Two Strands of Thought in Pierangelo Garegnani’s Capital Theory Critique

Abstract

Two lines of thought may be discerned in the half-century arc of critical writing on capital theory which extends from Garegnani (1960) to Garegnani (2010). The first concerns the conception of the quantity of capital as an endowment to be put on a par with land and labour - the traditional three ‘factors of production’ (which is not to discredit Marshall’s fourth factor, organisation, which, like capital, is produced). The second draws attention to a related methodological shift within neoclassical theory prompted by a seeming recognition, originally on the part of Hicks, but essentially found in Walras (as Garegnani has repeatedly pointed out), that the treatment of a given capital endowment as an arbitrary vector of capital goods—each one a separate resource or factor input—is inconsistent with ‘the uniformity of returns on capitals’ supply prices pertaining to the “normal position”’ (Garegnani, 2010, p. 81). A central point in this second line of argument is that the ‘normal position’ was the bedrock upon which both classical and traditional neoclassical theory had been built.

Helpful comments by a referee are gratefully acknowledged.