What Are Your Assumptions?

Neoclassical economic theory, correctly understood, imposes no restrictions on the direction of real Wicksell effects. Paul Samuelson's student Edwin Burmeister writes:

"Imposing some set of conditions on the technology T(.) should be sufficient to assure that the real Wicksell effect is always negative. Such conditions would be of interest - especially if they could be empirically tested - since they would validate the quantitative conclusions derived from the one-good models often used in macroeconomics without any theoretical justification for ignoring aggregation problems... Unfortunately, no set of such sufficient conditions is known, but the literature on capital aggregation suggests they would impose severe restrictions on the technology." -- Edwin Burmeister (1987). "Wicksell Effects", The New Palgrave: A Dictionary of Economics (edited by John Eatwell, Murray Milgate, and Peter Newman)

So, from the point of view of the M.I.T. side of the Cambridge Capital Controversy, economists should either (1) Develop economic theory compatible with real Wicksell effects going in any direction, or (2) Recognize that we don't know special-case assumptions that are consistent with methodological individualism and that restrict real Wicksell effects to be always negative.