ABSTRACT
Stan Metcalfe’s fascinating account of important achievements and unsettled problems of the evolutionary approach to economics in his Graz Schumpeter Lectures can be assessed from different perspectives. Being myself concerned with exploring the explanatory power of what may be called the ‘classical’ approach, the natural thing for me to do is to look at Metcalfe’s findings from this perspective. The core part of his argument then emerges as revolving first and foremost around the problem of what the classical economists called the ‘gravitation’ of market prices to ‘natural’ prices, or ‘prices of production’ and, correspondingly, the gravitation of the actual rates of profit to some natural or ‘normal’ level. Whilst in analysing the problem of gravitation the emphasis is commonly on the tendency, or lack thereof, towards a uniform rate of profit (or some ‘normal’ pattern of profit rate differentials) across industries, assuming that the intrasectoral profit rates are equalised, Metcalfe is concerned with the tendency, or lack thereof, towards a uniform rate of profit within an industry. This concern is to be welcomed because what happens inside an industry has been entirely neglected or at best given short shrift in the gravitation literature. Its results are implicitly based on the dubious assumption that what happens inside an industry is of no import for what happens between industries. On the contrary, Metcalfe’s analysis is based on the simplifying assumption that what happens outside an industry is of no import for what happens inside it.
