ABSTRACT
John von Neumann gave his paper on equi-proportionate growth for the first time in the Winter of 1932 at the Mathematical Seminar of Princeton University where he had been offered a professorship in 1931. In 1936 he gave the paper in Karl Menger’s Mathematical Colloquium at the University of Vienna. The paper was published for the first time in German in the proceedings of the colloquium, Ergebnisse eines mathematischen Kolloquiums (von Neumann, 1937).1 In 1945, upon the initiative of Nicholas Kaldor who was a friend of von Neumann’s, an English translation of the paper was published in the Review of Economic Studies, which was then edited by Kaldor, together with a commentary by the Oxford economist David Champernowne (von Neumann, 1945; Champernowne, 1945). VonNeumann’s paper is rightly famous in economics, although it has repeatedly
been maintained that from an economic as opposed to a mathematical point of view the paper is not all that interesting. One author even contended that the paper contains “not very good economics” (Koopmans, 1974). We do not agree with this judgement, which assesses the model against the background of a particular point of view, neoclassical analysis, of which von Neumann was critical (see Section 3 below). From another point of view, that of classical analysis, the von Neumann model turns out to be a very important contribution to the theory of “normal” prices, or “prices of production”, and incomedistribution in the tradition of such authors as William Petty, the Physiocrats, the English Classical economists, especially David Ricardo and Robert Torrens, Vladimir K. Dmitriev, Ladislaus von Bortkiewicz and Georg von Charasoff, a tradition which culminated in the work of Piero Sraffa (1960). In this paper we make an attempt to clarify the issues at hand. We do this partly with recourse to previous contributions by us to an interpretation of the von Neumann model (Kurz and Salvadori, 1993; 1995, ch. 13; 2001). However, we add further flesh to our argument and present it more succinctly and, hopefully, also more convincingly.2
