Abstract
In ‘Ricardo and the 93% Labor Theory of Value’, Stigler (1958) demonstrates that Ricardo’s labour theory of value cannot be defended as an analytical proposition but can be defended as an empirical proposition. Here, Stigler’s criteria for analytical and empirical value theories are used to evaluate the Cambridge capital theory controversies, particularly Samuelson’s contribution. The evaluation demonstrates that the neoclassical scarcity theory of value — the conception of price as an index of resource scarcity relative to consumption demand — cannot be defended analytically but can be defended empirically. The analytical deficiencies in both theories of value stem from capital-related problems. For neoclassical theory, which is the focus of this paper, these problems are not eliminated at the general equilibrium level. Instead, the problems are sidestepped by abandoning the scarcity theory of value as an analytical proposition.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
Archibald, G. Christopher (1965) ‘The Qualitative Content of Maximizing Models’, Journal of Political Economy, 73 (February), pp. 27–36.
Arrow, Kenneth J. and Hahn, Frank H. (1971) General Competitive Analysis (San Francisco: Holden-Day).
Blaug, Mark (1975) The Cambridge Revolution: Success or Failure?, revised edition (London: Institute of Economic Affairs).
Blaug, Mark (1980) The Methodology of Economics (Cambridge: Cambridge University Press).
Bliss, Christopher J. (1975) Capital Theory and the Distribution of Income (Amsterdam: North-Holland).
Böhm-Bawerk, Eugen von (1959) Capital and Interest, Vols. I - III, trans-lated by George D. Huncke (South Holland, Ill.: Libertarian Press).
Brown, Murray (1969) ‘Substitution–Composition Effects, Capital Inten-sity, Uniqueness and Growth’, Economic Journal, 79 (June) pp. 334–47.
Clark, John Bates (1891) ‘Distribution as Determined by a Law of Rent’, Quarterly Journal of Economics, 5 (April) pp. 289–318.
Clark, John Bates (1899) The Distribution of Wealth (New York: Macmillan).
Cohen, Avi J. (1984) ‘The Methodological Resolution of the Cambridge Controversies’, Journal of Post Keynesian Economics, 6 (Summer) pp. 614–29.
Cohen, Avi J. (1989) ‘Prices Capital and the One-Commodity Model in Neoclassical and Classical “Theories”’, History of Political Economy, 21 (Summer) pp. 231–51.
Cohen, Avi J. and Cohen, Jon S. (1983) ‘Classical and Neoclassical Theories of General Equilibrium’, Australian Economic Papers, 22 (June) pp. 180–200.
Dobb, Maurice (1973) Theories of Value and Distribution Since Adam Smith (Cambridge: Cambridge University Press).
Eltis, Walter A. (1973) Growth and Distribution (London: Macmillan).
Ferguson, Charles E. (1969) The Neoclassical Theory of Production and Distribution (Cambridge: Cambridge University Press).
Ferguson, Charles E. (1972) ‘The Current State of Capital Theory. A Tale of Two Paradigms’, Southern Economic Journal, 39 (October) pp. 160–76.
Ferguson, Charles E. and Allen, Robert F. (1970) ‘Factor Prices, Com-modity Prices, and Switches of Technique’, Western Economic Journal, 8 (June) pp. 95–109.
Garegnani, Pierangelo (1966) ‘Switching of Techniques’, Quarterly Journal of Economics, 80 (November) pp. 554–67.
Garegnani, Pierangelo (1970) ‘Heterogeneous Capital, the Production Function and the Theory of Distribution’, Review of Economic Studies, 37 (July) pp. 407–36.
Garegnani, Pierangelo (1976) ‘On a Change in the Notion of Equilibrium in Recent Work on Value and Distribution’, in Essays in Modern Capital Theory, edited by Murray Brown, Kazuo Sato and Paul Zarembka (Amsterdam: North-Holland) pp. 25–45.
Hahn, Frank H. (1972) The Share of Wages in the National Income (London: Weidenfeld and Nicholson).
Hahn, Frank H. (1975) ‘Revival of Political Economy: The Wrong Issues and the Wrong Argument’, Economic Record, 51 (September) pp. 360–4.
Hahn, Frank H. (1981) ‘General Equilibrium Theory’, in The Crisis in Economic Theory, edited by Daniel Bell and Irving Kristol, pp. 123–38 (New York: Basic Books).
Hahn, Frank H. (1982) ‘The Neo-Ricardians’, Cambridge Journal of Economics, 6 (December) pp. 353–74.
Harcourt, Geoffrey C. (1982) ‘The Cambridge Controversies: Old Ways and New Horizons–Or Dead End?’, in The Social Science Imperialists, edited by Prue Kerr, pp. 239–78 (London: Routledge and Kegan Paul).
Hicks, John R. (1932) The Theory of Wages (London: Macmillan).
Hicks, John R. (1965) Capital and Growth (Oxford: Oxford University Press).
Hicks, John R. (1973) Capital and Time (Oxford: Oxford University Press).
Lowe, Adolph (1981) ‘Is Economic Value Still A Problem?’, Social Research, 48 (Winter) pp. 786–815.
Malinvaud, Edmond (1966) ‘Interest Rates in the Allocation of Resources’, in The Theory of Interest Rates, edited by Frank H. Hahn and Frank Brechling, pp. 209–41 (New York: St. Martin’s Press).
Malinvaud, Edmond (1985) Lectures on Microeconomic Theory, revised edition (Amsterdam: North-Holland).
Marshall, Alfred (1920) Principles of Economics, 8th edition (London: Macmillan).
Meek, Ronald L. (1977) ‘Value in the History of Economic Thought’, in Smith, Marx and After, pp. 149–64 (London: Chapman and Hall).
Milgate, Murray (1979) ‘On the Origin of the Notion of “Intertemporal Equilibrium”’, Economica, 46 (February) pp. 1–10.
Pasinetti, Luigi (1969) ‘Switches of Technique and the “Rate of Return” in Capital Theory’, Economic Journal, 79 (September) pp. 508–31.
Pasinetti, Luigi (1970) ‘Again on Capital Theory and Solow’s “Rate of Return”’, Economic Journal, 80 (June) pp. 428–31.
Pasinetti, Luigi (1974) Growth and Income Distribution (Cambridge: Cambridge University Press).
Pasinetti, Luigi (1986) ‘Theory of Value–A Source of Alternative Paradigms in Economic Analysis’, in Foundation of Economics, edited by Mauro Baranzini and Roberto Scazzieri, pp. 409–31. (Oxford: Basil Blackwell).
Ramsey, Frank P. (1928) ‘A Mathematical Theory of Saving’, Economic Journal, 38 (December) pp. 543–59.
Ricardo, David (1951–73) Works and Correspondence (I-X), edited by Piero Sraffa (Cambridge: Cambridge University Press).
Samuelson, Paul A. (1947) Foundations of Economic Analysis (Cambridge, Mass.: Harvard University Press).
Samuelson, Paul A. (1962) ‘Parable and Realism in Capital Theory: The Surrogate Production Function’, Review of Economic Studies, 29 (June) pp. 193–206.
Samuelson, Paul A. (1966a) ‘Rejoinder: Agreements, Disagreements, Doubts and the Case of Induced Harrod-Neutral Technical Change’, Review of Economics and Statistics, 48 (November) pp. 444–8.
Samuelson, Paul A. (1966b) ‘A Summing Up’, Quarterly Journal of Economics, 80 (November) pp. 568–83.
Samuelson, Paul A. (1975) ‘Steady-State and Transient Relations: A Reply on Reswitching’, Quarterly Journal of Economics, 89 (February) pp. 40–7.
Samuelson, Paul A. (1980) Economics, 11th edition (New York: McGraw-Hill).
Sen, Amartya (1974) ‘On Some Debates in Capital Theory’, Economica, 41 (August) pp. 328–33.
Solow, Robert M. (1963) Capital Theory and the Rate of Return (Amsterdam: North-Holland).
Solow, Robert M. (1975) ‘Cambridge and the Real World’, Times Literary Supplement (14 March) pp. 277–8.
Solow, Robert M. (1985) ‘Economics: Is Something Missing?’, in Economic History and the Modern Economist, edited by William N. Parker, pp. 21–9 (Oxford: Basil Blackwell).
Stigler, George J. (1958) ‘Ricardo and the 93% Labor Theory of Value’, American Economic Review, 48 (June) pp. 356–67.
Stiglitz, Joseph E. (1973) ‘The Badly Behaved Economy with the Well- Behaved Production Function’, in Models of Economic Growth, edited by James A. Mirrlees and Nicholas H. Stern, pp. 117–37 (New York: Wiley).
Stiglitz, Joseph E. (1974) ‘The Cambridge-Cambridge Controversy in the Theory of Capital: A View From New Haven: A Review Article’, Journal of Political Economy, 82 (July/August) pp. 893–903.
Walras, Léon (1954)Elements of Pure Economics translated by William Jaffe (Homewood, Ill.: Richard D. Irwin).
Walsh, Vivian and Gram, Harvey (1980) Classical and Neoclassical Theories of General Equilibrium (Oxford: Oxford University Press).
Editor information
Editors and Affiliations
Copyright information
© 1993 Mauro Baranzini and G. C. Harcourt
About this chapter
Cite this chapter
Cohen, A.J. (1993). Samuelson and the 93% Scarcity Theory of Value. In: Baranzini, M., Harcourt, G.C. (eds) The Dynamics of the Wealth of Nations. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-22728-0_6
Download citation
DOI: https://doi.org/10.1007/978-1-349-22728-0_6
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-22730-3
Online ISBN: 978-1-349-22728-0
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)