ABSTRACT
Wicksell and others attempted to defend and extend BöhmBawerk’s approach (Lutz 1967; Ebeling 1997). With the advent of the Keynesian revolution, however, interest in capital theory waned. It revived slowly in the postwar period. In retrospect we may identify two main lines of development. One is the familiar Neoclassical approach, in which capital simply came to be understood as an amorphous stock of production potential equal to K as an argument in a production function. The other is the resurgence, emanating from the contributions of Joan Robinson (1956) and Pierro Sraffa (I960), of the Ricardian classical approach (the Neo-Ricardian School), in which capital and labor are not continuously substitutable for each other, and the earnings of labor relative to capital (the prime focus of this literature) are seen to be determined by “social” rather than economic conditions. Modern capital theory controversy consists largely in the clash of these two perspectives. Ironically, as explained above, both of these approaches can be traced to the Ricardian aspects of BöhmBawerk’s work.
