Structural economic dynamics and technical progress in a pure labour economy

Abstract

This paper attempts a methodological appraisal of Luigi Pasinetti's recent contribution to the analysis of structural economic dynamics. After briefly reviewing the content of Pasinetti's volume, the author presents a general consideration on the method employed. The relationship between Pasinetti's approach to the analysis of economic growth and structural change on the one hand, and neoclassical theory, on the other, is then briefly considered. Finally, the model of a ‘pure labour’ economy is assessed, and the procedure of abstraction to be used in investigating structural dynamics is discussed. In particular, it is argued that Pasinetti's method is based upon a realist approach, and that attention is focused upon general principles rather than empirical regularities derived from observation. In this connection, Smith's and Ricardo's treatments of a ‘pure labour’ economy are considered, and it is argued that they are based upon alternative simplifying assumptions: exclusion of capital goods in Smith's case, uniform ratios of capital to labour in Ricardo's case. The author maintains that a Ricardian-type pure labour economy may enhance the plausibility of Pasinetti's approach to structural dynamics, and facilitate possible extensions.