A bridge over troubled water: A Structural Political Economy of vertical integration

Abstract

This article proposes a new interpretation of the logical process of vertical integration, exploring its socio-political dimension. The first step is to show that models of industrial interdependencies (in the Leontief and Sraffa formulations) and vertically integrated models (in the Pasinetti formulation) imply profoundly different views on production, distribution, and socio-political conflicts. The next step is to focus on the process of vertical integration in itself—on its being a ‘bridge’ between such different views. Because analytically equivalent representations of economic structures have such different socio-political implications, economic structures cannot be seen as univocally determining economic interests or conflicts in society. This result opens up a new field for structural analysis: studying how the formation of interests in society is influenced, but not determined, by economic structures. The article suggests a route to address the socio-political dimension of economic structures, which is largely left on the background by structural economic analysis.