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Source link: http://archive.mises.org/3703/austrian-friendly-jep-article/

Austrian-friendly JEP article

June 10, 2005 by

Just in case it slipped by the radar of potential readers, I bring to your attention a 2003 Journal of Economic Perspectives article, “Whatever Happened to the Cambridge Capital Theory Controversies?” (I ran across the article on this blog post, cited by Gene Callahan in a recent piece.)

The article may be interesting to Austrians for a number of reasons:First, it cites Bohm-Bawerk, Hayek, and others on Austrian capital theory, and does so respectfully.

Second, it documents how the neoclassical mainstream clearly lost the capital debates on theoretical grounds, and yet proceeded as if nothing significant had happened.

Third, it shows how both sides are still missing the basic (Austrian) point, that interest is not a return to capital (goods). (I have submitted a paper to HOPE on this, with suitable math bells-and-whistles; maybe they’ll publish it.)

And fourth, it has some (sometimes unintentionally) funny quotations. For example, Mark Blaug:

The Cambridge School has this crazy idea, that if we have a rigorous simple theory, and then we discover one little flaw in it, that makes it more complicated to use it, we are finished. If we need five tyres to run a car instead of four tyres, we haven’t got a car any more, so we must give up everything and start using an aeroplane.

{ 1 comment }

Robert V. June 14, 2005 at 2:42 am

Robert, would you be willing to list other quotations you find funny.

I suppose Austrians interested in the CCC would be interested in Jack Birner’s 2002 book from Routledge, “The Cambridge Controversies in Capital Theory: A Study in the Logic of Theory Development.” I find Birner’s account of which theory is more general to be misguided. I do agree his point that an internal history finds the participant’s views evolving because of technical contents, not ideology.

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