Von Neumann, the Classical Economists and Arrow-Debreu

Kurz, Heinz D. and Salvadori, Neri (2004) Von Neumann, the Classical Economists and Arrow-Debreu. Acta Oeconomica, 54 (1). pp. 39-62. ISSN 0001-6373

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Abstract

The paper compares the von Neumann model with the approach to the theory of value and distribution of the classical economists on the one hand and that of the neoclassical economists on the other. It is shown that all salient features of the von Neumann model are classical in spirit: its long-period method; its analytical structure revolving around the concept of the surplus product, the latter's appropriation in the form of interest and its use for the purpose of accumulation; and its constitutive aspects. While the von Neumann model focuses attention exclusively on the problem of reproducibility, in neoclassical theory the problem of scarcity assumes centre stage of the analysis. The paper concludes with a remark on a proposition by Arrow and Debreu in their seminal 1954 paper. They contended that their assumption, according to which each and every agent is possessed of an endowment of goods such that he or she can survive under any circumstances whatsoever plays the same role as von Neumann's assumption that each and every commodity enters or exits each and every process of production. It is argued that this proposition cannot be sustained.

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