The results of the capital theory controversies and general equilibrium theory

  1. I was happy to have been asked to write a chapter under the rubric of the results of the capital theory controversies and general equilibrium theory. I once got into hot water with Christopher Bliss when, in a draft of a paper that eventually appeared in two versions (Harcourt 1975, 1976) (one with a title that, in retrospect, I regret having chosen), I tried to reconcile the clash between Christopher Bliss (1970) and Pierangelo Garegnani over Garegnani (1970). Bliss had written a comment on it, in which he expressed surprise at some of Garegnani's results because, within an Arrow—Debreu framework, the results were not likely to occur. Garegnani's results related to comparisons of values of relative factor prices and shares, following a ‘change’ in accumulation, which he thought were unable to be reconciled with any real-world observations. (In his Ph.D. dissertation (1959), Garegnani had made much the same point about marginal productivity theory and had used Walras and Wicksell as his guinea pigs.) I suggested that perhaps their difference in opinion might be traced to the fact that Garegnani concentrated (à la Ricardo) on the ultimate long-period outcomes of ‘changes’ in the values of specific variables, whereas Bliss had put more emphasis (à la Malthus) on immediate, short-period results. Bliss interpreted my comments (made in a footnote and subsequently removed) as an assertion that he did not know the difference between the short period and the long period — oh dear me! We eventually sorted out our differences and resumed our restored friendship. With the fullness of time to provide hindsight, I would like now to make a few remarks about the issues involved. ¹