Capital Theory and Political Economy Prices, Income Distribution and Stability Routledge Frontiers of Political Economy Series

In recent years, there have been a number of new developments in what came to be known as the "Capital Theory Debates". The debates took place mainly during the 1960s as a result of Piero Sraffa's critique of the neoclassical theory according to which the prices of factors of production directly depend on their relative scarcities. Sraffa showed that when income distribution changes, there are many complexities developed within the economic system impacting on prices in ways which are not possible to predict. These debates were revisited in the 1980s and again more recently, along with a parallel literature that has developed among neoclassical economists and has also looked at the impact of shocks on an economy.

This book summarizes the debates and issues around the theory of capital and brings to the fore the more recent developments. It also pinpoints the similarities and differences between the various approaches and critically evaluates them in light of available empirical evidence. The focus of the book is on the price trajectories induced by changes in income distribution and the resulting shape of the wage rates of profit curves and frontier. These issues are central to areas such as microeconomics, international trade, growth, technological change and macro stability analysis. Each chapter starts with the theoretical issues involved, followed by their formalization and subsequently with their operationalization. More specifically, the variables of the classical theory of value and distribution are rigorously defined and quantified using actual input?output data from a number of major economies, but mainly from the USA, over long stretches of time. The empirical results are not only consistent with the anticipations of the theory but also further inform and therefore strengthen its predictive content raising new significant questions.

List of Figures

List of Tables

List of Abbreviations

Preface and Acknowledgements

Chapter 1: Preliminaries

Chapter 2: Theory of Capital in Historical Perspective

Chapter 3: Capital Theory Controversies

Chapter 4: Price Trajectories and the Rate of Profit

Chapter 5: Wage-Rate of Profit Curves and Technological Change

Chapter 6: Near Linearities of the Price- and Wage-Rates of Profit Curves and the Distribution of Eigenvalues

Chapter 7: A Simple but Realistic Linear Model of Production

Chapter 8: Summing-Up

References

Index

Lefteris Tsoulfidis holds a Ph.D. and an M.A. in economics from the New School for Social Research in New York, and a B.A. in economics from the University of Macedonia. He is currently a Professor in the Department of Economics at the University of Macedonia in Thessaloniki, where he teaches courses in the history of economic thought, economic history, political economy, mathematical economics and macroeconomics.

He is the author of Competing Schools of Economic Thought (2010) and co-author of Modern Classical Economics and Reality. A Spectral Analysis of the Theory of Value and Distribution (2016) and Classical Political Economics and Modern Capitalism: Theories of Value, Competition, Trade and Long Cycles (2019).