chapter  7
7 Pages

A naive theory of technology and change

There is one aspect of knowledge that has always been explicitly recognized in Marshallian economics, namely technical knowledge. However, the knowledge recognized in Marshallian economics is about production technology. While technology is thereby not a neglected element in neoclassical models, it can be argued that changes in technology have been ignored. Recall that Marshall defines the long run as the period during which knowledge is fixed [1920/49, pp. 291 and 315]. Since longrun prices are determined mostly by production costs, I think Marshall is saying that technical knowledge is fixed. In this regard, consideration of the problem of knowledge dynamics discussed in Chapter 6 might lead us to question the adequacy of neoclassical models to deal with questions involving changing technology and particularly their adequacy when it comes to questions of economic history.