, zyxwvu History of Political Economy zy 21:2 zy 0 zyxw 1989 by Duke University Press CCC 00 18-2702/89/$1.50 Prices, capital, and the one-commodity model in neoclassical and classical theories Avi J. Cohen Such simple models or parables do, I think, have considerable heuristic value in giving insights into the fundamentals of interest theory in all its com- plexities. -P. SAMUELSON (1962, 193) zy I. Ini‘roduction There are two major price conceptions in the history of economic thought: the neoclassical conception of price as a scarcity index and the classical conception of price as an index of the difficulty of production. Each con- ception is associated with robust results that hold without exception within the respective one-commodity models that are the subject of this paper: Samuelson’s surrogate production function and the neo-Ricardian corn model. These one-commodity models are heuristically important because in a wide range of more general models, capital-related exceptions arise for each price conception. Neoclassicals face the exceptions of reswitching and capital reversal. Modem descendents of classical political economy, the neo-Ricardians, face exceptions to the inverse wage-rate of profits relation. While numerous papers have debated the significance of these excep- tions, this article does not attempt to judge whether the exceptions are significant enough to invalidate the theories involved. The article focuses instead on a simple prior question. For each price conception, why do exceptions occur and what is it about the one-commodity model that elim- Correspondence may be addressed to the author, Dept. of Economics, York University, zy 4700 Keele Street, Toronto, Ontario CANADA M3J 1 P3. 1. Stigler (1958) assesses the significance of the exceptions to Ricardo’s labour-theory- of-value-version of the classical price conception while Cohen (1987b) provides a parallel assessment of the neoclassical price conception. Major assessments of the Cambridge cap- ital controversies, including the role of the neo-Ricardians, appear in Blaug (1975), Bur- meister (1980), Hahn (1975, 1982), and Har-court (1972, 1975, 1982). See Cohen (1984a) for a methodological assessment of why there-is no agreement on significance. On the controversy over Sraffa’s standard commodity and the inverse wage-rate of profits relation, see A. Levine (1974, 1975, 1977), Burmeister (1975, 1977), zyx and Eatwell (1975, 1977). 231