| Abstract: | This dissertation investigates the criticism of those in Cambridge, England, to neoclassical theory as currently taught in the U.S. Neoclassical theory teaches that there is a direct relation between the wage-rate of interest ratio and the capital-labor ratio for linearly homogeneous inputs, capital and labor, in competitive markets. As the capital-labor ratio increases, the permanently sustainable income-stream increases. The Cambridge Criticism challenges this on the grounds that the interest rate, which is unique only for one price system, must enter the valuation of heterogeneous capital-goods, and this may cause the wage-rate of interest ratio to be inversely related to the capital-labor ratio over some ranges of the production function. Therefore, as the capital-labor ratio increase, the permanently sustainable income-stream may decrease. The dissertation consists of five chapters which discuss the following topics. ... |
|---|