| Abstract: | Summary The so-called Cambridge-Cambridge controversy concerning heterogeneous capital goods is reconsidered in this article. Firstly, the neoclassical theory as it has been criticized is summarized by means of a formulation of the production function with a variable or constant elasticity of substitution between labour and capital. This VOCES-function includes the Cobb-Douglas and the CES functions as special cases. In an appendix to this article, the alternative Sraffa system is presented in accordance with Sraffa's remark that there is no harm in adopting the assumption of constant returns as a temporary working hypothesis. Sraffa takes only a sideways look at the (double) switching of techniques.Samuelson's surrogate production function and the critical exposition of it by Garegnani are confronted with Hick's analysis of the wage-interest frontier. The impact of it on the relation between capital intensity and interest makes Garegnani's assumption of an integrated industry in this connection not fully acceptable in the present author's view.Both Nuti and Hicks have shown in their recent articles in theEconomic Journal (1970) that it can be helpful to follow what Hicks calls a Neo-Austrian approach. Already in the thirties Hayek and Eucken made it clear that production may be conceived as a process that connects dated inputs and outputs with capital goods as intermediate products. In the opinion of the present writer, this point of view has been too much neglected. In his doctoral thesis (1970) the author has, therefore, developed an  isochronic isoquant analysis. This approach involves the formulation of a general factor period as a basis for a cost analysis in terms of immediate costs of inputs and the average investment period. In the present article, this method of analysis is used for the direct derivation of the wage-interest frontier without resorting to wage-interest curves and by stressing the impact ,of the production relations themselves on that frontier.It follows that a Ricardian analysis, as more clearly expounded in the (neo-)Austrian approach than in the neoclassical theory, has to be preferred both for further analyzing production and for a better understanding of capital and interest, and that this conclusion stems already from thirty years ago.Dit artikel is de nadere uitwerking van een bijdrage voor de interuniversitaire bijeenkomst over algemeae economie, op 24 september 1971 gehouden aan de Universiteit van Amsterdam. Voor de stimulerende opmerkingen van met name prof. dr. J. G. Knol en drs. W. van Drimmelen wil ik graag mijxn dank uitspreken. |
