The Cambridge School denotes the line of economists working at the University of Cambridge, England, from Alfred Marshall's founding of the economics tripos in the 1880s-1900s through Arthur Cecil Pigou and John Maynard Keynes to the postwar generation of Joan Robinson, Piero Sraffa, Nicholas Kaldor and Richard Kahn. Marshall's own synthesis of supply-and-demand marginalism defined the school's early character; Keynes's General Theory grew directly out of it. In the 1950s-60s the postwar Cambridge (England) economists became the central protagonists of the Cambridge capital controversy against Cambridge, Massachusetts economists (Paul Samuelson, Robert Solow, Franco Modigliani at MIT), disputing how capital itself can be meaningfully measured and aggregated in neoclassical growth theory. The English side, concentrating on how the division of income between wages and profits itself adjusts, argued that valuing a stock of capital goods cannot be done without already knowing the rate of profit those goods are expected to generate, a circularity Piero Sraffa formalized as reswitching: the same technique can be the most profitable choice at both high and low rates of profit, undermining the simple story that a lower interest rate always induces more capital-intensive production.
Facts
Start YearDated to Alfred Marshall's 1885 return to Cambridge as professor of political economy, where he built the economics tripos and the school's founding character; the Cambridge capital controversy phase the description also covers ran through the 1950s-60s. Core TenetEconomic value and capital cannot be measured independently of the income distribution (the wage-profit split) they are meant to explain; how a stock of capital goods is valued already presupposes a rate of profit, a circularity the Cambridge, England side used to challenge neoclassical aggregate production functions. 1 Connections
Associated Figures and Events
Marshall built the Cambridge economics tripos from the 1880s and his own supply-and-demand marginalist synthesis defined the school's early character.
Source Wikipedia
Source Arthur Cecil Pigou (Wikipedia)
Alfred Marshall, founder of the Cambridge School, formalized internal and external economies of scale in Principles of Economics (1890).
Source Principles of EconomicsAlfred Marshall
Robinson was a central figure of the postwar Cambridge, England side of the capital controversy.
Source Wikipedia
Keynes was a Cambridge, England economist across his whole career and The General Theory grew directly out of Marshall's Cambridge tradition.
Source Wikipedia
Critiqued Here
Why this is disputed. The Cambridge (England) side of the mid-20th-century Cambridge capital controversy against Cambridge, Massachusetts (Samuelson, Solow, Modigliani) economists, disputing whether capital can be meaningfully aggregated and measured independently of the rate of profit it is used to explain; the reswitching results are not disputed as mathematics but their real-world significance for growth theory remains genuinely contested among economists.
Source Wikipedia
Sources
1. Wikipedia
Wikimedia FoundationCambridge capital controversy, The two Cambridges
Key figures: Joan Robinson, Piero Sraffa, Nicholas Kaldor, Luigi Pasinetti, Richard Kahn
Cambridge capital controversy, Reswitching
valuing a stock of capital goods cannot be done without first knowing the rate of profit, since capital goods are valued by the income they are expected to generate
View the Source Arthur Cecil Pigou (Wikipedia)
Wikimedia FoundationAssociated Figures and Events: Arthur Cecil Pigou, Lead sectionQuote, Associated Figures and Events: Arthur Cecil Pigou, Lead section
As a teacher and builder of the School of Economics at the University of Cambridge, he trained and influenced many Cambridge economists who went on to take chairs of economics around the world.
Principles of Economics
Alfred Marshall, Macmillan, 1890Associated Figures and Events: Economies of Scale
HET Website, The New School for Social Research: The Cambridge Neoclassicals
HET Website, The New School for Social ResearchIn Group: Marginalist Schools of the Late Nineteenth Century, Opening paragraphQuote, In Group: Marginalist Schools of the Late Nineteenth Century, Opening paragraph
The reign of Alfred Marshall at the University of Cambridge represented the consolidation of the Marginalist Revolution in the English-speaking world - but somewhat defanged, as the Marshallians preferred to integrate the works of Ricardo , Mill and other British Classical economists with the radical marginalism of Jevons , which was closer to the Continental tradition of the Lausanne and Austrian Schools.
Dissenting Readings (1 dissenting reading)
Debated With: Neoclassical Economics
Even Paul Samuelson himself, writing in the 1966 Quarterly Journal of Economics symposium that closed the controversy's technical phase, conceded that switching back to a technique at a very low interest rate that had seemed viable only at a very high one, reswitching, "involves more than esoteric difficulties" and abandoned his own earlier treatment of capital as a homogeneous, well-defined aggregate. But economist Edwin Burmeister later observed that most American economics graduate programs never taught the controversy at all and that macroeconomics textbooks went on discussing capital "as if it were a well-defined concept, which it is not," while other neoclassical economists, Christopher Bliss among them, redirected mainstream capital theory toward simpler one-good growth models rather than confronting the aggregation problem directly. The practical position that prevailed was not a rebuttal of reswitching's mathematics, which is conceded, but a judgment that it is empirically rare enough in real economies to leave aggregate production functions useful as a modeling simplification regardless.
A dissenting reading, from Edwin Burmeister and the mainstream macroeconomic textbook traditionWikipedia, Wikimedia Foundation
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