<p>Actually the Cambridge controversy sort of affected macroeconomic modeling. As explained in the article that is also linked in one of the comments, the aggregate production function, real business cycle, neoclassical general equilibrium models, and endogenous growth theories can be thought of as an retort to some of the criticism levied by the English side of the Cambridge controversy, even though the modern scholarship on these ideas often does not acknowledge this or in the words of   <a href="https://pubs.aeaweb.org/doi/pdfplus/10.1257/089533003321165010" rel="nofollow noreferrer">Cohen &amp; Harcourt (2003)</a> they often &quot; as if the controversies had never occurred and the Cambridge,England contributors had never existed.&quot;</p>
<p>Also, while Cohen &amp; Harcourt argue that the Cambridge controversy simply fizzled out because English side simply forgot to intellectually procreate and died out I don't think thats perfectly accurate. The American side has put forward some good counter arguments (e.g. see <a href="https://www.jstor.org/stable/1837157" rel="nofollow noreferrer">Stiglitz 1974</a>), and neoclassical modeling was influenced by the critique (even if primarily in a way that it tried to retort critique coming from the English side). In fact Solow-Swan model was indirectly influenced this controversy since as argued by <a href="https://read.dukeupress.edu/hope/article-abstract/41/Suppl_1/67/92504/Solow-s-1956-Contribution-in-the-Context-of-the" rel="nofollow noreferrer">Hagemann (2009)</a> Solow-Swan model was reaction to Harrod-Domar model. Similarly, the above mentioned general equilibrium theory and (modern) endogenous growth theory (eg Paul Romer), can be viewed as retorts to some of the criticism of English  side (even if unintentional/unacknowledged). I think this to some extent took the wind out of the English side's sails.</p>

CC BY-SA 4.0
2021-07-12T00:13:59.747Z
Solow Swan Influence is a bit of a stretch in my opinion but you have a point.
EconJohn
CC BY-SA 4.0
2021-07-12T07:09:58.960Z
@EconJohn well, as mentioned in that paper I cited impetus for SS model of growth was to have some response to HD model of growth... its not the sort of influence Adam Smith had on Ricardo, rather its the sort of influence Marxist economics had on mainstream during the socialist calculation debates, where models were developed to show the other side is wrong
1muflon1
CC BY-SA 4.0
2021-07-09T22:18:29.537Z
2021-07-09T22:18:29.537Z
1muflon1
<p>Every now and again I find myself looking into the Cambridge Capital Controversy in terms of debate around general equilibrium modelling often walking out more confused than I have before doing such a google search.</p>
<p>This being said given the 'reswitching' argument and number of theorems going back and forth on this issue are quite large in number. Are there any particular results that inform standard methods of macroeconomic modelling and if not is there an informal reason for why we should not care.</p>

CC BY-SA 4.0
2021-07-09T17:45:00.730Z
This paper (available for download under this splash page) appears to outline the theories and arguments involved in the cambridge capital controversy: https://www.aeaweb.org/articles?id=10.1257/089533003321165010.
SystemTheory
CC BY-SA 4.0
2021-07-09T18:24:21.980Z
It's a good question. My understanding is that the core of the debate is that 'distribution can or cannot be treated separately from growth/accumulation.' If you can prove that it does not, then marginalism should be scrapped. This would clearly cause a problem for GE-type modelling and modern economic theory. But nevertheless, I've not read about the topic since my undergraduate days. And the last time I heard it mention was by Emmanuel Fahri who acknowledged how it should be considered in modern economic modelling, here: https://www.youtube.com/watch?v=QRFRuj0myTI
EB3112
CC BY-SA 4.0
2021-07-10T01:44:58.350Z
Here is the direct link to another 20 page paper **MIT and the Other Cambridge** on the subject matter: https://paulromer.net/posts/2015/pdf/History-of-Political-Economy-2014-Backhouse-252-71.pdf.
SystemTheory
CC BY-SA 4.0
2021-07-12T00:15:34.757Z
@EB3112 Oh wow I didn't know there was a presentation on that paper by farhi. Thank you!
EconJohn
CC BY-SA 4.0
2021-07-12T10:55:37.383Z
No problem. I think you deserve a lot of praise for drawing attention to the CCC in the post. I find some of the comments/articles linked on this post reasonably misleading however. Standard economics may have 'reacted'. But building models to by-pass the critique, is not the same as internalising it. I find post-Keynesian economists like Lavoie provide a useful account of the debate, beyond those already given by Harcourt https://www.ineteconomics.org/perspectives/blog/what-even-famous-mainstream-economists-miss-about-the-cambridge-capital-controversies
EB3112
<soft-question><history-economic-thought><aggregate-production><cambridge-capital-controversy>
Why did the Cambridge Capital Controversy have no impact on economic modelling?
EconJohn
# Why did the Cambridge Capital Controversy have no impact on economic modelling?

(Asked by: username_0 on 2021-07-09)

Every now and again I find myself looking into the Cambridge Capital Controversy in terms of debate around general equilibrium modelling often walking out more confused than I have before doing such a google search.

This being said given the 'reswitching' argument and number of theorems going back and forth on this issue are quite large in number. Are there any particular results that inform standard methods of macroeconomic modelling and if not is there an informal reason for why we should not care.

**Tags:** soft-question, history-economic-thought, aggregate-production, cambridge-capital-controversy

> **Comments:**
> **username_1**: This paper (available for download under this splash page) appears to outline the theories and arguments involved in the cambridge capital controversy: https://www.aeaweb.org/articles?id=10.1257/089533003321165010.  
> **username_2**: It's a good question. My understanding is that the core of the debate is that 'distribution can or cannot be treated separately from growth/accumulation.' If you can prove that it does not, then marginalism should be scrapped. This would clearly cause a problem for GE-type modelling and modern economic theory. But nevertheless, I've not read about the topic since my undergraduate days. And the last time I heard it mention was by Emmanuel Fahri who acknowledged how it should be considered in modern economic modelling, here: https://www.youtube.com/watch?v=QRFRuj0myTI  
> **username_1**: Here is the direct link to another 20 page paper **MIT and the Other Cambridge** on the subject matter: https://paulromer.net/posts/2015/pdf/History-of-Political-Economy-2014-Backhouse-252-71.pdf.  
> **username_0**: @username_2 Oh wow I didn't know there was a presentation on that paper by farhi. Thank you!  
> **username_2**: No problem. I think you deserve a lot of praise for drawing attention to the CCC in the post. I find some of the comments/articles linked on this post reasonably misleading however. Standard economics may have 'reacted'. But building models to by-pass the critique, is not the same as internalising it. I find post-Keynesian economists like Lavoie provide a useful account of the debate, beyond those already given by Harcourt https://www.ineteconomics.org/perspectives/blog/what-even-famous-mainstream-economists-miss-about-the-cambridge-capital-controversies  

---

## 1 answers

### Answer by username_3 on 2021-07-09. Score: 3

Actually the Cambridge controversy sort of affected macroeconomic modeling. As explained in the article that is also linked in one of the comments, the aggregate production function, real business cycle, neoclassical general equilibrium models, and endogenous growth theories can be thought of as an retort to some of the criticism levied by the English side of the Cambridge controversy, even though the modern scholarship on these ideas often does not acknowledge this or in the words of   [Cohen & Harcourt (2003)](https://pubs.aeaweb.org/doi/pdfplus/10.1257/089533003321165010) they often " as if the controversies had never occurred and the Cambridge,England contributors had never existed."

Also, while Cohen & Harcourt argue that the Cambridge controversy simply fizzled out because English side simply forgot to intellectually procreate and died out I don't think thats perfectly accurate. The American side has put forward some good counter arguments (e.g. see [Stiglitz 1974](https://www.jstor.org/stable/1837157)), and neoclassical modeling was influenced by the critique (even if primarily in a way that it tried to retort critique coming from the English side). In fact Solow-Swan model was indirectly influenced this controversy since as argued by [Hagemann (2009)](https://read.dukeupress.edu/hope/article-abstract/41/Suppl_1/67/92504/Solow-s-1956-Contribution-in-the-Context-of-the) Solow-Swan model was reaction to Harrod-Domar model. Similarly, the above mentioned general equilibrium theory and (modern) endogenous growth theory (eg Paul Romer), can be viewed as retorts to some of the criticism of English side (even if unintentional/unacknowledged). I think this to some extent took the wind out of the English side's sails.

> **Comments:**
> **username_0**: Solow Swan Influence is a bit of a stretch in my opinion but you have a point.  
> **username_3**: @username_0 well, as mentioned in that paper I cited impetus for SS model of growth was to have some response to HD model of growth... its not the sort of influence Adam Smith had on Ricardo, rather its the sort of influence Marxist economics had on mainstream during the socialist calculation debates, where models were developed to show the other side is wrong  

---

