This article aims to assess the debate between John Bates Clark and the“old” institutionalist scholars — Thorstein Veblen, above all — with particularreference to the nature of capital and the functioning of the labor market.Although studies on both authors are numerous, relatively little attention has beenpaid to finding the crucial elements at the heart of their radical disagreement. A.J.Cohen (2014) convincingly argues that Veblen’s attack on Clark is in the center ofthe capital controversy of the 1960s and 1970s. We propose an extension of thisargument, based on the idea that Veblen’s attack on Clark follows three steps. First,Veblen defined capital in money terms and, at the same time, he saw it as theaccumulated technological and institutional experience of a community. Second,insofar as capital cannot be reduced to a stock of physical goods, it is logicallyimpossible to derive a function of the marginal labor productivity from the existingstock of capital. Third, insofar as the marginal productivity of labor cannot bemeasured, it follows that the equality between real wage and marginal laborproductivity cannot logically hold. It also follows that, since it does not exist, thisequality cannot be used as a basis for establishing that the equilibrium wage is a justwage.

A Capital Controversy in Early Twentieth Century: Veblen vs. Clark

PACELLA, Andrea
2017

Abstract

This article aims to assess the debate between John Bates Clark and the“old” institutionalist scholars — Thorstein Veblen, above all — with particularreference to the nature of capital and the functioning of the labor market.Although studies on both authors are numerous, relatively little attention has beenpaid to finding the crucial elements at the heart of their radical disagreement. A.J.Cohen (2014) convincingly argues that Veblen’s attack on Clark is in the center ofthe capital controversy of the 1960s and 1970s. We propose an extension of thisargument, based on the idea that Veblen’s attack on Clark follows three steps. First,Veblen defined capital in money terms and, at the same time, he saw it as theaccumulated technological and institutional experience of a community. Second,insofar as capital cannot be reduced to a stock of physical goods, it is logicallyimpossible to derive a function of the marginal labor productivity from the existingstock of capital. Third, insofar as the marginal productivity of labor cannot bemeasured, it follows that the equality between real wage and marginal laborproductivity cannot logically hold. It also follows that, since it does not exist, thisequality cannot be used as a basis for establishing that the equilibrium wage is a justwage.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/20.500.11769/241258
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