The Controversy on the Theory of Capital

Abstract

This chapter contains the capital theory controversy that took place among the most importanteconomists from the universities of Cambridge (UK) and Cambridge (Mass.). Firstly, we presentthe neoclassical propositions which are summarized in the neoclassical parables. The second section contains Robinson’s criticism of the neoclassical capital theory and Garegnani’s criticismof the decreasing marginal productivity theory. Thirdly, we summarize Samuelson’s attempt to validate the neoclassical production function and his main mistakes. The fourth section presents Solow’s response and Nell’s criticism. Finally, in the fifth section, we present the main contributions to the capital theory controversy.