Luigi L. Pasinetti: An Intellectual Biography

Leading Scholar and System Builder of the Cambridge School of Economics

Mauro L. Baranzini, Amalia Mirante

• Publisher: Palgrave Macmillan
• Year: 2018
• Print ISBN: 9783319710716
• eBook ISBN: 9783319710723
• Topic: Economics
• Subtopic: Econometrics
• Index: Economics

Luigi L. Pasinetti (born 1930) is arguably the most influential of the second generation of the Cambridge Keynesian School of Economics, both because of his achievements and his early involvement with the direct pupils of John Maynard Keynes. This comprehensive intellectual biography traces his research from his early groundbreaking contribution in the field of structural economic dynamics to the 'Pasinetti Theorem'. With scientific outputs spanning more than six decades (1955–2017), Baranzini and Mirante analyse the impact of his research work and roles at Cambridge, the Catholic University of Milan and at the new University of Lugano. Pasinetti's whole scientific life has been driven by the desire to provide new frameworks to explain the mechanisms of modern economic systems, and this book assesses how far this has been achieved.

© The Author(s) 2018

Mauro L. Baranzini and Amalia MiranteLuigi L. Pasinetti: An Intellectual BiographyPalgrave Studies in the History of Economic Thoughthttps://doi.org/10.1007/978-3-319-71072-3_1

Begin Abstract

1. Introduction: Luigi L. Pasinetti—A Leading Scholar of the Second Generation of the Cambridge School of Keynesian Economics

Mauro L. Baranzini¹ and Amalia Mirante²

(1)

University of Lugano, Lugano, Switzerland

(2)

University of Applied Sciences of Southern Switzerland and University of Lugano, Lugano, Switzerland

If all this causes headaches for those nostalgic for the old-time parables of neoclassical writing, we must remind ourselves that scholars are not born to live an easy existence. We must respect, and appraise, the facts of life.

(Paul A. Samuelson, summing up the ‘Symposium on Paradoxes in Capital Theory’, Quarterly Journal of Economics, 1966)

End Abstract

1.1 Introduction

Luigi Pasinetti is with no doubt a leading scholar, probably the most influential, of the second generation of the Cambridge School of Keynesian Economics, both because of his achievements and for his early involvement with the direct pupils of John Maynard Keynes.¹ Pasinetti, with Geoff Harcourt² and a few others, belongs to that generation that was not directly involved with Keynes but that was in direct contact with his pupils. The first generation of the School includes, apart from John Maynard Keynes himself, in alphabetical order, his direct pupils Richard Kahn, Nicholas Kaldor, Joan Robinson and Piero Sraffa. To these we may add Richard Goodwin, who arrived in Cambridge in 1950, four years after Keynes’s death, as a pupil of Joseph Schumpeter. This impressive group of scholars started initially, at least to some degree, within the mainstream of their time. But soon ‘they all moved well and truly outside it, attempting to create […] a revolutionary alternative’.³

But Pasinetti has gone further, and may be considered a real ‘system-builder’. Basically, he was unsatisfied with the line of research initiated in Cambridge in the 1950s and much developed in the 1960s, concerning the disaggregated analysis of the economic system, carried out in particular by David Champernowne, Richard Goodwin, Piero Sraffa, Richard Stone (and Wassily Leontief in the United States). In his words:

Both the macro-dynamic growth models and input-output analysis impressed me at the time; but they left me profoundly dissatisfied when I tried to use them in order to understand what was going on in economic systems with a very high degree of dynamism, i.e. of technical progress. (Pasinetti 1981, p. xi)

This led Pasinetti in his 1962 Cambridge Ph.D. thesis to put forward his groundbreaking contribution in the field of ‘structural economic dynamics’. In few words, Pasinetti’s defines the conditions for an economic system to reach and maintain full labour employment and full capacity utilization when the system is subject to structural change caused by a differentiated and continuously changing technical progress of the productive sectors, and to a continuously changing composition of consumers’ demand (Engel’s law). In order to solve this dynamic multi-sector model, Pasinetti later on devised two new tools of analysis—the vertical integration approach and the vertically hyper-integration sectors—which has led a number of authors to rightly label him a ‘tool-maker’ as opposed to the term ‘tool-user’.

It is beyond doubt that when Pasinetti arrived at Gonville and Caius College in Cambridge in September 1956 and was matriculated as a graduate student, he was about to start a life-long association with the Cambridge School of Keynesian Economics. How did his ‘passional critical attitude’ start? Again, in his words:

It was Richard Goodwin who skillfully directed my very first timid steps into research work. And later, when I began to write a great deal, Richard Kahn very patiently read, criticised and commented every single note I submitted to him. Through Kahn I came in contact with that unique mixture of radicalism, wisdom and social concern that was the distinct mark of Keynes’s environment. Through Goodwin I was stimulated to open up my intellectual curiosity and interests towards tools of analysis that came from outside. At the same time, I also benefited from long discussions, and often from daily conversations, with Nicholas Kaldor, always bubbling with new ideas, Joan Robinson, always hard as a rock on her theoretical conceptions, and Piero Sraffa, the real master of all critics. It is from them that I learnt that passionate critical attitude which has been the conditio sine qua non for starting and pursuing an investigation of this type. (Pasinetti 1981, p. xiv)

One indication that Pasinetti since the mid-1980s has been widely considered a leading figure of the Cambridge School of Keynesian Economics was that he was asked to give the address at the memorial service of the late Lord Richard Kahn, delivered in the Chapel of King’s College in Cambridge, of which both had been official fellows, on October 21, 1989. He was also requested to write official biographies of Joan Robinson (1903–83), Piero Sraffa (1898–1983), Nicholas Kaldor (1908–86), Richard Kahn (1905–89), Richard Stone (1913–92) and Richard Goodwin (1913–96). Some of these personal and scientific biographies have been republished by Pasinetti and discussed in Pasinetti (2007, 2010). We may say that in this precious work Pasinetti is rivalled only by Geoff Harcourt, who for a long period has been responsible for the obituaries of The Economic Journal. On October 21, 1989, at the service in honour of Richard Kahn, Pasinetti stated that:

This is the third time, over a short span of years, that the congregation assembles in this Chapel to commemorate, and reflect upon the life of, a major contributor to that intellectual breakthrough that has become known in the world of economics and politics as ‘the Keynesian Revolution’. (Pasinetti 1989, p. 1)

Pasinetti was referring to the previous commemorations of Joan Robinson and Nicholas Kaldor; he went on to say that

If one adds that another memorial service, shortly after that of Joan Robinson, was held in Cambridge, though in another Chapel, for yet another close associate of Keynes, Piero Sraffa, one cannot resist the impression that today’s ceremony concludes a whole historical phase, almost an era, in the recent history of economic thought. This group of Cambridge economists has been protagonist of one of those extraordinary and unique events in the history of ideas that decisively pushed ahead and created a break with the past. (Pasinetti 1989, p. 1)

Pasinetti, as we shall see below, was one of the major contributors to the controversies on the measurement of technical progress, on capital theory, on income distribution and on 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 pointed out in Baranzini and Harcourt (1993, pp. 3–4), the battle was, as we shall see, won by Cambridge, England,⁴ but paradoxically the losing side was awarded, over the years, a number of Nobel Prizes (while significantly none of the above-mentioned Cambridge UK economists were awarded one, apart from Sir Richard Stone and, to a certain extent, Amartya K. Sen). Notwithstanding the strength and the high analytical rigour of such a group of thinkers, as time passed, the ‘Keynesian’ and later the ‘post-Keynesian’ schools have progressively lost ground (at least until the great crash of 2007 when all, at least for some time, became new Keynesians), while the marginalist school has taken over and, numerically at least, has become the dominant school in most of the Western world. In a certain sense the first ‘Keynesian Revolution’, led by John Maynard Keynes himself, Richard F. Kahn and Joan V. Robinson, had been able to ‘create a break with the past’ and to convert most of the leading economists and fellow politicians of the 1930s, 1940s and 1950s; but when the time was ripe for a continuation of the ‘Keynesian Programme’ to issues concerning the long run, the majority of economists did not follow. The ‘Keynesian Programme’ suffered a halt and its leading members found themselves besieged mainly in Cambridge, England. To this specific point, Pasinetti (2007, 2010) has recently returned.

Pasinetti has an extraordinary clarity of mind and vision, so he has been able to carry out a remarkably unified research programme, one which encompasses a great number of strands within its scope. Because of the clarity and simplicity of his vision, unsympathetic critics have sometimes taken him to task; and this is not surprising for a promoter of four scientific controversies. Among these critics, we may mention, in chronological order: Robert Solow (1959, 1970, 2009, 2012), Frank Hahn (1964), James Meade and Frank Hahn (1965), Maurice Allais (1965a), Robert Dorfman (1965), David Levhari (1965), James Meade (1966), Paul Samuelson and Franco Modigliani (1966a, b), Christopher Dougherty (1972), James Mirrlees and Nicholas Stern (1973), Domenico Mario Nuti (1974), Giuseppe Campa (1975), Joseph Stiglitz (1975), John Hicks and Samuel Hollander (1977), Christopher Bliss (1986, 2010), Florian Fleck and Claus-Michael Domenghino (1987, 1990), Paul Samuelson, indirectly (1991), Edmond Malinvaud (1995), William Baumol (2009, 2012) and Moshe Syrquin (2012). They have often confused clarity of vision, the focus on fundamental, central, conceptual points, with undue simplification.

1.2 A ‘Tool-Maker’⁵ Rather than a ‘Tool-User’

Pasinetti’s research programme, which spans over more than 60 years (since his first paper was published back in 1955), 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 the modern economic systems. This has been carried out with powerful tools of analysis, in particular the methods of ‘vertical integration’ and ‘hyper-integration’ (Pasinetti 1973, 1988), so allowing the understanding of a number of very complicated phenomena taking place in the modern economic systems, such as the unequal distribution and pace of technical progress and productivity, the non-linear variations in the composition of demand, the presence of a great variety of asymmetric behaviours, the complex role of institutions (although Pasinetti begins with a core model which is free from institutions) and the relevance of the distribution of income and wealth among factors of production and different socio-economic classes.

Pasinetti’s theory of vertical integration provides a precise analytical formulation to a way of representing the economic system that has been of critical importance for the development of dynamic analysis since the early applications of this method in Smith’s Wealth of Nations. An especially important feature of Pasinetti’s form...

Table of contents

• Cover
• Front Matter
• 1. Introduction: Luigi L. Pasinetti—A Leading Scholar of the Second Generation of the Cambridge School of Keynesian Economics
• Part I. Life and Research Activity of Luigi L. Pasinetti
• Part II. Pasinetti’s Main Research Lines
• Back Matter