The Cambridge Controversy. A note
A debate, which started at the late 1950s and lasted up to the early 1970s, known as the Cambridge controversy, is the subject of this paper. The core of that debate was the composition of capital and moreover the production and the reproduction of commodities. The “roots” of the Cambridge Controversy can be found in the literature of K. Marx and D. Ricardo. However both schools of thought have underestimated the important role of price normalization, leaving the problem of choosing techniques unexplained.
Report on:‘The Cambridge Controversy. A note’, written by Kosmas Manoudakis submitted to Economic Thought
Brief summary of the paper
The author argues about the role of the choice of the numeraire in the procedure of selection of the most profitable technique in linear production models.
Overall evaluation and Recommendation
The paper does not seem to add any new result to the debate on the choice of techniques. The only one argument which could be original concerns the influence of the numeraire on the choice of techniques, on switching points and on the ordering of techniques along the profit-wage frontier.* But these points are not proved in the paper. There is just a reference to other works, already published by Stamatis and Manoudakis, where a proof of these results should be found. The rest of the paper (especially the first 8 pages) surveys many aspects of the reswitching debate, but the entire account is quite rough, not always clear and with some disputable argument (some of doubtful points are listed below).
[*By the way, the points maintained by the author contradict with some well-established results in the literature: see, for example, Luigi Pasinetti, Lectures on the Theory of Production, Chap. 7, §§ 4.2 and 4.3, proposition (iii).]
For these reasons I suggest to reject the paper.
it is possible to calculate the Standard commodity associated to this technique, denoted by .
If we want to compare technique α with another technique, say β, we must draw on the same graph the relation between the rate of profit and the wage rate associated to technique α expressed in terms of , which can be denoted by , and the relation between the rate of profit and the wage rate associated to technique β still expressed in terms of , which can be denoted by
As we know, is linear but is not linear, because bundle is not an invariant standard of value with technique β. Relations and may thus intersect more than one time, making ambiguous the order of technique with respect to their capital intensities.
Page 1: the reference to Samuelson (1953) is not in the list of References.
Page 2, row 4 and page 3, footnote 5, first row: Sollow → Solow.
Page 5, row 12: Sraffain → Sraffian.
Page 6, rows 7-8: ‘For her it … economy’: to be deleted.
Page 6, last row of the text: ‘capital intended’ → ‘capital intensive’.
Page 7, row 1: Passinetti → Pasinetti.
Page 8, row 22 and page 9, footnote 17, last row: Sraffaian → Sraffian.