Luigi Pasinetti: A System-Builder

Pasinetti was one of the major contributors to the controversies on capital theory, income distribution, and the theory of value that were fought out between Cambridge, England, and Cambridge, Massachusetts, during the ‘raging’ 1950s,

1960s, and 1970s, with ‘upshots’ in the 1980s and 1990s and even into the twenty-first century. As a less known episode, he also started in the late 1950s a controversy with Robert Solow on the concepts and measures of changes in productivity. All of these controversies were secured by Cambridge, England. It is sometimes argued that—probably as a compensatory move—the losing American side was awarded, over the years, a number of Nobel Prizes for Economics, while the Cambridge, England, Nobel Prize winners (Sir Richard Stone, Amartya Sen, James Meade, and Sir James Mirrlees) were mainly at the margins of the controversies. Despite the strength and the high analytical rigour of those on the English side, as time passed, the ‘Keynesians’ and later the ‘Neo-Keynesian’ schools have progressively lost ground (at least until the financial crash of 2007 when all embraced some form of New Keynesianism). At the same time, the marginal- ist, or neoclassical, school has taken over: numerically, at least, they have become the dominant school in most of the Western world. In a certain sense the first ‘Keynesian revolution’, led by John Maynard Keynes himself and his pupils of the so-called Circus, had been able to ‘create a break with the past’ and successfully blaze a trail for most of the leading British and American economists and politicians of the 1930s, 1940s, and 1950s. However, when the time was ripe to extend the ‘Keynesian Programme’ to cover issues of the long run, the majority of economists did not follow. The Keynesian revolution seemed to have come to a halt, and its leading members found themselves besieged mainly in Cambridge, England, as well as elsewhere. The so-called neoclassical synthesis had, in the meantime, swept the field (see Pasinetti 2007).

Pasinetti has a distinct clarity of mind and of vision. He has been able to carry out a remarkably unified research programme encompassing a great number of strands. He is one of the best examples of straight arguing in a typically Ricardian style. A friend once wrote of Ricardo at the time that with him ‘the understanding is improved without the temper being ever tried in the discussion’ (Maria Edgeworth quoted in Ricardo 1955: 169). The same can be said of Pasinetti. Much as it happened to Ricardo, however, straightness of mind may sound provocative, especially to vested interests. Unsympathetic critics have frequently taken Pasinetti to task. Among these were eminent economists such as Paul Samuelson, Franco Modigliani, Robert Solow, James Tobin, James Meade, Joseph Stiglitz, Nicholas Stern, and Christopher Bliss.

At the time of writing (April 2015), Pasinetti’s scientific output consisted of 130-odd papers mainly published in international journals; to these must be added four groundbreaking volumes published by Cambridge University Press (see references) and eight other volumes and seven edited volumes with the best presses and usually translated into several languages. His scientific programme may be subdivided into seven separate but strongly interrelated lines of research (see also Porta 2007). They represent major contributions in the fields of the theory of structural change, growth, value, income distribution, capital accumulation, and technological change. More precisely, as pointed out in Baranzini and Harcourt (1993):

1. On the measurement of productivity changes, that is, the first ‘two Cambridges controversy’.
2. On Ricardo and classical political economy, in particular the Ricardian model of growth and distribution.
3. The second ‘two Cambridges controversy’: on profit determination, income and wealth distribution, and capital accumulation.
4. The third ‘two Cambridges controversy’, on capital theory.
5. On structural dynamics and vertical integration, that is, on the formulation of the concept of vertically integrated sectors and their relation to Sraffa’s subsystems.
6. On the pure labour theory of value.
7. On the roots of the present financial crisis, that is, the Modigliani—Miller Theorem.

We shall now consider these issues within the context of the Cambridge School of Economics as a whole.