What divided Modigliani and Miller from Durand was at root whether market processes, in particular arbitrage, were strong enough to overcome the effects of institutional restrictions. Modigliani and Miller held that they were. Durand did not believe that, and he published an extensive critique of Modigliani and Miller's claim of the irrelevance of capital structure. He did not deny the logic of their basic reasoning as noted above, he had himself explored the path they took but he claimed that their analysis held only in a "limited theoretical context." The situation of what Durand called "real corporations" (1959, p. 640) was quite different, and the market they had to interact with was far from Modigliani and Miller's assumption of perfection.

Donald MacKenzie, An Engine, Not a Camera, loc. 193