Reswitching, Wicksell Effects, and the Neo-Classical Production Function

The Cambridge debate over capital theory has raised doubts about the validity of the neo-Classical theory of distribution (see G.C. Harcourt). As this theory is widely assumed in empirical work, and often drawn upon in the analysis of policy, a demonstration that it is seriously flawed would require extensive rethinking of many areas of mainstream economics. Accordingly, two principal lines of defense have been advanced. The first, an oblique defense, accepts the critique, but asserts that only a simplifying ‘parable’ has been damaged. The main corpus of neo-Classicism, general equilibrium theory, remains unscatched. The second is a counterattack, and contends that a well-ordered neo-Classical production function can be constructed after all (see Gallaway and Shukla, 1974, and refutations by Garegnani and by Sato, 1976). These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.