Sunday, March 09, 2008

Neoclassical Economics as Imitation Physics

I cannot recall any literature that develops this point:
"One interesting sidelight before we leave the subject of intertemporal pricing: Consider any efficient capital program and its corresponding profile of prices and own-rates. At every point of time the value of the capital stock at current efficiency prices, discounted back to the initial time, is a constant, equal to the initial value. This law of conservation of discounted value of capital (or Net National Product) reflects, as do the grand laws of conservation of energy of physics, the maximizing nature of the path." -- Robert Dorfman, Paul A. Samuelson, Robert M. Solow (1958). Linear Programming and Economic Analysis, New York: Dover Publications
Does this mean the accumulation of capital in this model is impossible?


Anonymous said...

You've read Mirokowski, right? And his detractors...

Robert Vienneau said...

I don't think Mirowski or his reviewers comment specifically on this passage. I think I've here stumbled upon further support for Mirowski's generalizations about Samuelson.