Why Capital Controversies Occur Repeatedly: A Methodological Interpretation

Abstract

This study explains the causes of capital controversies that occurred thrice in economic history, namely, at the turn of the 20th century, in the 1930s, and in the 1960s. Recurrence of controversies seeks answers from various theoretical frameworks. Differences between the Classical and Neoclassical schools are used to explain such controversies. The former explains long-period position using cost-of-production theory, hereas the latter explains short-run equilibrium using demand-and-supply theory. Results reveal neglected

aspects of the controversies, i.e., methodological positioning. Hence, controversies result from differences in the methodologies of scientific approaches, i.e., deductionist vs. inductionist and/or individualist vs. holistic.