus the profit rate, on the profit rate - circle conclusion.

For the Neoricardianer thereby the science-theoretically rare case is present that a theory is already logically disproved. Nevertheless further Neoklassik claimant"…

Reswitching

See detailed article to Reswitching

Part the capital controversy was also the discussion around the Reswitching. Sraffa could show the fact that if the wages in a national economy are continued to raise always that then in the same direction toward less and less labor intensive production engineering is not always avoided, but that it can be that a production engineering, which was left in former times with rising wages becomes with still far rising wages again the most favorable production engineering for the national economy.

Such a procedure cannot be represented within the neoclassical theory, which represents an in property parabola, approximately on basis of a Cobb Douglas Produktionsfunktion.

Literature

• Sraffa, Piero: Goods production by means of goods. Epilogs of Bertram Schefold (1976 1960]), Suhrkamp publishing house Frankfurt/Main

Articles in category "Capital controversy"

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