After the Cambridge Controversies: Reflections Old and New

Perfect foresight is a consequence of applying the Pontryagin Maximum Principle to the analysis of an intertemporal general equilibrium. For this reason, the capital theory controversy ended in an intellectual impasse. The critique of mainstream theory largely ignored the perfect foresight entailments of intertemporal equilibrium analysis, while its defenders, with notable exceptions, too often failed to acknowledge this implication of the technique of dynamic programming. From this standpoint, the long debate over the existence or non-existence of an aggregate production function is secondary. This leaves open the theoretical question of how to proceed with an analysis of the actual dynamics of capitalist development. The critique of mainstream capital theory remains a ‘prelude’, caught up in an ever deeper analysis of the implications of alternative representations of the technique of production. The first part of this paper deals with the question of how perfect foresight came to infect mainstream theory; the second part turns to a consideration of a weakness in the dual representation of the technique of production in the simplest Sraffian framework. Neither part addresses the bigger questions of how to analyze the process of uneven development under the capitalist rules of the game