economics as faith (2)

This contribution to our series is from Cambridge University economist Joan Robinson (1903-1983).  In a 1954 article – “The Production Function and the Theory of Capital” – she attacked the neo-classical idea that physical capital can be measured and aggregated, touching off what came to be known as the ‘Cambridge controversy’ between Cambridge, England and Cambridge, Massachusetts. This extract is from a short, non-technical paper that she published the following year.

The number of robin-minutes worked per day on his territory rises from a minimum when the cock is alone to a maximum when the pair are feeding the fledglings. Assuming that technical conditions remain constant over the period, we can draw up a schedule showing how output (of grubs caught) per robin-minute varies with robin-minutes worked per day. The advantage to a robin of having a more fertile territory (in terms of grubs per square yard, allowing for infestation by birds of other species who do not recognise the robin’s territorial rights) shows itself in a shorter working day (for total needs are rigid) and more time for singing.

For human production, even of the simplest kind, the function cannot be expressed in work alone. To produce an output to-day, work has to be combined with pre-existing goods, and the valuation of these goods affects the technique of production. From a purely engineering point of view, a steam-hammer is a powerful instrument for cracking nuts and gold the best material for lining drain- pipes. ….

The fallacy at the root of the production function is the idea that it is possible to specify purely technical relations, not involving prices, in a human economy. Even Robinson Crusoe does not provide an example of an economy for which this idea is valid. He looks before and after and plans productive processes that take time to carry through. He cannot build himself a hut unless he has food to eat while he is unable to go fishing, and the price, from his point of view, of future shelter in terms of stocks of food comes into his calculation (along with his evaluation of the trouble involved) of whether it is worth his while to build the hut. Only the robins, living in a timeless present, satisfy the conditions required for the neo-classical analysis of production to make sense.

Joan Robinson, “The Production Function”, The Economic Journal, 65:257 (March 1955), pp. 67-71.

I have come to agree that production functions are useless – or worse – as an aid to understanding the organisation of productive activity, but for a simpler and more obvious reason, one that is not mentioned by Joan Robinson. Joan Robinson’s earlier paper was published in The Review of Economic Studies, 21:2 (1954), pp. 81-106. According to Google Scholar, the 1954 paper has been cited 388 times, whereas the more accessible and brief 1955 paper has been cited only 14 times.

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