Abstract

Chapter 5 is an essay on the methodology of equilibrium theory. In the course of examining recent controversies concerning lawlike claims and "assumptions" in economic theory, I reach a position similar to J. S. Mill's. Neo-classical economics is what Mill would call "a separate science." It follows a deductive method, since its basic laws supported by everyday experience. In its general equilibrium formulation, equilibrium theory possesses, however, no explanatory worth and very little explanatory importance, since its idealizations are not legitimate. General equilibrium theory ought fundamentally to be regarded as an explanation of how economic equilibrium is possible. ;In conclusion I argue that Sraffa's contribution is a legitimate form of economic theorizing. Those methodological views, like Lionel Robbins', which would proscribe the sort of piecemeal theorizing Sraffa exemplifies, are, as methodological strictures, unjustified. In fact they involve an ideological distortion. Given the weaknesses in general equilibrium theory identified in Chapters 3 and 5, one has good reason to be eclectic. The Austrian theory, despite the Cambridge criticisms, may be useful in some investigations. A much more segmented economics built around Sraffa's work may have a great deal to teach us. Theories of capital, interest and exchange value currently are underdeveloped, unsupported, and subject to ideological influence. ;In Chapter 3 one special formulation of intertemporal general equilibrium theory is examined. I argue that general equilibrium theory may be taken as a theory of the rate of interest to which the Cambridge criticisms do not apply. Puzzles remain, however, concerning both the apparently lawlike claims and the unrealistic stipulations concerning background conditions that general equilibrium theory makes. ;In Chapter 4 Sraffa's system in The Production of Commodities by Means of Commodities is presented and tentatively assessed. I argue that it is consistent with equilibrium theory, but may be combined with other claims that are not consistent with equilibrium theory. What is puzzling but, I argue, methodologically legitimate in Sraffa's work is that he takes as givens factors like the composition of output, that are themselves subject to further economic analysis. Sraffa's work, when properly understood, can prove valuable to Marxian economists. ;Chapter 1 establishes a contrast between physical cost and marginal utility theories of exchange value and examines why issues concerning capital and interest are theoretically central to both theories. I point out that physical cost theories of value are not tenable. ;Chapter 2 is concerned with simplified aggregate capital theories, especially Wicksell's Austrian theory of capital, and with the Cambridge criticisms of such theories. The Cambridge criticisms show, I conclude, that aggregative capital theories make unwarranted economic claims. ;This dissertation examines from both an economic and a philosophical perspective controversies concerning the theory of capital and interest and the relationship of capital and interest to exchange value. The fundamentals of the neo-classical and neo-Ricardian approaches to economic theory are made explicit and compared. The neo-Ricardian approach is partially defended