Comments (1)

• Enrico Bellino says:

  January 3, 2017 at 10:35 am

  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.

  Minor comments

  1. Page 2: with reference to Samuelson (1962) the author writes: ‘Under the special assumption of his model the occurred w-r relation was linear regardless if one or more commodities were used as means of production’ (emphasis added); but in Samuelson (1962) each techniques employs just one (specific) capital good.
  2. Page 2: ‘The linear w-r implied that without substitution, in a steady state, a given proportion of output and homogenous labor is produced’: not clear.
  3. Page 2, footnote 4: ‘these production processes are represented by a diagonal coefficient Matrix – in linear algebra terms – or with a matrix with linear dependent rows or columns’: but in a diagonal matrix all rows or columns are independent.
  4. Page 3, footnote 8: probably the word ‘continuous’ should be replaced with ‘contiguous’.
  5. Page 5: the ‘neoricardian perspective’ is also expressed by Pasinetti, who disproved Levhari’s non-reswitching result firstly (see Pasinetti, QJE, 1966).
  6. Page 5, ‘For them [neoricardians] prices could be determined based not only to technological attributes of the system but to income distribution variables as well’: not clear. If the author means that in order to choose the most profitable technique we must fix one distributive variable from outside, then he should refer to one distribution variable, not to ‘distribution variables’.
  7. Page 5: ‘The commodities were divided into non-reproducible the price of which was determined by scarcity – such as Labour’: according to the Classical perspective the wage rate is not determined by scarcity. It is determined by other elements, like subsistence or other ‘institutional’ elements.
  8. Page 6: ‘Joan Robinson (1953-54) studied the “nature” of capital into the SPF …’ (emphasis added): the SPF had not invented yet in those years but it is reasonable to think that J. R. would have rejected it too, as she rejected the aggregate production function. So, the above proposition does not seem appropriate.
  9. Page 6, footnote 12: Levhari’s paper (QJE 1966) contains two parts: the first one contains a proof of the ‘non-substitution theorem’ which was correct; the second part contains the non-reswitching theorem, and was wrong. Bidard (1990) probably refers to the first part, not to the second one.
  10. Page 7, first row: ‘For L. Passinetti(1966) there was no functional relation between capital intensity and profit rate’. This is not correct: Pasinetti proved that in a multisectoral model there was no decreasing relation between capital intensity and the profit rate.
  11. Page 8: ‘He had shown that the introduction of a standard commodity, such as the Sraffian one […] ensured the existence of a linear w-r curve, and therefore an unambiguous choice of techniques’. Given a technique

      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.

  Misprints
  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.

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