ABSTRACT OF PAPER
Title: Capital Theory “Paradoxes” and Paradoxical Empirical Findings: Resolved or Continued?
Author: Mariolis Theodore, Tsoulfidis Lefteris
Capital theory controversies and the associated with these “paradoxes” culminated in the decades of 1960s and 1970s. These debates started as a critique in the logical foundations of the neoclassical theory of value and they showed that the wage or price-rate of profit curves often display shapes that are not consistent with the requirements of the neoclassical theory of value. The theoretical findings of the capital controversies were subjected to empirical testing and the results suggested that (a) only in a few cases we observe change in the monotonicity of price-rate of profit curves; in most cases, these curves are quasi-linear. (b) the wage-profit rate curves are normally quasi-linear. These findings suggest that, although the actual economies cannot be analyzed on the basis of neoclassical parables, the role of price effects in the revaluation of capital is of limited significance. Furthermore, the spectral analysis of actual economies shows that the above results can be explained by the rectangular hyperbola-like distribution of eigenvalues typically found in the matrices of vertically integrated technical coefficients of many diverse economies. This particular distribution of eigenvalues indicates on the one hand the presence of significant near linear dependencies between rows-columns of those matrices and on the other hand that the actual economies can be represented by models of two or at most three dimensions. Consequently the real paradox in the sense of knowledge-vacuum and thus requiring further research is the distribution of eigenvalues and not the “paradoxes of the theory of capital”.
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