Technology is Not a Cause of Distribution: On the Unimportance of Capital Reversing, Reswitching, and Price to Capital Theory, and the Inconsequentiality of Capital Value, an Epi-Phenomenon

A novel parameterization of a two-good economic model, consumption good and capital good, enables straightforward resolution of various issues that have vexed the long Cambridge capital controversy, including the existence of single quantities for both capital quantity and capital value regardless of its composition from heterogeneous goods, the closure of price and value, capital reversing, and reswitching. Capital value is shown to be a consequence, not a cause, of distribution and choice of technique, hence an epi-phenomenon. Technology, the production function and its curvature, cannot determine distribution, because any equivalence between marginal factor productivities and factor compensation, wage and profit rates, is an accounting identity with no causal implications at all. The direction of causation of distribution is necessarily from distribution to choice of technique. Distribution itself must be determined by social forces other than technology.

Key words: JEL Classification: E11, E13, E14, E25, E40, O41