10 - CAPITAL THEORY UP-TO-DATE

Abstract

THE lectures which Professor Solow gave in Holland (published in 1963)1 opened with the remark: Everybody except Joan Robinson agrees about capital theory. He did not say what it was that they agreed, and a few years later the ‘reswitching’ controversy brought some important differences of opinion to light. Now, fortunately, we have a clear exposition of what Professor Solow must have meant. Professor Ferguson, in The Neoclassical Theory of Production and Distribution, asserts that belief in neoclassical theory is a matter of faith. ‘I personally have the faith’ he declares, so that we can learn from him what it is that the neo-neoclassicals believe neoclassical theory to be. But first let us trace the history of the ‘reswitching’ affair.