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Capital Controversy, Post-Keynesian Economics and the History Of CAPITAL CONTROVERSY, POST- KEYNESIAN ECONOMICS AND THE HISTORY OF ECONOMIC THOUGHT Essays in Honour of Geoff Harcourt Volume One Edited by Philip Arestis, Gabriel Palma and Malcolm Sawyer London and New York CAPITAL CONTROVERSY, POST- KEYNESIAN ECONOMICS AND THE HISTORY OF ECONOMIC THOUGHT Geoff Harcourt has made substantial and wide-ranging contributions to economics in general, and to post-Keynesian economics in particular. In this volume more than forty leading economists pay tribute to and critically evaluate his work. In particular, contributions focus on: • debates in the area of capital theory • the development of post-Keynesian economics and the ‘Cambridge tradition’ • major figures in the history of economic thought including Marx. Keynes and Sraffa The contributors represent a wide range of schools in economics, and include Nobel Laureates Paul Samuelson and Robert Solow. Philip Arestis is Professor of Economics at the University of East London. Gabriel Palma is Lecturer in Economics in the Faculty of Economics and Politics, University of Cambridge. Malcolm Sawyer is Professor of Economics in the School of Business and Economic Studies, University of Leeds. Geoff Harcourt Source: Tony Jedrej, Cambridge Evening News First published 1997 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis CONTENTS or Routledge’s collection of thousands of eBooks please go to http://www.ebookstore.tandf.co.uk/.” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, List of figures ix NY 10001 List of tables xi © 1997 Editorial material the editors; individual chapters © the contributors List of contributors xiii All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including Foreword xv photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Geoff Harcourt: A tribute xviii British Library Cataloguing in Publication Data A catalogue record for this book is available from Introduction xx the British Library Library of Congress Cataloging in Publication Data Capital controversy. post Keynesian economics and the history of economic thought: essays in honour of Geoff Harcourt/ edited by 1 A CAMBRIDGE ECONOMIST BUT AN AUSTRALIAN PATRIOT 1 Philip Arestis, Gabriel Palma, and Malcolm Sawyer. p. cm.—(Routledge frontiers of political John Hatch and Ray Petrides economy, ISSN 1359–7914:6) Includes bibliographical references and index. 1. Capital-History. 2 NOTES ON THE SURPLUS APPROACH IN POLITICAL ECONOMY 10 2. Keynesian economics-History. 3. Markets-History. 4. Unemployment-History. 5. Economic Heinrich Bortis policy-History. I. Arestis, Philip. II. Palma, J.Gabriel. III. Sawyer, Malcolm C. IV. Harcourt, Geoffrey Colin. V. Series. HB501. C24224 1966 332a. 041–dc20 96–15332 3 THE SAVINGS DEBATE IN AUSTRALIA AND THE MEANING OF 21 CAPITAL ISBN 0-203-98329-7 Master e-book ISBN Paul Dalziel 4 KEYNESIAN MACROECONOMICS AND THE CAPITAL DEBATES 34 Colin Rogers 5 RESWITCHING, SOCIAL DISCOUNT RATE AND 45 ISBN 0-415-13391-2 (Print Edition) ENVIRONMENTALISM: A NOTE William J.Baumol 6 THE PRODUCTIVITY OF WORKING AND WAITING: STATIC AND 52 DYNAMIC ASPECTS OF THE CAPITAL CONTROVERSY Thomas K.Rymes 7 FIXED CAPITAL AS A PROBLEM IN JOINT PRODUCTION: SOME 64 HISTORICAL CONSIDERATIONS Peter Groenewegen 8 BÖHM-BAWERK’S LETTERS TO J.B.CLARKE: A PRE-CAMBRIDGE 75 CONTROVERSY IN THE THEORY OF CAPITAL Avi J.Cohen and Helmar Drost 9 THE FATE OF THE CAMBRIDGE CAPITAL CONTROVERSY 88 Geoffrey M.Hodgson 10 KEYNES’S MACRO THEORY OF PROFITS 102 Robert Dixon 11 PROFIT AND RENT IN A MODEL OF CAPITAL ACCUMULATION 111 AND STRUCTURAL DYNAMICS Mauro Baranzini and Roberto Scazzieri 12 UNEVEN DEVELOPMENT AND THE RATE OF PROFIT 122 Christopher A.Gregory Robert Rowthorn 28 THE NOBEL PRIZE IN ECONOMICS 310 13 THE RATE-OF-RETURN DEBATE: AN AFTERGLOW 137 A.W.Bob Coats Harald Hagemann 29 THE SPLIT LEGACY OF WILFRED SALTER, AUSTRALIAN 321 14 THE SOCIAL ‘BURDEN’ OF HIGH INTEREST RATES 149 ECONOMIST EXTRAORDINARY Luigi L.Pasinetti Andrea Maneschi 15 MARX, KEYNES AND SRAFFA: CONFLICTING ATTITUDES 157 30 J.NEVILLE KEYNES: A DEDICATED VICTORIAN DON 332 TOWARDS POLITICAL ECONOMY Phyllis Deane William Darity, Jr 31 SMITHIAN FOUNDATIONS OF THE MARKET ECONOMY 341 16 ISOLATING SOURCES OF STERILITY IN MARX’S THEORETICAL 173 Alessandro Roncaglia PARADIGMS 32 HISTORY VERSUS EQUILIBRIUM 350 Paul A.Samuelson John Eatwell 17 MR KEYNES AND THE ANTI-NEOCLASSICS 183 33 SHORT-PERIOD ECONOMICS IN RETROSPECT 360 Christopher Bliss Maria Cristina Marcuzzo 18 KEYNES’S USE OF THE TERM ‘INVOLUNTARY 195 34 THE LIMITATIONS OF THE ECONOMIC POINT OF VIEW 370 UNEMPLOYMENT’: A HISTORICAL PERSPECTIVE John K.Whitaker Bernard Corry 35 THOUGHTS INSPIRED BY READING AN ATYPICAL PAPER BY 378 19 THE GENERAL THEORY OF EMPLOYMENT, INTEREST AND MONEY 208 HARCOURT AND PRICES Robert M.Solow Omar F.Hamouda 36 IN THE BEGINNING ALL THE WORLD WAS AUSTRALIA… 384 20 KEYNES AND THE FINANCIAL MARKET PROCESSES IN 217 Heinz D.Kurz and Neri Salvadori HISTORICAL CONTEXT: FROM THE TREATISE TO THE GENERAL 37 HARCOURT AS A HISTORIAN OF ECONOMIC THOUGHT 401 THEORY John B.Davis Michael S.Lawlor 38 ECONOMICS AND SOCIAL CONSCIENCE: THE HARCOURT CASE 411 21 DID KEYNES REVERSE THE MARSHALLIAN SPEEDS OF 229 Mark Perlman ADJUSTMENT?: USING HARCOURT’S METHOD TO RESOLVE 39 ECONOMICS AND RELIGION 420 THEORETICAL CONTROVERSIES AND TO GAIN INSIGHT INTO Sheila C.Dow THE REAL WORLD Paul Davidson 22 J.M.KEYNES ON THE WORKING CLASS 243 Geoff Harcourt: a bibliography 427 Hans E.Jensen Index 435 23 KEYNES AND CHURCHILL 251 Heinz W.Arndt 24 COHERENCE IN POST-KEYNESIAN ECONOMICS 262 Stephen Pratten 25 NOTES ON THE HISTORY OF POST-KEYNESIAN ECONOMICS IN 274 AUSTRALIA John E.King 26 ROBERTSON AND THE POST-KEYNESIAN APPROACH TO 285 GROWTH AND CYCLES Lilia Costabile 27 POLITICAL ECONOMY, HOUSEHOLD ECONOMY AND THE PRICE 299 OF LAND: TOWARDS A DECOLONIZATION OF ‘SOCIAL SCIENCE IMPERIALISM’ Paul A.Samuelson, Massachussetts Institute of Technology, Cambridge, United States of America Roberto Scazzieri, Università degli Studi, Bologna, Italy CONTRIBUTORS Robert M.Solow, Massachussetts Institute of Technology, Cambridge, United States of America John K.Whitaker, University of Virginia, Charlottesville, United States of America Heinz W.Arndt, Australian National University, Canberra, Australia Mauro Baranzini, Centro di Studi Bancari, Vezia-Lugano, Italy William J.Baumol, New York University, United States of America Christopher Bliss, University of Oxford, England Heinrich Bortis, Université de Fribourg, Switzerland A.W.Bob Coats, University of Nottingham, England Avi J.Cohen, York University, Toronto, Canada Bernard Corry, Queen Mary and Westfield College, University of London, England Lilia Costabile, Universita degli Studi di Napoli Federico II, Italy Paul Dalziel, Lincoln University, New Zealand William Darity, Jr, University of North Carolina, Chapel Hill, United States of America Paul Davidson, University of Tennessee, Knoxville, United States of America John B.Davis, Marquette University, Milwaukee, United States of America Phyllis Deane, University of Cambridge, England Robert Dixon, University of Melbourne, Australia Sheila C.Dow, University of Stirling, Scotland Helmar Drost, York University, Toronto, Canada John Eatwell, New School, New York, United States of America Christopher A.Gregory, Australian National University, Australia Peter Groenewegen, University of Sydney, Australia Harald Hagemann, Universität Hohenheim, Stuttgart, Germany Omar F.Hamouda, Massachusetts Institute of Technology, United States of America John Hatch, University of Adelaide, Australia Geoffrey M.Hodgson, University of Cambridge, England Hans E.Jensen, University of Tennessee, Knoxville, United States of America John E.King, La Trobe University, Australia Heinz D.Kurz, Institut für Volkswirtschaftspolitik, Graz, Austria Michael S.Lawlor, Wake Forest University, Winston-Salem, North Carolina, United States of America Andrea Maneschi, Vanderbilt University, Nashville, United States of America Maria Cristina Marcuzzo, Università di Roma, ‘La Sapienza’, Italy Luigi L.Pasinetti, Università Cattolica Sacro Cuore, Milan, Italy Mark Perlman, University of Pittsburgh, United States of America Ray Petrides, Murdoch University, Australia Stephen Pratten, University of Cambridge, England Colin Rogers, University of Adelaide, Australia Alessandro Roncaglia, Università di Roma, ‘La Sapienza’, Italy Robert Rowthorn, University of Cambridge, England Thomas K.Rymes, Carlton University, Ottawa, Canada Neri Salvadori, Università di Pisa, Italy pivotal position. Why have the burning issues of those days—capital theory controversy, left Keynesianism, the political economy of socialism, growth and accumulation theory— lost their urgency? Much of the answer is, of course, in the way the world has materially changed. But ideas do matter. Was it something endogenous to Cambridge or something FOREWORD exogenous—the power of the Establishment, the weight of positivist methodology, the American dominance of the profession—that undermined the Cambridge programme?. Nice guys don’t finish last; they are never finished Recall that in the 1950s and 1960s Cambridge was part and parcel of the Establishment. The serried ranks of Marshall lecturers, the visitors who came
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