M.I.T. Capital theory. Course outline, suggested readings. Solow, 1975

 

Capital theory à la Solow. Posted earlier: material from Robert Solow’s 1965 capital theory course; material from Paul Samuelson’s 1975 core economic theory course.

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14.459 THEORY OF CAPITAL
Spring 1975
Robert M. Solow

OUTLINE

1. One-commodity models
   1. No labor, stationary equilibrium, differentiable technology. A complete model
   2. Add labor, steady growth equilibrium
   3. More complicated demand conditions, e.g., class structure
   4. Linear model: one good, one activity and labor
   5. Many activities; continuum of activities
2. Many capital goods
   1. Simple Leontief Model (i.e., constant returns to scale, no joint production, one primary factor, no possibility of substitution in production)
   2. Generalized Leontief Model (substitute activities)
   3. Non-substitution theorem
   4. Extension to model with production lag
   5. Dynamic non-substitution theorem, factor-price frontier
   6. Examples of a complete equilibrium model in this set-up
3. Reswitching and “perversity”
4. What “the Controversy” is all about, if anything

 

SUGGESTED READING

C.C. von Weizsäcker: Steady State Capital Theory, pp. 4-22

E. Burmeister & R. Dobell: Mathematical Models of Economic Growth, Ch. 8

P. A. Samuelson: “The Rate of Interest under Ideal Conditions” QJE, Feb 1939, 286-97; also in Collected Papers, Vol. I, 189-200

P. Garengnani: “Heterogeneous Capital, the Production Function and the Theory of Distribution,” Review of Economic Studies, July 1970

L. Spaventa: “Rate of Profit, Rate of Growth and Capital Intensity in a Simple Production Model,” Oxford Economic Papers, July 1970

B. Rowthorn: “Neo-Classicism, Neo-Ricardianism and Marxism,” New Left Review, No. 86, July/August 1974, 63-87

J. Stiglitz: “The Cambridge-Cambridge Controversy in the Theory of Capital, A View from New Haven,” JPE, July/August 1974, 893-903

K. Sato: “The Neoclassical Postulate and the Technology Frontier in Capital Theory,” QJE, August, 353-384.

 

Source: Duke University. David M. Rubenstein Rare Book & Manuscript Library. Economists’ Papers Archive. Papers of Robert M. Solow, Box 68, Folder without a label.

Image Source: Robert Solow pictures at the MIT Museum website.