For the purposes of this very simplified and schematic post, I present the CCC as having two sides.
- Views and achievements of Cambridge (UK) critics:
- Joan Robinson's argument for models set in historical time, not logical time.
- Mathematical results in comparing long-run positions:
- Reswitching.
- Capital reversing.
- Empirical results and applications.
- Rediscovery of the logic of the Classical theory of value and distribution.
- Arguments about the role that a given quantity of capital plays in disaggregated neoclassical economic theory between 1870 and 1930.
- Arguments that neoclassical models of intertemporal and temporary equilibrium do not escape the capital critique.
- A critique of Keynes' marginal efficiency of capital and of other aspects of The General Theory.
- The recognition of precursors in Thorstein Veblen and in earlier capital controversies in neoclassical economics.
- Views of neoclassical defenders:
- Paul Samuelson and Frank Hahn's, for example, acceptance and recognition of logical difficulties in aggregate production functions.
- Recognition that equilibrium prices in disaggregate models are not scarcity indices; rejection of the principle of substitution.
- Edwin Burmeister's championing of David Champerowne's chain index measure of aggregate capital, useful for aggregate theory when, by happenstance, no positive real Wicksell effects exist.
- Adoption of models of inter temporal and temporary general equilibrium.
- Assertion that such General Equilibrium models are not meant to be descriptive and, besides, have their own problems of stability, uniqueness, and determinateness, with no need for Cambridge critiques.
- Samuel Hollander's argument for more continuity between classical and neoclassical economics than Sraffians see.
I think I am still ignoring large aspects of the vast literature on the CCC. This post was inspired by Noah Smith's anti-intellectualism. Barkley Rosser brings up the CCC in his response to Smith. I could list references for each point above. I am not sure I could even find a survey article that covered all those points, maybe not even a single book.
So the CCC presents, to me, a convincing demonstration, through a counter-example to Smith's argument. In the comments to his post, Robert Waldmann brings up old, paleo-Keynesian as an interesting rebuttal to a specific point.
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My overall summary is that the CCC established that neoclassical/neokeynesian approaches lack even a crude theory of capital, and without that they are largely pointless.
The sraffian subset of that argument is that they lack even a general theory of production (of "commodities by means of commodiaties") as the cost of capital in that theory of production can only be exogenous, and also the resulting schedules result in "anomalies".
The Dutch economist Jan Pen argued: "The neoclassical theory, with her magnificent formulas, is a challenging object for students to investigate. She is a piece of economics, which gives confidence in the ingeniosity of professionals, and that is worth something". That is to say, all theories (notably the mathematical ones) are abstractions and thus wrong. Their main purpose is to furnish plausible relations between economic variables, and thus to allow economists to structure their thoughts. Theories are merely food for thought. In the social sciences, it would be foolish to believe that any model is real. In fact, the criticism by new economic institutionalists with respect to the general equilibrium model is at least as devastating as the theory of Sraffa. Thus the NEI has become a respected part of the neoclassical theory. Applied economics will usually borrow familiar ideas and concepts from a wide variety of theories, simply as a means of communication.
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