Cambridge capital controversy – Wikipedia, the free encyclopedia

The Cambridge capital controversy – sometimes called “the capital controversy” or “the two Cambridges debate” – refers to a theoretical and mathematical debate during the 1960s among economists concerning the nature and role of capital goods and the critique of the dominant neoclassical vision of aggregate production and distribution. The name arises because of the location of the principals involved in the controversy: the debate was largely between economists such as Joan Robinson and Piero Sraffa at the University of Cambridge in England and economists such as Paul Samuelson and Robert Solow at the Massachusetts Institute of Technology, in Cambridge, Massachusetts. The two schools are often labeled “Sraffian” or “neo-Ricardian” and “neoclassical”, respectively.

Most of the debate is mathematical, but some major elements can be explained in simple terms and as part of the ‘aggregation problem’. That is, the critique of neoclassical capital theory might be summed up as saying that it suffers from the fallacy of composition, i.e., that we cannot simply jump from microeconomic conceptions to an understanding of production by society as a whole. The resolution of the debate, particularly how broad its implications are, has not been agreed upon by economists.

via Cambridge capital controversy – Wikipedia, the free encyclopedia.

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