A Different World

Suppose that all equipment used in production were privately owned by individuals. Being fairly well-off, I might have a house with some sort of blast furnace in the back yard. Production in this imaginary world would be performed entirely by self-employed artisans.

One can allow some people in this world to perform no work. Some of these artisans would be lending or borrowing specific equipment from others. So any specific piece of capital equipment would have a rental price. If I happened to own equipment that could command high enough rents, I would be able to lend all my equipment out and live off these rents.

It seems to me that inasmuch as a neoclassical theory of value exists that is logically consistent in its assumptions, it is a map of the above sort of society. It is not even an attempt to describe a society in which one can loan out money at interest or buy and sell shares in firms that themselves own capital equipment. Given the lack of a stock market in this imaginary world, I do not see the point of introducing wage labor into the model either. One would still not end up with a model of a capitalist economy.

References

• Joan Robinson (1962) Essays in the Theory of Economic Growth, Macmillan
• Joan Robinson (1973) Economic Heresies: Some Old-Fashioned Questions in Economic Theory, Basic Books