"In the conventional specification, total capital K is implicitly defined as being proportional to the sum of all different types of capital. This definition implies that all capital goods are perfect substitutes. One additional dollar of capital in the form of a truck has the same effect on the marginal productivity of mainframe computers as an additional dollar's worth of computers. Equation (1) expresses output as an additively separable function of all the different types of capital goods so that one additional dollar of trucks has no effect on the marginal productivity of computers." -- Paul Romer (1990).
Does Romer think that the so-called factor price curve for all techniques must be an affine function? That price Wicksell effects are always zero? Or maybe he just is trying to buffalo his reader with an ill-thought out use of mathematical symbols.
On his twitter feed, he expresses a disinterest in knowing what he is talking about:
"Sorry, but the capital controversies were a waste of time. No relevance then or now." -- Paul Romer, 16 May 2015, 1:09 PM.
I suppose one might possibly be able to defend this view:
"Economists usually stick to science. Robert Solow (1956) was engaged in science when he developed his mathematical theory of growth. But they can get drawn into academic politics. Joan Robinson (1956) was engaged in academic politics when she waged her campaign against capital and the aggregate production function." -- Paul M. Romer (2015).
One might say Solow was looking to empiricalism when he developed his non-rigorous, loose theory of growth. And, I suppose one could say that some political views were involved in Joan Robinson's insistence that Keynes' theory applies to all runs, both the short run and the long run. And in her attempt to combat the development of pre-Keynesian theories after Keynes, even if such developments were the product of those who called themselves Keynesians in some other context.
But to make such an argument, one would have to have read at least some of Joan Robinson's work from the era. It is clear that Romer has not:
"When I learned mathematical economics, a different equilibrium prevailed. ...when economic theorists used math to explore abstractions, it was a point of pride to do so with clarity, precision, and rigor. Then too, a faction like Robinson’s that risked losing a battle might resort to mathiness as a last-ditch defense, but doing so carried a risk. Reputations suffered.
If we have already reached the lemons market equilibrium where only mathiness is on offer, future generations of economists will suffer... Where would we be now if Robert Solow’s math had been swamped by Joan Robinson’s mathiness?" -- Paul M. Romer (2015).
When, during the Cambridge Capital Controversy, did Robinson try to buffalo readers with pretend rigorous manipulations of imprecisely defined mathematical symbols. How about never? Is never good for you?
Update (24 July 2015): Marc Lavoie and Mario Seccareccia also comment on Romer's confusion.References
- Romer, Paul M. (1990) Endogenous Technological Change, Journal of Political Economy V. 98, N. 5 (Oct): S71-S102.
- Romer, Paul M. (2015). Mathiness in the Theory of Economic Growth, American Economic Review, V. 105, N. 5: pp. 89-93.