Sraffa and Modern Economics, Volume I

Savings, investment and capital in a system of general intertemporal equilibrium

Pierangelo Garegnani^†

1.1 Introduction

1.   The criticism of the neoclassical theory based on the inconsistency of the concept of a ‘quantity of capital’ has been met from the orthodox side essentially with the claim that contemporary reformulations of the theory do not rely on any such concept.¹ The present chapter is intended to show that the claim is unfounded and that the deficiencies of the concept undermine the reformulations no less than they do the traditional versions.²

In Section 1.2 we shall introduce for this purpose, the very simple model of intertemporal equilibrium which Hahn put forward in 1982 to counter what he took to be the ‘neo-Ricardian’ critique. ...