Luigi L. Pasinetti (1930—)
Mauro Baranzini and Pier Luigi Porta
Introduction
Luigi Pasinetti was born on 12 September 1930 in the village of Zanica (south of Bergamo, Northern Italy). He was the eldest son of a modest family. His father, Giovanni Angelo, was employed as a disegnatore edile, or architect, with a local construction firm, which was forced to close down during the Second World War. Luigi’s father being thus unemployed, the family had to rely on the income provided by his mother, Romilda Arzuffi, who was the midwife of the small village and surrounding area. A few months after losing his job, Giovanni Angelo decided to set up a small construction firm. The business was far from thriving, and the family barely managed to survive. Life was hard, compounded by food rationing. Unfortunately, Luigi’s mother died suddenly in April 1949, aged 49. At that stage, Luigi was 18 and was just about to complete high school and earn the Diploma di Ragioniere, a sort of A-level focusing on accountancy and business studies.
In spite of a successful career in school, it was not easy to find a job. Only towards the end of 1949 was Luigi offered employment as a clerk in the book
M. Baranzini (*)
Professor of Economics, University of Lugano, Switzerland e-mail: This email address is being protected from spam bots, you need Javascript enabled to view it
P.L. Porta
Formerly Professor of Economics, University of Milano-Bicocca, Italy © The Editor(s) (if applicable) and The Author(s) 2017
R.A. Cord (ed.), The Palgrave Companion to Cambridge Economics,
DOI 10.1057/978-1-137-41233-1_44
keeping division of a manufacturing firm based in Milan. He was happy to cease to be a financial burden on his family: not much more than that, though, as his wage was barely enough to cover his food and lodging. After a few months of hard work, the headquarters of his firm moved close to the seat of the Catholic University, where the Economics Faculty gave evening classes for working students. During one of his first visits there, Pasinetti dared to enter one of the large amphitheatre-shaped classrooms at the end of the second quadrangle where Arnaldo Masotti, a mathematician of the Polytechnic of Milan, was explaining the concept of a limit in front of a large class. Luigi was impressed by this lecture as well as by the topic, and decided that that was the sort of thing he wanted to do. The degree at the Catholic University could be obtained either by day classes or by evening classes: he chose the latter in order to be able to continue his work to support himself through university. In 1953-1954, he completed his dissertation on ‘Econometric Models and their Application to the Trade Cycle Analysis’, under the supervision of Francesco Vito and Siro Lombardini. At that stage he quit his job and got down to working full-time on a research scholarship. In those years he got in touch with Beniamino Andreatta, Pasquale Saraceno, Romano Prodi, and many others. He was strongly encouraged to go abroad for research. His first destination, in 1956, was Cambridge, UK, where he was a research student and completed his PhD in 1962, with one year at Harvard (1957-1958) and two years at Nuffield College, Oxford (1959-1961). At present, Luigi Pasinetti is rightly called the ‘senior’ representative of the Cambridge PostKeynesian School of Economics, both because of his acknowledged achievements and for his early involvement with the pupils of John Maynard Keynes. He today shares this title with Geoffrey Harcourt, who is one year his junior.
While he was a Research Fellow at Nuffield, Pasinetti was appointed, thanks to the influence of Richard Kahn and Nicholas Kaldor, from 1 October 1961, at Cambridge as an Assistant Lecturer in the Faculty of Economics and Politics. Soon after, he was made a University Lecturer and from 1973 a Reader in the same Faculty, being the second scholar of Italian origin, after Piero Sraffa, to reach that rank. In the summer of 1976, he resigned his position in Cambridge and returned, mainly for family reasons, to Italy. At the Catholic University of Milan, his alma mater, where he is now Emeritus, he took up the Chair of Economic Analysis and was elected Dean of the Faculty of Economics. Through the years, Pasinetti has taught in many universities around the world and in the 1990s he successfully supported the foundation of the University of Lugano, the first university to be established in the Italian-speaking part of the Swiss Federation. He was elected President of the Italian Economic Society for 1986-1989. Pasinetti was also the first President of the European Society for the History of Economic Thought in 1996. He has been active in the International Economic Association, of which he is honorary President. Pasinetti is a Fellow of the Lincei Academy in Rome and of the Lombard Institute in Milan.
Pasinetti’s soaring international fame set in after moving to Cambridge in 1956. At the same time he also gained access to the top economic journals of that period. His 1960 paper on Ricardian economics remains a classic for its penetrating insights. The author exhibits from the start his typically clear and perceptive style. Pasinetti’s own research is, first and foremost, an inquiry into the theoretical tools for a dynamic theory of economic growth and income distribution. His Cambridge PhD thesis on A Multi-Sector Model of Economic Growth’ soon turned into a well-known piece of analysis (Pasinetti 1965), which he would develop later on in his 1981 and 1993 volumes for Cambridge University Press. His whole work, in a distinctive Cambridge fashion, is explicitly rooted in classical economic analysis; in other words, he has always felt a deep attachment to the Cambridge tradition. For about three decades he was closely associated with Richard Kahn, Nicholas Kaldor, Joan Robinson, Richard Goodwin, Richard Stone, and Piero Sraffa.
During the 1960s Pasinetti’s theoretical hits were outstanding and surprising. His 1962 theorem on the Cambridge equation—a long-run equilibrium relationship between the rate of profits and the rate of growth, usually written as P/K = n/sc, where P is the total profit, Kis the capital stock of the system, n is the constant rate of growth, and sc is the exogenously given propensity to save of the ‘pure’ capitalists—would soon become famous and give rise to a vast literature. Pasinetti’s creative insight provided a correction and an intriguing generalization of the Kaldor model of growth and distribution. Neoclassical economists, such as Paul Samuelson and Franco Modigliani, chose to label his theorem the Pasinetti Paradox, since it struck at the heart of their own theory. Thereafter it has become customary to speak of the Kaldor-Pasinetti model of growth and distribution. We shall discuss in detail below the various strands of analysis that this theorem has originated.
A few years later, in 1965, one of Samuelson’s pupils, David Levhari, published a paper claiming to show that some of the paradoxes in capital theory— that had emerged in the literature and had been brought into full light by Sraffas famous 1960 book, Production of Commodities by Means of Commodities—only had limited validity. It was left to Pasinetti to prove conclusively that there were no grounds for such an attack on Sraffa and on the Cambridge view. Pasinetti’s paper was first presented in 1965 in Rome at the First World Congress of the Econometric Society. It would then open a special issue of the Quarterly Journal of Economics (see Pasinetti 1966), where Levhari’s theorem was acknowledged to be false by the author and by Samuelson himself. It was an impressive showdown which honours the economics profession and has since given rise to a full range of insights in the theory of capital (see Pasinetti 1969).
Pasinetti’s scientific contributions focus on two main issues: (1) the critique of the neoclassical system; and (2) the completion of the Keynesian system and its extension to distribution, growth, and accumulation. Pasinetti’s most significant contribution on both accounts is probably to be found in his 1981 volume on Structural Change and Economic Growth. It is one of the outstanding achievements in economic dynamics at the turn of the millennium. Along with the dissatisfaction with aggregate dynamic models and with the deceiving character of a number of disaggregated models (e.g. von Neumann’s model), it is the historical fact of the widespread unevenness of development processes—Pasinetti himself argues—that provides the drift to structural dynamics. In the present state of economic growth theory, Pasinetti’s contribution has a special place. His system provides the only theory focusing on the conditions for an economic system to reach and maintain full employment and full-capacity utilization in the long run when the system is subject to structural change. Here again, classical economic analysis provides the foundation to Pasinetti’s framework. His scholarly approach to classical economics of course encompasses Marx, although Pasinetti has no interest in establishing any canon or dogma on value and distribution. Rather, he aims at building on the open and innovative side of the classical tradition. His scheme of structural economic dynamics focuses on technical progress and human learning and develops a groundbreaking contribution to growth theory.
Pasinetti’s research programme spans more than half a century (19592015). It has followed a coherent pattern, first outlining the weaknesses of the marginalist or neoclassical model, and then laying step by step the foundations of the reconstruction, on mixed classical-pure’ Keynesian bases, of a ‘more general theory’ in order to identify, explain, and analytically recompose the mechanisms and dynamics of modern economic systems. This has been carried out by the use of powerful tools of analysis, in particular the method of vertical integration (Pasinetti 1973) which has opened the field to the understanding of a number of very complicated phenomena, such as the unequal distribution and pace of technical progress, non-linear variations in the composition of demand, the presence of a great variety of types of asymmetric behaviour, the complex role of institutions, and the relevance of the distribution of income and wealth among factors of production and different socio-economic classes.
