Reflections on reswitching and roundaboutness

Abstract

Controversies about capital and interest never die. But interest in the issues of technique reswitching and roundaboutness waxes and wanes – though without rhythm and without obvious provocation. Central to these issues, so says one school of thought, is the viability of the neoclassical production function and, more broadly, the viability of neoclassicism itself. Avi J. Cohen and Geoffrey C. Harcourt (2003a) have recently published an illuminating retrospective on the debate between Cambridge, UK and Cambridge, MA. Though engaging, their title question-“Whatever Happened to the Cambridge Capital Theory Controversies?” – never quite gets answered. The reader gets the impression, however, that the authors are actually expressing annoyance if not dismay that their neoclassical adversaries have never acknowledged the fatal defects of their theory and scrapped their aggregate production function. Commenting on Cohen and Harcourt, Jesus Felipe and J.S.L. McCombie (2003: 229) ask the question in a more confrontational way: “So why is the aggregate production function still widely used in neoclassical macro economics, even after the legitimacy of the Cambridge, U.K.’s critique was explicitly acknowledged by Samuelson (1966a)?”

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