Piketty’s Fair-Weather Friends


Seth Ackerman in Jacobin:

If you’ve read far enough into the reviews of Piketty’s book, you’ve probably already come across references to a mysterious academic debate of the 1950s and 1960s called the Cambridge Capital Controversies, which pitted MIT neoclassicals like Paul Samuelson and Robert Solow against a group of Cambridge University economists, including Joan Robinson and Piero Sraffa, who sought to revive and perfect aspects of the earlier classical approach of David Ricardo and Marx.

Popular attempts to recount that debate tend to get needlessly bogged down in the abstract. They typically focus on the brain-teaser question of whether it’s possible to quantify the “amount” of capital in the economy, given that this capital stock is made up of a vast number of heterogeneous goods, from jackhammers to hard drives. And that was, in fact, the issue that first got the debate started.

But what the argument was fundamentally about was whether the marginal productivity theory of income distribution — marginalism — is a logically coherent theory. Although carried out in technical terms, the debate had strong political overtones. (Note that Solow served in the Kennedy White House, whereas Sraffa had smuggled in the paper for Gramsci to write thePrison Notebooks).

At its heart, the controversy opposed two visions of the capitalist economy. In the neoclassical vision, the most fundamental forces shaping the division of society’s produce are the supply and demand for labor and capital, and behind them, the technical facts of technology, scarcity, and consumer tastes. In this vision, the income distribution can be explained by the old platitudes “when the price goes up, less is bought,” and “when more is supplied, the price goes down.”

In the Cambridge vision, social, historical, and political forces — class struggle — are the essential factors in setting the income distribution. Once that distribution is fixed, the rest of the economy adjusts around it.

More here.