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Pasinetti on Capital Theory

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Part of the Palgrave Studies in the History of Economic Thought book series (PHET)

Abstract

In 1965 Pasinetti triggered a third controversy, on capital theory. Paul Samuelson was convinced of a strictly monotonic relation between the profit rate and capital intensity. His pupil Levhari claimed that reswitching and capital-reversing may occur in an industry, but not at macro-level. The refutation of Levhari’s thesis came promptly from Pasinetti at the First World Congress of the Econometric Society in 1965. His paper stirred a huge controversy between the two Cambridges. In the special 1966 issue of the Quarterly Journal of Economics, Levhari and Samuelson admitted that ‘The Nonswitching Theorem is False’. However, Leijonhufvud has recently written: ‘It is truly remarkable how the mainstream has managed to resign to oblivion the clear-cut victory of Old Cambridge in the Capital Controversy, in which Pasinetti played a prominent part’.

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© The Author(s) 2018

Authors and Affiliations

  1. 1.University of LuganoLuganoSwitzerland
  2. 2.University of Applied Sciences of Southern Switzerland and University of LuganoLuganoSwitzerland

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