Luigi Pasinetti Research Articles

Luigi Pasinetti: an appreciation

Abstract This article presents an appreciation of the lifetime contributions of Luigi Pasinetti to economics. In a career spanning 70 years, Pasinetti operated at the frontiers of economic theory and analysis. The article covers his contributions to the economics of growth, distribution, capital, structural change, production and fiscal policy. It also provides an account of his intellectual formation and a checklist of his published works.

Pasinetti and the EU Fiscal Governance Framework: A Debate That Will Not Go Away

Luigi Pasinetti voiced his objections to the Stability and Growth Pact (SGP) at its very inception, in the late 1990s. The SGP has by now been in existence for almost one-quarter of a century. Its historical trajectory has proven its critics right, while its repeated revisions over time have increased its complexity and ineffectiveness to the point where the European Commission embarked on a process of overhaul, ending in a new EU fiscal governance framework. In the present article, we argue that Pasinetti’s objections remain valid today, twenty-five years after he exposed them in a series of articles. The new version of the Stability and Growth Pact remains focused on debt reduction, ignores the role of money and of finance and keeps fiscal policy apart from the rest of the economy. The chances that it will succeed where its previous versions failed appear slim.

Solow's attempt to revive the concept of ‘social rate of return’ and Pasinetti's critique

AbstractThe paper deals with Robert Solow's attempt to revive the concept of the ‘social rate of return’ and Luigi Pasinetti's critique of it. By means of this concept Solow thought to be able to circumnavigate the capital theoretical attack on the marginalist theory by claiming that the rate of interest is an accurate measure of, and can be seen as being determined by, the ‘social rate of return’. His analysis focused on a switch‐point between two techniques, in which, alas, the rate of interest is already fixed. Pasinetti objected that, by construction, Solow established the opposite of what he thought he had done. Since in a switch‐point also the prices of capital goods are known, the ‘quantity of capital’ employed is fixed: it depends on the rate of interest and therefore cannot be taken as given independently of it and the corresponding system of prices.

Luigi Pasinetti and the making of classical-Keynesian political economy

The paper is made up of two sections. The first contains some preliminary remarks to elaborate a classical-Keynesian system of political economy: closing the gap between Keynes and Sraffa, and the close connections existing between Ricardo, Sraffa and Keynes. The second section starts with a presentation of the social process of production, followed by considering the relationship between this process and the problems of value and distribution. Subsequently, the determination of output and employment in a monetary production economy is dealt with. Finally, the crucial importance of the Pasinetti transformation for linking classical and Keynesian elements of analysis is put to the fore. In the concluding remarks classical-Keynesian political economy is set into a wider context.

Luigi Pasinetti 1930–2023

Journal Article LUIGI PASINETTI 1930–2023 Get access Murray Milgate, Murray Milgate Queens’ College, University of Cambridge Search for other works by this author on: Oxford Academic Google Scholar John Eatwell, John Eatwell Queens’ College, University of Cambridge Search for other works by this author on: Oxford Academic Google Scholar Giancarlo de Vivo Giancarlo de Vivo Università degli Studi di Napoli Search for other works by this author on: Oxford Academic Google Scholar Contributions to Political Economy, bzad008, https://doi.org/10.1093/cpe/bzad008 Published: 02 May 2023 Article history Accepted: 06 April 2022 Published: 02 May 2023

Luigi Pasinetti on growth and structural change in international economic relations

This paper covers Luigi Pasinetti's contribution to the analysis of international economic relations as contained in his 'Structural Change and Economic Growth' (1981) and 'Structural Economic Dynamics' (1993). While appreciating the important contribution he makes in this area, the paper also critically examines some aspects of his analysis and suggests further developments.

Donald Edward Moggridge (1943–2021)

Donald Edward Moggridge (1943–2021)

A self-financed enterprise with employee stockholding and voice

This paper has a twofold purpose: focusing on a self-financed, regularly growing enterprise, that may be viewed as the typical entity of what Luigi Pasinetti would call a natural economic system, to explore both the distributive possibilities between stockholders and employees consistent with this enterprise model and come to suggest, on the ground of macroeconomic and social cohesion implications, that the stockholding corresponding to capital accumulation should reasonably belong to capital owners and employees.

A Structural Economic Dynamics Approach to ‘Stagnationist’ Unbalanced Growth

ABSTRACT Our inquiry offers an analysis of ‘stagnationist’ unbalanced growth through making use of a Structural Economic Dynamic (SED) approach. What we intend to establish are some of the advantages associated with treating William Baumol’s unbalanced growth model as a particular case of Luigi Pasinetti’s framework. One such advantage involves challenging assumptions behind the model by scrutinising the conditions under which Baumol’s result is valid. Another advantage consists of extending the analysis to an arbitrary number of sectors to consider quasi-proportional growth and full dynamics – cases considered by Pasinetti. As suggested by Nicholas Oulton and drawing from the SED framework, we then expand the model to consider intermediate inputs, through using the concept of vertical integration. This leads us to confirm the remark advanced by Oulton; namely, that in the presence of intermediate goods, the aggregate growth rate of productivity might not slow down sufficiently to converge towards the lower productivity growth sector, as advocated by Baumol. In sum, the point we seek to establish is that the ‘stagnationist’ outcome depends on an intricate relation between supply and demand. The multi-sectoral approach that considers intermediate inputs suggests that a disaggregated analysis of well-established results can indeed offer novel insights.

François Quesnay, Luigi Pasinetti and the historical contexts of economic theory

In 2002, Professor Luigi L. Pasinetti gave a keynote address at the Raffaele Mattioli Foundation and Library in honour of their acquisition of a rare third edition of François Quesnay’s Tableau Économique. This lecture subsequently appeared as a chapter in Italian in the conference volume edited by Giancarlo De Vivo in 2009. In honour of Luigi Pasinetti’s 90th birthday, Professor Coffman has offered the first English translation of Pasinetti’s essay on Quesnay, which she also introduces by reflecting on its rhetorical strategy, argumentative structure, and Pasinetti’s use of Quesnay to critique mainstream neoclassical economics. She ends her introduction by drawing attention to the place of the Tableau within contemporary debates about taxation and the optimal scale and capacities of the state.

Germany and China Have Savings Gluts, the USA Is a Sump: So What?

A “global saving glut” was invented by Ben Bernanke in 2005 as a label for positive net lending (imports exceeding exports) to the American economy by the rest of the world. This trading situation had already emerged around 1980 and led to the Plaza Accord in 1985. One common explanation is based on the Mundell–Fleming IS/LM/BP model. But this model cannot be valid, since the “BP” equation is not independent of “IS.” Other champions of this saving glut hypothesis rely on loanable funds theory, which is institutionally inadequate. More plausible analyses of the persistent trade imbalance can be derived from a two-country IS/LM set-up devised by Wynne Godley, a Kaleckian description of the political economy of East Asia and the United States, and dissection of the terms of trade due to W. Arthur Lewis and Luigi Pasinetti.

Germany and China Have Savings Gluts, the USA Is a Sump: So What?

A “global saving glut” was invented by Ben Bernanke in 2005 as a label for positive net lending (imports exceeding exports) to the American economy by the rest of the world. This trading situation had already emerged around 1980, and led to the Plaza Accord in 1985. One common explanation is based on the Mundell-Fleming IS/LM/BP model. But this model cannot be valid, since the “BP” equation is not independent of “IS.” Other champions of this saving glut hypothesis rely on loanable funds theory, which is institutionally inadequate. More plausible analyses of the persistent trade imbalance can be derived from a two-country IS/LM set-up devised by Wynne Godley, a Kaleckian description of the political economy of East Asia and the United States, and dissection of the terms of trade due to W. Arthur Lewis and Luigi Pasinetti.

MODERN STRUCTURAL ECONOMIC DYNAMICS IN THE SHORT AND THE LONG RUN

During several decades and until the end of the 1990s, the theory of structural economic dynamics has been absent in the field of so-called mainstream economic analysis. The literature included only either empirically oriented contributions or developments that were related to so-called critical theoretical approaches of structural change. At the end of the twentieth century, however, mainstream economic theorists changed this situation and began to investigate the field of structural dynamics, often using the Solovian theory of economic growth. During the last two decades, they contributed to change substantially the state of the theory of structural change. This contribution first provides an assessment of the advances realized by these theorists. It then confronts these advances with the so-called alternative or critical theoretical approaches of structural dynamics—namely, Luigi Pasinetti’s contribution and ‘evolutionary’ approaches—in order to provide a more complete picture of structural dynamics in the short and the long run.

Learning, innovation, increasing returns and resource creation: Luigi Pasinetti’s ‘original sin’ of, and call for a post-classical, economics

We draw on the seminal contribution to economics by Luigi Pasinetti, respond to his call to reverse what he saw as the ‘original sin’ of classical economists exacerbated by neoclassical economists, namely the assumption of non-increasing returns to scale, and move towards building a post-classical economics. We outline the contours of a post-classical framework that draws on key themes and contributions from Pasinetti on learning, technical progress, increasing returns, resource creation, trade and catching up, and contributions from within and without economics that are in line with, lend support to and challenge it. We advocate the pressing need and opportune timing for a concerted effort to revitalise ideas from the once vibrant ‘Cambridge School’ of economics and help develop a fresh, more pluralist and inclusive post-classical economics that cuts across divides and opens up opportunities for a less ‘dismal science’.

Capitalists, Workers and Thomas Piketty's Capital in the 21st Century

ABSTRACTThis paper interprets Piketty's influential work through the lens of structuralist macroeconomic theory, which is a synthesis of the classical, Marxian and Keynesian traditions. It shows that Piketty's key inequality, (the rate of profit is greater than the rate of growth) measures the influence of capitalist consumption on capital accumulation in the context of a growth model with capitalists and workers in the tradition of Nicholas Kaldor and Luigi Pasinetti. The paper shows how in the structuralist model the connections Piketty makes between growth and inequality become more transparent and less confusing than they are in the neoclassical theory he resorts to using. The paper also examines his data with emphasis on two central paradoxes of neoliberalism: with all the upward redistribution of income, there is surprisingly little concentration of the wealth distribution; and with a higher profit rate, there has been no corresponding increase in growth. The hypothesis suggested by structuralist growth theory is that neoliberal capitalism has transformed Marx's ‘accumulate, accumulate' into ‘consume, consume.' The political-economic implications of this hypothesis are significant.

Luigi Pasinetti and the Political Economy of Growth and Distribution

Luigi Pasinetti and the Political Economy of Growth and Distribution

Wealth Concentration, Income Distribution, and Alternatives for the USA

US household wealth concentration is not likely to decline in response to fiscal interventions alone. Creation of an independent public wealth fund could lead to greater equality. Similarly, once-off tax/transfer packages or wage increases will not reduce income inequality significantly; on-going wage increases in excess of productivity growth would be needed. These results come from the accounting in a simulation model based on national income and financial data. The theory behind the model borrows from ideas that originated in Cambridge UK (especially from Luigi Pasinetti and Richard Goodwin).

Innovation, Resource Creation, Learning and Catching-Up: Building on Pasinetti to Revitalize Cambridge Economics

We draw on the seminal contribution to economics by Luigi Pasinetti. We respond to his clarion call to reverse what he called the “original sin” of classical economists, (the assumption of non-increasing returns to scale) exacerbated later by neo-classical economists and move towards developing a post-classical economics. We outline the contours of a post-classical framework that draws on key themes and contributions from Pasinetti on learning, technical progress, increasing returns, resource creation, trade and catching up, and contributions from within and without Economics that are in line with, lend support to, and challenge it. We advocate the pressing need and opportune timing for a concerted effort to revitalize ideas from the once vibrant “Cambridge School” of economics, and help develop a fresh, more pluralist and inclusive post-classical economics that cuts across divides and opens up new research avenues.

On the Cambridge, England, Critique of the Marginal Productivity Theory of Distribution

The Cambridge, England, critique of the marginal productivity theory of distribution is hard to disentangle from the related theories and developments that occurred alongside it. These include value theory, price theory, capital theory, growth theory and methodology. Indeed, in the event, I found it impossible to disentangle them and I argue in the concluding section that not being able to do so is no bad thing anyway. The economists associated with the critique – Krishna Bharadwaj, Pierangelo Garegnani, Richard Kahn, Nicholas Kaldor, Luigi Pasinetti, Joan Robinson, Piero Sraffa – were simultaneously developing their own theories of distribution to replace marginal productivity. Their theories were embodied in theories of growth and reflected the methodology associated with the critique and their own developments.

'Heinz' Harcourt's Collaborations: Over 57 Varieties

Harcourt’s experience with 57 collaborators has been both happenstance and deterministic. His record contains an impressive list of interactions that include two types of collaborators: present or past graduate students, and internal or external colleagues. Harcourt’s adventures in collaboration have involved personalities in the post-Keynesian world including Joan Robinson, Piero Sraffa, Paolo Sylos-Labini, John Hicks, Maurice Dobb and Luigi Pasinetti.