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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 28, No. 3, pp.285-310
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2015
Received 06 Mar 2015 Revised 14 Jul 2015 Accepted 15 Jul 2015

Why Capital Controversies Occur Repeatedly: A Methodological Interpretation

Keehyun Hong
Professor, Department of Economics, Seoul National University, Tel: 82-2-880-6379, Fax: 82-2-886-4231 hongk@snu.ac.kr

JEL Classification: B13, B20, B41

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, whereas 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.

Keywords:

Capital controversies, Deduction vs. Induction, Individualist vs. Holistic

Acknowledgments

Financial support for this study was provided by the SNU Development Foundation. I am thankful to Professor Emeritus Seung Hoon Lee, former Director of Corporate Competitiveness Center (CCC) of SNU Institute of Economic Research, for helping me obtain financial support for this research. I am also grateful to Professor Kiichiro Yagi and Professor Karl Milford for giving me the opportunity to rethink this research topic during my stay at Kyoto University. I am also thankful to Professor Manseop Park of Korea University for the helpful comments on the earlier version of this study, especially for reminding me about recent literature, including Solow (2007), and to an anonymous referee for suggesting valuable comments to improve the paper. All errors are mine.

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