The concept of capital in the context of Cambridge controversies

Since Classical and Marxist economists, capital and distribution have been a vital part of the literature, especially when Ricardo and Marx, in opposing ideologies, emphasized labor as an explanation of value, has been an essential factor in the emergence of the Neoclassical Theory, which is called the marginal revolution. Claiming that the payment to be made to labor and capital in the measure of marginal efficiencies would provide a fair distribution, Neoclassical Theory was criticized, especially since mid-1950, due to inconsistency in the way capital is addressed. With Sraffa (1960), the critics took a significant turn, and there were debates about the inconsistency of the Neoclassical Theory between Cambridge University in the UK and Cambridge-based MIT in the USA, which ultimately referred to as Cambridge Capital Controversies in the literature. These debates are mainly related to the fact that Neoclassical Theory deals with the capital of heterogeneous commodities as a single magnitude, such as labor or land. Cambridge Capital Controversies, which were sparked by Sraffa (1960)'s view that the price of commodities will change as distribution changes and that heterogeneous capital commodities cannot be taken as a single magnitude are still ongoing with the responses from the neoclassical front and counter-responses from the Cambridge front in the UK. In this study, the Classical, Marxist, Neoclassical, and Sraffian distribution theories are included in order to first address the theoretical framework in a holistic context; then, the final part of the study refers to theoretical and empirical details of the Cambridge Capital Controversies. Both theoretical and empirical literature were examined, and Cambridge Capital Controversies concluded to be a duel that did not win. However, this does not impede some economic implications. It is concluded that the theoretical and empirical flaws of the views that defend the neoclassical theory should be clearly revealed and that economic policies should not be shaped by taking into account the one-way implications of Neoclassical Theory that apply to a single-commodity world.