Value, Distribution and Capital Essays in honour of Pierangelo Garegnani Edited by Gary Mongiovi and Fabio Petri London and New York Routledge Frontiers of Political Economy 1 Equilibrium Versus Understanding Towards the rehumanization of economics within social theory Mark Addleson 2 Evolution, Order and Complexity Edited by Elias L.Khalil and Kenneth E. Boulding 3 Interactions in Political Economy Malvern after ten years Edited by Steven Pressman 4 The End of Economics Michael Perelman 5 Probability in Economics Omar F.Hamouda and Robin Rowley 6 Capital Controversy, Post Keynesian Economics and the History of Economics Essays in honour of Geoff Harcourt, volume one Edited by Philip Arestis, Gabriel Palma and Malcolm Sawyer 7 Markets, Unemployment and Economic Policy Essays in honour of Geoff Harcourt, volume two Edited by Philip Arestis, Gabriel Palma and Malcolm Sawyer 8 Social Economy The logic of capitalist development Clark Everting 9 New Keynesian Economics/Post Keynesian Alternatives Edited by Roy J.Rotheim 10 The Representative Agent in Macroeconomics James E.Hartley 11 Borderlands of Economics Essays in honour of Daniel R.Fusfeld Edited by Nahid Aslanbeigui and Young Back Choi 12 Value, Distribution and Capital Essays in Honour of Pierangelo Garegnani Edited by Gary Mongiovi and Fabio Petri 13 The Economics of Science Methodology and Epistemology as if Economics Really Mattered James R.Wible 14 Competitiveness, Localised Learning and Regional Development Specialization and prosperity in small open economies Peter Maskell, Heikki Eskelinen, Ingjaldur Hannibalsson, Anders Malmberg and Eirik Vatne 15 Labour Market Theory A constructive reassessment Ben J.Fine 16 Women and European Employment Jill Rubery, Mark Smith, Colette Pagan, Damian Grimshaw 17 Explorations in Economic Methodology From Lakatos to empirical philosophy of science Roger Backhouse 18 Subjectivity in Political Economy Essays on wanting and choosing David P.Levine 19 The Political Economy of Middle East Peace The impact of competing Arab and Israeli trade Edited by J.W.Wright, Jnr 20 The Active Consumer Novelty and surprise in consumer choice Edited by Marina Bianchi 21 Subjectivism and Economic Analysis Essays in Memory of Ludwig Lachmann Edited by Roger Koppl and Gary Mongiovi 22 Themes in Post-Keynesian Economics Essays in honour of Geoff Harcourt, volume three Edited by Peter Kriesler and Claudia Sardoni 23 The Dynamics of Technological Knowledge Cristiano Antonelli 24 The Political Economy of Diet, Health and Food Policy Ben J.Fine First published 1999 by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2005. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to http://www.ebookstore.tandf.co.uk/.” Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Editorial material and selection © 1999 Gary Mongiovi and Fabio Petri Individual chapters © 1999 the individual contributors All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Value, distribution, and capital: essays in honour of Pierangelo Garegnani/edited by Gary Mongiovi and Fabio Petri. Includes bibliographical references and index. 1.Value. 2. Distribution (Economic theory). 3. Capital. 4. Classical school of economics. 5. Garegnani, Pierangelo. I. Garegnani, Pierangelo. II. Mongiovi, Gary. III. Petri, Fabio, 1949–. HB201. V354 1999 330.15′3–dc21 98–29696 ISBN 0-203-98246-0 Master e-book ISBN ISBN 0-415-14277-6 (Print Edition) This collection of essays was presented to Pierangelo Garegnani on the occasion of his 65th birthday, by economists who have great admiration for his contributions to our discipline. Many of us have learned from him what it means to do serious theoretical work, and we warmly thank him for that. These essays honour Professor Garegnani’s tireless efforts to carry forward the research programme of the classical economists and Marx, and above all his unwavering commitment to the highest scientific standards in economics. This Festschrift is not a celebration of Professor Garegnani’s retirement, however, because in Italy university professors need not retire before the age of 72. Professor Garegnani continues to write, publish and teach. We eagerly await his papers to come. In the meantime, we hope that these essays will contribute to the progress of economic science; for that is the sort of homage he will most appreciate. G.M. F.P. Contents List of contributors xii 1 Introduction 1 GARY MONGIOVI 15 PART I The critique of neoclassical theory 2 Professor Hahn on the ‘neo-Ricardian’ criticism of neoclassical economics 16 FABIO PETRI 3 Classical and neoclassical short-run prices: a comparative analysis of their 60 intended empirical content ROBERTO CICCONE 4 Some deficiencies of Walrasian intertemporal general equilibrium 82 JOHN EATWELL AND MURRAY MILGATE 94 PART II Classical political economy and its relation to marginalism 5 From utilitarianism to marginal utility 95 ALESSANDRO RONCAGLIA 6 Use value and the ‘commercial knowledge of commodities’: reflections on 109 Aristotle, Savary and the Classics BERTRAM SCHEFOLD 7 From classical rent theory to marginal productivity theory: the works of 130 F.B.W.Hermann and J.H.von Thünen HEINZ D.KURZ 8 Social accounting with Adam Smith 148 FERNANDO VIANELLO 9 The notion of the subsistence wage with pre-Smithian classical political 163 economy: some reflections inspired by the surplus approach TONY ASPROMOURGOS AND PETER GROENEWEGEN 10 Ricardo and the wages fund 184 ANTONELLA STIRATI 11 The special thing I learned from Sraffa 210 PAUL A.SAMUELSON 219 PART III Accumulation and technical change in the light of the surplus approach 12 New and old neoclassical growth theory: a critical assessment 220 SERGIO CESARATTO 13 Wicksell after Sraffa: ‘capital arbitrage’ and ‘normal’ rates of growth, 243 interest and profits EDWARD J.NELL 269 PART IV Issues in the theory of production 14 Transferable machines with uniform efficiency paths 270 NERI SALVADORI 15 Vertical integration and ‘reduction to dated quantities of labour’ 286 IAN STEEDMAN 291 PART V The surplus approach and economic policy 16 High public debt and inflation: on the ‘disciplinary’ view of European 292 Monetary Union MASSIMO PIVETTI 17 The government sector in the post-Keynesian theory of growth and personal 308 distribution CARLO PANICO Appendix: Pierangelo Garegnani’s publications 322 Name index 326 Subject index 332 Contributors Tony Aspromourgos, University of Sydney, Australia Sergio Cesaratto, Università di Roma ‘La Sapienza’, Italy Roberto Ciccone, Terza Università di Roma, Italy John Eatwell, University of Cambridge, England Peter Groenewegen, University of Sydney, Australia Heinz D.Kurz, Universität Graz, Austria Murray Milgate, University of Cambridge, England Gary Mongiovi, St John’s University, New York, USA Edward J.Nell, New School for Social Research, New York, USA Carlo Panico, Università di Napoli, Italy Fabio Petri, Università di Siena, Italy Massimo Pivetti, Università di Roma ‘La Sapienza’, Italy Alessandro Roncaglia, Università di Roma ‘La Sapienza’, Italy Neri Salvadori, Università di Pisa, Italy Paul A.Samuelson, Massachusetts Institute of Technology, Cambridge, USA Bertram Schefold, Johann Wolfgang Goethe-Universität, Frankfurt am Main, Germany Ian Steedman, Manchester Metropolitan University, England Antonella Stirati, Università di Siena, Italy Fernando Vianello, Università di Roma ‘La Sapienza’, Italy 1 Introduction Gary Mongiovi Pierangelo Garegnani’s work has been central to the modern revival of the classical political economy tradition pioneered by Smith, Ricardo and Marx. That tradition was ‘submerged and forgotten’ (Sraffa 1960:v) in the wake of the marginalist theory of supply and demand that rose to dominance in the last decades of the nineteenth century. But in the late 1920s Piero Sraffa initiated a project to clarify and reconstruct the classical surplus approach. The project has been carried forward, by Sraffa, Garegnani and others, including many of the contributors to this Festschrift, on several fronts. The first of these involved the development of a critique of the orthodox theory. Sraffa’s penetrating criticisms of the Marshallian theory of supply (1925, 1926) opened the first cracks in the marginalist edifice. In the 1930s Keynes’s General Theory (1936) raised troubling questions about the marginalist theory’s ability to deal with unemployment, and perhaps more importantly hinted at the existence of flaws in that theory’s treatment of distribution. Then a series of important contributions by Joan Robinson (1953), Sraffa (1960) and Garegnani (1970), among others, exposed the capital-theoretic defects of the marginalist framework. The capital critique was one of several factors that encouraged the shift within orthodox theory away from models that treat the endowment of capital as a value aggregate in favour of intertemporal and temporary general equilibrium models that specify it as a vector of commodities (Milgate 1979). This reformulation