Monday, February 10, 2020

Principals of Macroeconomics 5: Robinson and the Theory of Capital — John Weeks

In Chapter 1 of The General Theory Keynes famously refers to two “postulates of Classical economics”, one of which determines the demand for labour and the other the supply. He states that “I shall argue that the postulates…are applicable to a special case only and not to the general case”, with continuous full employment the “special case” and less than full employment the general case.
In the context of later parts of The General Theory (for example, Appendix on User Cost and Chapter 20 on “The Employment Function”) it is clear that Keynes wrote tactically in accepting the limited applicability of mainstream supply and demand for labour. With an eye to what he considered his important contributions to come later in his book, he apparently decided to not to fight a battle over the theory of the labour market.
Robinson took on this fight with her path-breaking 1953 article, “Production Function and the Theory of Capital”, which initiated what came to be called the Cambridge Capital Controversy. Superficially arcane and esoteric, this controversy goes to the heart of mainstream economics. I do not exaggerate when stating that if Robinson’s critique is correct, mainstream economic theory collapses....
Progressive Economy Forum
Principals of Macroeconomics 5: Robinson and the Theory of Capital
John Weeks


AXEC / E.K-H said...

Links on John Weeks on ‘Principals of Macroeconomics 5: Robinson and the Theory of Capital’

Stop beating mainstream economics ― it is long dead

Joan Robinson and the ‘throng of superfluous economists’

You are fired!

The CCC ― a monument of economists’ utter scientific incompetence

Egmont Kakarot-Handtke

Bob said...

As a rule, historians are never interested in the horse until it's dead.