Last modified: 2017-05-27
Abstract
Cambridge capital controversy”, “Cambridge monetary theory of business cycle”, “Cambridge equation” are some of the geographical reference used to characterize the economic theories and approaches that developed in Cambridge (UK) between the 1920s and the 1960s. The question arises which are, if any, the shared aspects in these developments that point to the idea of a Cambridge approach to economics.
I have been arguing for some time that the group of economists renowned as representative the “Cambridge school” (Keynes, Sraffa, Kahn and Joan Robinson) or the “Cambridge Keynesians” with the inclusion of Kaldor, as they are also named (see Pasinetti, 2007) should be best defined as a “group” rather than a “school”; the reason of the distinction is to convey the idea of both cohesion and sharing, rather than adhesion to a common body of doctrine. The implication is that “the Cambridge approach to economics” is an alternative to neoclassical economics, but not as cohesive and a fully-fledged system of thought; its rather a legacy with many threads. Several aspects of method, “style” and content of the economics associated with the Cambridge tradition, whose imprinting is to be traced to Marshall, make it well recognizable, when compared with the so called “mainstream” economics and other schools of thought. This is what will present in this paper, drawing on my previous work (Marcuzzo and Rosselli 2005, Marcuzzo 2012).
I will focus on the five economists who epitomize the Cambridge approach to economics, by showing the divergences, differences, communalities that make them a very composite group, and argue that their heritage can be found in contemporary research areas, which make this tradition alive and promising of further developments.
My conclusion is that the Cambridge tradition has handed down to us a legacy resting on two pillars. The first is rejection of the “classical” conclusion that market forces are always at work to bring the economic system to full employment of resources, implicated by the belief that there is no discontinuity between individual and aggregate behaviour, so that what is good for a single player in the market is good for the whole. The second is the Sraffian theme that the market, taken as synonymous with supply and demand, is a misleading arena for representation of the rules of production and distribution.
Both pillars are needed to travel the road towards an alternative economic theory and economic policy.