Economic Istues, VoL 4, Part 2, Seplember 1999

Economic Theory and Technical Progress
Luigi Pasinettir
This paper was given as the Economic lssaes Lecture to theRoyal Economic Society Annual Conference, Nottingham, England, March 1999

applications, on a mass scale, of the new

Ahsfiacl

technologies that had been discovered and to
the social conditions that made suchapplications possiblc. Yet technical progress

F,conomists' recent outburst of interest inlechnical progress follows upon a widespreadfeeling of inadequacy of current ecohomic
theory. This paper traces the origin of thisinadeq acy back lo

has remained exfraneous to the core of
economic theory.
The picture has changed since the end ofWorld War II. The economic liierature of the
post-war period, at first slowly but, then at anincreasing pace- especia\ over the past two
decades, has given the impression of an
explosion of concem for, and interest in, thelhe historicalcircumstances that led an influential group ofEnglish economisls in l8l5 to put forward the'law of diminishing returns' to land

cultivation, jointly with lhe lheory of rent. It
shows how technical progress, though notdenied in principle, was eliminated byassumptionfor analytical reasons. That choi ce

economic consequences of changes intechnology, wi$ particular attention beiag
given io the spread of innovations and the- il atgues - arose from historicaldissemination of knowledge. Thisciramstdnces specifc to a pafiicular country
in a particular time. Yet il has influenced thedevelopmenl of economic theory evet since.
Later on, neoclassical economists have further
exacerbated the fficts of that initial choice.
The paper argues in favour o/ going back tolhe origin and reversing the Classical choice.

unprecedented interest in technical progress isof course fully justifred, if somewhat belated.
It has happened under the strong, persistentimpact of external macroscopic evenls. Facts,

rather than a spon0aneous development of
economic theory, have forced economists toopen up their analyses to the widospread
effects of technical change. Yet there is no
disguising the apparent incongruity between
the new concem for technical progress tlat
has been imposed by extemal events andcontemporary economic theory, as at prese[tit stands. To begin with, most of the new

L lntroductinn: the roots of the problem
For alnost two centudes, since Adarn Smith's
Weallh of Nations (1776), only
rare,
exoeptional cases has technical progressinplayed any role in economic theory.
This is by itself astonishing. The 'Industrial
Revoluiion', that started in England roughly at
the time of publication of Adam Smith's
masterpiece, was precisely due to the practicalcontributions on technical progress originated,and continue to develop, on tracks that arequite outside the established body of-l-L Pa;inetti
economic theory. At the same time, thosecontributions that have insisted on taking
mainstream economics as their starting point
have remained limited in scope (mainly inmacro-eoonomic terms) and have turned out
to be extraordinarily conplicated.
Quite plainly, the economic theory which
we have inherited from both Classical andNeoclassical (and also, by the way, ftom
Marxian) economics has revealed itself to beunsuited to the investigation of phenomena
connected with technical progress.
In the present paper, I contend that theroots of the appalling inadequacy of modem
eoonomic theory to investigate technicalprogress lie ina peculiarly perverse

cumulation of misjudgments made by the
economic profession at crucialjunctures in thedevelopment of economic theory when, foranalltical reasons, a choice seemed necessary
between equally possible, but alternative, lines
of investigation. The first of such choises wasmade in 1815, in England. The 'corn

question' provided the historical context at atime when Adam Smith's theoreticalframework had to be opened up to moreanallticallygrounded investigations. A second
choice took place (and on this occasion on alarger scale) at the end of the nineteenth
century. It had the effect of furth€r
exacerbating the consequences of the previous
choice.
If the 1815 choice was a kind of'original sin'of economic theory, it seems unlikely that wewill be able to rectify it, unless we revisit
reassess and understand tle circumstances of
the time.
2. A rmurkable Febuary 1815

The year 1815 - besides being the start oflong-lasting changes in the history of theWestem world - has also become famous tohistorians of economic thought for the
publication in London of five pamphlets: two

by Malthus, dre others by West, Torrens andRicardo. All of them appeared in theremarkably shod period of three weeks, inFebruary 1815. According to Piero Sraffa's(1951, p.5) careful recon$truction, thechronological succession was as follows:
Maltllurs, Inquiry inlo Renl, 3 FebruarY
1815,

Malthrs, Grounds of an OPinion, l0
February 1815,[West], Es,ray on the Application of Capitalto Land, 13 February 1815,

Tonens, Essay on the Extemal Corn Trade,
24 February 1815,

Ricardo, Essay on Profrt, 24 February
1815.

These five ess{rys are often cited as a major
simultaneous discovery inexampleof

economic theory. They all have in common
the differential (sometimes, improperly, called'Ricardian') theory of rent - bodr in its
extensive and (with the exception of Torrens)

in its intensive version - and the 'law ofdininishing retums' to land cultivation.
The theory of rent has been taken as thesouroe of the marginal prinoiple, whichsurvived Classical economics in the theory of
productio4 and income distribution, and, by
being interpreted in a different form, wasextended and applied tn all factors of
production (not only to land). The principle ofdininishing retums has become one of thoseideas that have inlluenced econonic theory
ever since.
3. No coinci.dcnce
It is worth stressing at the outset that, in spiteof appearances, the publication of the essays
in those three weeks was not due to ohance.

Economic Issues, Vol. 4, Part 2, September 1999

As all authors explicitly state, theireven adds a preliminary advertisement to his
first pamphlet warning the readers that events'have induced me to hasten its appearance. It
is the duty of those who have any means ofconhibuting !o the public slock of knowledge
not only to do so, but to do it at the time
when it is most likely to be useful' (Malthus

pamphlets were published in anticipation of,and as a contribution to, the discussions on
the Com Bill, which was before the House ofCommons. The Parliamentary debate wasiabled to begin on February 17, l8lJ. The

new Corn Law was actually passed on March15.

l8l5a, p.i). Even Torrens, who was

There can be few doubts as to the crucial
relevance of tade in com - for a count5r such

publishing a 350-page book, which must havebeen in progress for some lime, expresses in

his Preface 'the hope of contributing

as Gr€at Britain during the second decade of

the nineteenth century. The Industrial

something to the right decision of a question,..

Revolution was under way, population was
growing at an unprecedented rate and com
was the major item in food consumption of
the working class.
The price of corn, over the previous few
decades, had increased enormously (and sowhich has come before the legislatrre';adding that 'the vital interest of the wholecommunity, rendered him not unwilling todepart from... his original design and toconjoin controversial detail with geneml

fluchrations. To give an idea of order ofmagnitrde, lhe average price of com, which'reading lately the reports of the com
committees', and that 'a correctunderstanding... of the corn question has
induced [him] to hazard this publication
before the meeting of Parliament' (West,1815, p.l). We know that Ricardo, on hisparl made a great effort, especially given his
admitted great difficulties in expressing
himself in writing. to bring out his essay ontime. He wrote it as a reply to, and in openpolemics with, Malthus, hoping to bringdisquisition' (Torrens, 1815, p. xv).
West begins by stating that he had been

had rents), though with substantial

was 45 shillings per Winchester quarter in the
1770s, rose to 82 shillings. in the 1800-1809

decade and peaked at approximately 150
shillings in l8l2! But in 1813, owing to ahuge harvest, it fell dramatically to about 70
shillings and continued to fall in 1814, owing
to exp€ctations conceming the consequencesof the end of the war.' Quite understandably,
the landlords were alanned and were cryingout for import protection.
In the previous years, the high price of corn
and increased rents had rendered the landlords

support to tle cause of unconditional free
trade (in opposition to Malthus's qualified
recommendation for protection).

So in Febmary l 8l5 there was noaccidental coincidence in discovery. Rather,
we witness a determined effort on the part of
all authors to take part in a cont€mporary
debate with the intention of inlluencing a
Parliamenary decision reputed to be of great

an unpopular class- Both the House ofCommons and the House of Lords had
appointed Select Committees to investigate theproblem of dre high price of com and theirreports which had become the subject ofheated discussions were before Parliament.
The five essays listed above are part of that

imDortance 0o the nation.

debate. The authors admit great haste andapologise for inperfections of exposition, due
to the necessity of quick publication. Malthus-3-

L Pasinetti

tlays after Malthus's widelypublicised Inqui ry
on Rent - that the last seven pages on rent

4. The beginning of Ricardian economics
The imminence of an important parliamentary
debate thus explains the publication of themight have been added at the last moment,
after reading Malthus's essay, at the end of analnost ready pamphlet basically devoted todiminishing retums.
It is also conceivable that something similar

five pamphlets in February 1815. But

simultaneous publication does not necessarily
imply any sudden discovery. Their authors
had been thinking about the problems underdiscussion for some time - pedraps for manymight have happened to Torrens's essay,
where a theory of differential ren! in theextensive version only (as he considers, inyears. Malthus - certainly a most authoritative

writer - thought it e4edient to convey hisarguments in two separate pamphlets. The
first, Inquiry on Rent, is a typically academic
essay, centred on presenting a theory of rent.
He states explicitly that he is using notes,
which had been the basis of his lectures at
East India College. In the essay, the theory ofrent is the central subjec! while the idea ofsuccession, fust-rate quality land, second-ratequality land, third-rate quality land, etc.) only
appears in the last chapter (Torrens, 1815, pp.

315-325).

Tle case of Ricardo's paper is lessuncertain. As he had mainly been abusinessman, he was, in a sense, a novice todiscussions of economic theory. Up to 1813,
his letlers and writing had been concernedwith currency questions. But in 1813 and1814 he had passionately begun to apply his
mind to th€ relation between the growth ofcapial and the rate of profrts. It is in thisconnection, i.e. with reference, and only wilh

diminishing retums enters as a consequenceofa dynamic application of the theory of rent toa situation in which land is in fixed supplyisgrowing. The sesond
and population
pamphlet, by contras! is an open statement ofpolicy. Malthus draws on arguments in yet

anotler of his previous pamphlets,'Observations on the Effects of the Cornreference, !o profits that he had been applying

Laws...', published in Spring 1814, end
openly staGs his position, giving his 'gmrmds
of an opinion' in favour of a partial restriction
on the importation of corn.
By contrast, West's pamphlet focuses on
Ite law of diminishing rcl rns: 'a principle ofpolitical economy - he writes - which
occurred to me some years ago', and which
he found 'oonfirmed by many of thewitnesses... on reading lately the reports ofthe com committees' (West, p. 1). In a
55-page essay, the theory of differential rentcones only in the last 7 pages. The expositionof the theory of rent is clear, but the focus of
the essay is on diminishing rehrrns. Sralfa(1951, p. 6) staies that West's presentation of
the theory of rent was independent of

the principle of diminishing returns to land
cultivation. Sraffa (1951, p.7) is convinced
that, in this form, he had applied the principle
as early as l8l0 or 18ll (in his iy'oles an
Bentham). But rent had not ent€red hisargum€nts before February, 1815. Quite
clearly, when he read Malthus's Inquiry on
lRerrl, he must have been, so !o speak, struckby light. He read both of Malthus's essays

voraciously. According to Sraffa'sreconstruction (Sraffa 1951, p.5), he had readthen by February 6, and by February 13,
respectively. One can imagine how Ricardo

could see all parts of his work over theprevious years at last coming together. The
theory of differential rent must have appeared
to him as the final missing piece that heneeded to conolete his mental scheme-

Malthus's. Yet, it does not seem inconceivable
to me - as West's essay was published l0-4-Economic Issues, yol. 4, Part 2, Seplember 1999

and Torrens's by March 14, according to
Sraffa's reconstruction; see Srafla 1951, p.5).
In them he only found confrrmation of his
own ideas. As the whole picture had, so to
speak, clicked together in his mind, he openly

leads him to the sad conviction that there is atendenc)' towa.rds a stationary state. And it is
argue
this eventualif that leads him
powerfully and passionately for free external
Fade of com, as the only way io avoid anotherwise gloomy course of €vents in which
the growth of population, the increase of rent,

acknowledged Malthus's contribution on rent.
(When, later, he read West's, he also added
West 0o Malthus as deserving recognition ofpriority on the theory of rent - see the Preface

could only lead, in the long run, to the miseryof a stationary state.

He read the other papers too, but after the
publication of his essay (West's by March 9,

to his Principles\.1
If one reads all these essays from the
distance of alrnost two centuries, one is struckby how remarkably Ricardo's essay towers
over those of the other authors. Malthus's
essays ar€ ably laid out and finely argued, buttley concentrate on rent. West's andTorrens's essals contdin competent arguments
on lhe issues at slake; yet with their concern
for diminishing returns and for the com trade
they are cleady dated. Ricardo's essay is quite
different.
really is remarkable for theItcompleteness of the undedying theoreticalframework from which his arguments aredeveloped. He begins with rent, which isimmediately linked to profits; he continues
with the growth of population and of capital,and links these to diminishing rehrrns . He
succeeds in bringing the pieces together in atothe fall of the rate profrts, and thecompression of wages towards subsistence
The importance of Ricardo's essay isunquestionable- It was the beginning of an
intense correspondence with contemporary
economists, who urged him to be moreexhaustive. From the intention of writing asecond edition of that essa!' sprang his majorwork, the Principles ofPolitical Economy andTmation (1817\.

The 1815 essay rwas the beginning ofRicardian economics.
5, Impact on economic theory
Quite apart from the beginning of Ricardian
economics, which was an event in its own
right, there can be no doubt that the impact of
those frve pamphlets on the development ofpolitical economy was enormous.
Ever since, the theory of differential rent
has remained a milestone in the history of

economic analysis. Adam Smith had been
confused, and even conaadictory, on thesubject of rent. By 1815, all influential
economists became convinced that politicalcomplete, logically consistent theoreticalstructure, in which the various elements
appear as coherent parts of a whole scheme ofa working economy. Though the details were
to become much clearer only two years laterin his Principles (1817), one can see here
already a theory of production, a theory ofincome distribution, a theory of relative prices(agriculture versus manufactures) and mostnotably a dynamic theory conceming tle
movement through time of a capitalist

technological reasons, have different€conomy.'productivities and yield differential gains.

It is this remarkably complete model that

economy had at last been enriched by a soundtheory of rent. No longer did rent appear as asort of 'monopoly price', as Adam Smith had
called it, but a necessary consequence of thefact that high-quality land is scarce, and thatin general the given natural resources, forL Pasinetti

expense of cultivating soils of very
different degrees of fertility may be reduced
io a perfect equality. (Anderson, 1777, p.

It must be pointed out, however, that thistheory of rent was not original. James
Anderson, in his work, Inquiry into the natureof the Corn Laws with a view to lhe new Com

J/Ul

BiIl for Scotland, published ia 1777, hanarticipated it, and very clearly so.
His farnous passages have been reprinted in

It is interesting io note that this passage wasmany places: for example, in McCulloch's

part of a criticism that Anderson directed at
Adam Smith. Yet he did not €xplicitly point

edition of the Wealth of Nations (McCulloch,out that Smith was inconect, ard Smith (who1828, p. 45) and inmust have seen Anderson's criticism, as
Caruran perspicaciously points out - see
Cannan p. 221) did not correct his theory.
James Anderson's remarkable theoretical

Cannaa (1903, pp.

371-372). They are too long to be reproduced

here. It may however be interesting to
reproduce yet another passage of James
Anderson's on rent, from another of his

contribution was thus simply missed.
The theory of differential rent remained
dormant, only to be re-discovered and hailed
as a great contribution in 1815, when it waspres€nted in conjunction with the law ofworks: Observations on the means of excitinga spirit ofNational lndzasrry, also published in1777:diminishing returns.
An important point to stress is that JamesIn every country there are various soils,
which are endued with different degrees offertility; and hence it must happen that thefarmer who cultivates the most fertile ofAnderson had always been a strong opponentof the idea of diminishing retums tocultivation of land! His opposition was notthese can afford to bring his corn to market

based on theoretical arguments; it came frompersonal experience. He was a farmer and an

at a much lower price than others who
cultivate poorer fields. But if the com thatgrows on these fertile spots is not sufficient
fully to supply the narket alone, the pricewill naturally be raised in that market tosuch a height as to indennify others for the
expense of cultivating poorer soils. The

experienced agriculturalist. Like all farners,
he was in favour of protection, but in his casethis was based on the grounds of an unusualargument. He thought drat protection would
indeed force inferior lands into cultivation,
but these inferior lands would eventually - bycareful tending - be made as productive as theother (originally more fertile) lands. He wasa strong believer in agriculfiral progress andfarmer- however. who cultivates the richspots will be able to sell his com at thesame rate in the market widr those who
oocupy poorer fields; he will, therefore,
receive much more than the intrinsic value
for the corn he rears. Many persons will,
therefore, be desirous of obtaining
possession of these fertile fields, and will
be contont to give a certain premium for an
exclusive privilege to cultivate drem; which
will be greater or smaller according to themore or less fert'rlity of the soil. It is thispremium which constitutes what we now
call ren! a mediurn by means of which theindefinite increasing returns! The point isworth mentioning as it shows, incidentally,that the theory of differential rent and the lawof diminishing returns are separate theories.
Neither implies the otler.
When Malthus published his Esmy on the

Principle of Population (1798), James

Anderson was among his shongest critics (seeAnderson, 1801). Malthus had presented his

Principle of Population on a rather weak4-

Economic Issues, Vol. 4, Parl 2, September 1999

theor€tical ground, namely on the ground that
there is an inconsistency befixeen a naturalgeometric progression of population growth

had been a higher price of corn and higher
rents.
To see diminishing returns in this process

and a factual aritlmetic progression of thewas simply a rationalisation of historicalmeans of subsistence. It was precisely inevents - actually of an historical circumstance,

replying to Anderson's criticisms, in thesecond €dition of his Principle of Population(1803), that Malthus developed,s in a rather
casual way, an argument that implied theprinciple of diminishing returns, but appliedin reverse.6 It look some time before the idea
crystallised clearly in his mind.
The same must have happened to West,which was tlpical of a specifrc country(England) and of a specific period of time(the late l8th - early l9th centuries),
Incidentally, but very significantly, it mustalso be noticed that, from a purely anal'.ticalpoint of view, the principle of diminishingreturns suited Malthus's theory of population
very well. In the place of the eadier weakerarguments of geometric versus arit}metic
progressions, a ssientific principle could bepresented which allowed Malthus to assert
drat, as the number of people increases, it istrue that 'a pair of hands comes with every
mouth', but while the new moutls require as
much food as the old, the new hands produce
less and less. Ricardo promptly tumed this
into a powerful argument against protection,
Free trade in corn would stop extension of

Torrens and Ricardo, though at various stages
and times, before 1815.

In any case, it is only with the publicationof the five February 1815 pamphlets drat the
Law of diminishing retums to land cultivation
becomes a clear, explicidy stacd principle ofpolitical economy. Again we might ask: why
was it that this conviction took hold precisely

in February, l8l5 ? As explained above, thefive pamphlets were all published in February

1815 in order to contribute to, and tocultivation to less productive lands and hence

influence, a decision that was about to beaken by the House of Commons. Now we
may look at the other side of the coin. All
these authors had read, very carefully, theReports of the Committees of Inquiry on thecom question. From these Reports, one cansee very clearly what had happened inEngland in the previous decades. The

divert production potential to manufactures,
where all agreed that diminishing returns
would not apply. Factual historical evidense
and analJtical convenience seemed to go handin hand.
The theory of differential rent - which had
been ignored as long as it had been proposed(by James Anderson) within a sadc
framework - becarne a powerful ana$cal
tool when it was applied within a dynamic
scheme, in which the extension of cultivationof land is coupled with diminishing retums toscale. For the emerging science of PoliticalIndustrial Revolution had been associated with
an urprecedented grouth of popr ation (infact, more than in a geomehic progressionl).
This, coupled with the Napoleonic wars andihe inevitable difficulties of importation ofcom, had caused a rapid increase in the
demaad for food, which had led !o an
expansion of agricultural production, throughthe passing of a succession of enclosure acts,in order to extend cultivation to forme y

Economy this marked a nrrning point.
6. The 'low' (or pseudo-law?) of diminishingtetumsBut how acflrate, or how reliable, or how
meaningful is a 'law' of diminishing retums?

uncultivated lands. The obvious consequences-7-

L Pasinetti

population advance in the proper proportions'
He obtains in logical succession:
lower-fertility lands brought into cultivation,higher rents, a low€r rate of profits, a higher

One has a pretty good idea of what is meant.

by a law in physics. The law of gravitation,for example, is a universal law expressed bya formula that describes how bodies fall in
ideal conditions of no atlrition. Of the law ofdiminishing returns, no one would say that it
expresses how an economy behaves in any
ideal condition. It rather expresses how an

price of corn, a movement towards thegloomy conditions of a stationary state, withwages compressed to subsistence, profrts attheir minimum and rents at their hiehesl He

economy moves in hypothetical conditions,
The hlpothesis is that technology does notconcludes:

It follows then, that the inter€st of thechange, or changes at a speed that is
insufficient to prevent a fall in productivity,
as production is expanded.
In fact, not one of the authors we havelandlord is always opposed to the interest of
every otler class of the community.-. Higlt

rent and low profits, for they invariably
accompary each other, ought never io be
the subject of complaint, if they are theeffect of the natural course of things,(Ricardo 1815, p, 20).

considered asserts that diminishing retums
represents a universal principle. To begin

with, they present it only for agricultural
production. This is a crucially important
point. They all imply that, in manufacturing
production, the opposite is the case, namely

The relevant point to note is that technicalprogress in manufactures, however
pronounced it may he, does not make theslightest difference to Ricardo's conclusions.
It is the process of production of thetlat productivity is increasing. Moreover, theyadmii that lechnical progress goes on inagricufture as well; but not at a suflicient pace
to offset the fall in productivity.
Ricardo is the most logically consistent ofagricultural good that acts as a botdeneck.
The way out, for Ricardo, is free externalthem all. He is always carefirl nol to deny that'improvements might take place inagricultue' fu. 11); but at the same time he isconvinced that they would not proceed at asuffrciently speedy pace. Therefore (quite

trade. If corn is imported, the country will
specialise in manufactures, and the process of

diminishing retums (as it only affects
agriculture) will be brought to a halt! The

remarkably ftom an analltical point of view),
he explicitly states that, for clarity, he leaves
them aside. He cus short all hesitations: 'We
will, however, suppose drat no improvements
tale place in agriculture, and that capital andpopulation advance in the proper proportion'(p. 12). In this way, the absence of technicalprogress in agriculture becomes an explicit
assumptionl Once this assumption is granted,
even the simple two-commodiry version ofRicardo's model (with an agricultural goodargument is incontrovertible; but it stands onthe crucial hlpotlesis of no (or in any caseinsufficient) technical progress in agriculture.
This can hardly be said to be a 'universal

conclusions logically follow, as 'capital and

Unlike the theory of rent, the law oflaw', In spite of what som€ interested

wihesses might have said in their testimonies
at the Com Comrnittees, many - and James
Anderson was one of them - would claim that
it was not even the ease in England at thattime. Cannan (1903 p. 152) remarks thatdiminishing retums may be seen as denied
even in some stat€m€nts of the Chairman of
dre Committee (Sir Henry Parnell).

and a manufactured good) is by itself
sulficient? to show how all of Ricardo's-8-Economic Issues, Vol. 4, Parl 2, Seplember 1999

diminishing retums in agriculture did not
attain general acceptance, even at the time it
was presented. Notable examples of a strong
critique are those by Thornas Chalmers(1832), in England, and by H.C. Carey(1837), in the United States. Chalmers, in his
Political Economy, argued at length that 'The
doctrine or discovery... promulgated by Sir
Edward West and Mr. Malthus... that the landof greatest fertiliry was first occupied... is notaccordant with historical truth' (Chalmers.
1832, chap. I, pp. 2-6). Carcy, in Political
Economy (1831), insisted on pointing out thatprecisely the way in which the law ofdiminishing returns was illustrated by bothWest and Ricardo, namely by the process ofcultivation starting on the most fertile land in
a newly settled country, was contradicted byhistorical facts. Certainly that was not tle way

his presentation of the law in the subsequentediiions of his Principles. In examining the
succession of John Stuart Mill's many
qualifications and exceptions, Edwin Cannanpoinis out that Mill ends up by admitting asurprisingly high number of exceptions, andhe is baffled:... we should be at a loss to conceive why

Mill should be at the trouble of developinga law which: 1) does not operale in thevery ear\ date of the history of society; 2)
is liable to temporary supersessions; and 3)

has been made head against by anantagonizing principle, namely, the progressof civilization, throughout the whole known
history of England. (Cannan, 1903, p. 177).

But what kind of 'law' can this be? No
wonder Cannan (1903) ends up by calling it'the pseudo-scientific law of diminishing
retums' (p. 181), pointing out that it is basedin which things happened in the United States.
Yet, in spite of criticism and opposition, thelaw of diminishing rehrrns immediately
became one of the cornerstones of 19th
century mainstream political economy. James
Mill, in his Elements of Political Etonomy(1821) expounds ihe law of diminishing
rehrms as a general de, neglecting even tomention the possibility of new discoveries or
improvenents. And when his son, John StuartMill, wrote what came to be considered as thesynthesis of Classical economic theory - his
Principles of Political Economy (1848) - hepresented the 'law' in a chapter headed 'Of
the Law of the Increase of Production fromon'pseudo-historical characteristics' fu - 175).
Yet it became generally accepted. One of its
effects was to generate unjustified pessimism
concerning the future of industrial economies-

Interestingly enough, this uniustified
pessimism, which characterised the political

economy that came oul

of

the

Malthus-West-Torrens-Ricardopamphlets,wasbetter perceived by external observers than by
the intemal praclitioners of the new science."
Thomas Carlyle, the Scottish poet and writer,
was quick to notice a contrast b€tween theactually vast possibilities of progress and thegloomy conclusions of the economic

Land', waming that 'This general law of
agricultural industry is the most important
proposiiion in political economy. Were theprofession. His epithet, defining political
econorny as the 'dismal science', has becomelaw differenl, nearly all the phenomena of the
production and distribution of wealth would
be other than they are' (Mill, 1848, 1st ed.
vol. I, p. 212). But John Stuart Mill musthave felt uneasy, and not at all on solid
ground, for he kept on continually modiflng

famous.
7. A theory of proftts (and of capital) as anetlmsion of the theory of renl
The idea that iechnical improvements would-9-

L Pasinetti

imperceptibly carried bey'ond such processes

not be strong enough to overcom€ the terrible
curse of the scarcity of natural resources,

precisely tiose characteristics that theClassical economists had carefully confined toland.
The consequences of this extension were ofparamount importance. ln the second part ofparticularly of land, shaped the minds of
economic theorists for the whole of thenineteenth oentury.
Even Marx, the theorist of historical change
and the inspirer of heretical thoughts on theconssquences of changes in technology, wasnevertheless unable to escape from such an
idea. Unlike Classical economists, hethe nineteenth century, as the process ofindustrialisation began to spread from Englandto Western Europe and to the United States,
the emphasis of economic theory was boundto shift from agricultural production toindustrial production. Capital accumulation,rather than extension of land cultivation,(unconvincingly) rejected the theory ofdifferential rent; he mixed rent and profits
together and considered thern all as being
parts of surplus value and exploitation. Rather
than avoid the problerr of diminishing returns,
he let it enter his analysis in disguised form.
Paradoxically, his concept of an 'increasingorganic composition of capital' led him inlo
the trap of applying diminishing retums io
capitalist accumulation in general. In a
Marxian context, the law of diminishing
retums re-emerged in the shape of a 'law of
the falling rate of profits' , which turned out io
be one of his major blunders.
Curiously enough, in this respect, themarginalist economists, at the end of thenineteenth century, fell into exactly the same
trap. They converted the marginal principle,

became the focus of economic investigation.

It deserved and should have received
appropriately invented iools of analysis, suitedfor its specific characteristics. What it
obtained instead was an extension ofready-made analytical tools that had been
invented for the analysis of the process ofland cultivation.

Bdhm-Bawerk, the principal theorist ofcapital, conceived capital accumulation as anincrease in the 'roundabout methods' of
production, which he tried to express in termsof an increase of the 'average period' of
production. In this version, the marginal
principle and the principle of diminishing
retums became indistinguishable parts of thewhich the Classical economists had applied toland only, into a general principle, to be
applied to all factors of production,
This is something that the Classicaleconomists would never have done. In theirelaborations - as is evinced most cleady by
Ricardo's scheme - the theory of differential
rent served the purpose of separating tho
effects of extension of production on land
(where dininishing retums were supposed toprevail) from those of extension of production
in manufactures (where constant, or
increasing, retums wer€ taken for granted).
By extending the marginal principle outside
the processes of land cultivation, themarginalist economists automatically andsame conception.

This approach put into motion a series ofanalltical adaptations, which proceeded fromtwo opposite sides. On the one side, fte
principle of marginal land had !o be shaped insuch a way as to suit the characteristics of allother factors of production; which led to theapplication of the marginal principle only in

its intensive version. The principle ofdiminishing returns was thereby shaped in theform of diminishing retums to changing
proportions, associated with variations, in the
opposite direction, of factor prices (the gro*'thof capital, relatively to labour, being
associated with a fall in dre rate of profits).
-10-

Economic Issues, Vol- 4, Part 2, September 1999

This was interpreted as expressing the - nodoubt important - process of subslilution ofcapital for labour, which is at the root of any
process of economic growth, But such aof variations had to be conceived as going in
the direction opposite to changes in factor
prices, again, by assumption, owing to therequirement drat convexity of the production
function is - not an observed fact! - but anec€ssity of the theory. The theory of income
distribution was associated - without any
explicit justification - only with the second
process of variations (i.e. with the variationsin the factor proportions).

conception of the substitution process shouldhave appeared as peculiar, as it presupposes a
constant state of technical knowledge.e
On the otlrer side, a series of assumptions
were introduced in order to assimilate thecharacteristics of all factors of production(and, most of all, of capitaD with dre

It seems extraordinary that the theories of
production and distribution should haveproceeded on such important questions sinply
by a process of, bit by bit, extensions, and ofassumptions added on the basis of anallticalconvenience, rather than on the basis ofobsefvation or logic.
This ana$cal process has proceeded along way indeed, in spite of its going, quite
clearly, against what Malthus, West, Torrens
and Ricardo originaly intended. It was no
doubt strongly influenced and facilitated by
the parallel development of the notion ofcharacteristics of land. Knut Wicksell, adding

rigour to Bdhm-Bawerk's theory of capital,
enshrined the relation among all &e factors of
production in what later became knorm as theneoclassical production function, in which all
factors enter production on exacdy tle samefooting. The clearest and perhaps mostingenuous expression of this approach is thatof John Bates Clark (1899, pp. 194 ff.), who
explicitly, and even with a touch of pride,uses precisely the diagram representing thevarying proportions of labour and land to

marginal utility inrepresent (by simply changing the name of the

fixed factor) also the varying proportions oflabow and capital.lo Then he could evenabandon land altogether, concentrating on
labour and capital only, with diminishing
retums to changing proportions.
This conception of production, which hascome to dominate economic theory, up to ourown day, required an analytical (rrot a
factual!) distinction between two tlpes ofchanges of refims: i) changes due to variationn Ihe scale of production, at constant factor
proportions; and, ii) changes due to variationsin the proportions among the factors ofconsumption.

IIthe theory of

Now and then, there have indeed been
criticisms and oppositions to such extensions,but, in spite of their solid grounds, they havenot in the end been successfitl.

inPiero Sraffa,
1925, published aremarkable adicle (Sraffa, 1925), in which hecarried out a punctilious analysis of thesources of the laws of retums in economic
theory. With reference to Marshallian

analysis, he argued that the 'diminishing' partand the 'increasing' part of the 'relation
between cost and quantity produced' were infact derived from altogether different andeven muhrally incompatible pieces of analysis,joined together as if they constituted a single
relation, only because thatwhat wasanalr4ically required in order to obtain an
elegant relation that could be slmmetrical toproduction (supposed to represeni the processof substinrtion of capital for labour). In
lleory, dre first process of variations mightyield constant, decreasing or increasingisr€turns; but in general increasing rehrrns were
excluded,by assumplran. The second process-l l-

L Pasinetti
second stage, the choice that had been madeby the Classics could have been reconsidered.

the demand schedule.

Sraffa was still moving within the

But this step failed to materialise. The
results of the 1960s discussion on capital

century-old economic approach that had taken
technology as given and constant. Technicalprogress had not yet dawned on the horizon

theory are nowadays generally ignoredUncritical acceptance of diminishing returnsof economic analysis. Within such a

1o changing proportions as applied io capitalframework, his conclusions were perfectly
consistent. The only assumption that could be
logically compatible with economic theory he argued - was the assumption of constantand labour remains widespread. In most of theeconomics textbooks and in most of thepapers appearing in loday's prestigious
economic journals, production fulctions
involving Labour and Capital wilh decreasing
retums to changing proportions are freely

returns to scale.

Sralla was not concerned with technicalprogress, even in his later work (Sraffa,1960). Yet, his discovery of the 'reswitching'used, apparently without the slightest doubt as

ta their appropriateness, and most of the timeeven without giving dre slightest waming or
information on agreed outcomes of previous

phenomenon in the choice of technique was
the generalised
criticisn
basic

to a

of

application of the marginal principle. The
conhoversy in capital theory that flared up in
the 1960s did achieve important results. At
the end of it, everybody had to agre€ that thediscussions.

For all this - it should be shessed - theauthors of the l8l5 Political Economy

assumption of diminishing retums to changing
proportions, when applied to capital andlabour, has no logical foundation. In general,
there exists no monotonic association between

pamphlets bear no responsibility.

variations 'trL the proportions of capital io
labour (or of capital to land or to capital to
any non-produced factor of production) andthe rate of profits. The implication is that theextension of the marginal principle to capitaland labour (or to capital and land) has no

Ricardo could never have imagined that an

8. Technical progress versus limited nutural
tesoufcesinnocent asszmpf on ('We will, however,suppose that no irnprovements takes place inagriculture...', Ricardo, p. 12), that so wellserved the analytical purpose of isolating what
he thought to be the freld of diminishing
retums (agriculnre) from what he took to be
the field of constant or increasing retums(manufactures), would generate such long
lasting effects. His assumption was meant tobe confined io production on land. Obviously

logical foundation. More specifrcally, theassunption of a general 'well-behaved' (as it
has been called) production function is totally

unwarranted. (See Pasinetti el ol., 1966).
The results of the capital theory debate of
the 1960s were therefore all against the
gen€ralisations of the marginal principle that
had taken place in post-Ricardian economics.
They should have provided a warning on thewrong directions that had been pursued; a sortof clarion call for an elimination of theexcesses of marginal economic theory and athedeparture
return to the point
Classics, One could have hoped then that at aofhe could not anticipate, even less prevent, theuse that lat€r economists would make of it.

But once the assumption of no technicalimprovement had been extended to production
in general - and here I come to the maincontention of the present paper - the effect
was that, witl the exception of a few isolatedcases, technical progress disappeared from
economic analysis for more tltan a c€ntury.

of

-12-

Economic Issues, Vol. 4, Part 2, Septembet 1999

Only in the post second Wodd War period- under an impulse that has basically comefrom outside economic theory and most of thetime even against current economics. as
mentioned at the beginning of this paper have economists re{iscovered the relevancein the lalest versions of the neoclassical 'new
growth' models, increasing returns are also
introduced, with the consequence of having ioturn to imperfect competition in order io
make the models logically consistentOne must acknowledge, nevertheless that atof technical progress and begun iolasl an enormous outburst of economic

re-introduce it, at first timidly then with force,

research concerning technical change (in rnany

into economic investigations. But
re-infroducing technical progress, after ac.entury and a half of economic analysis basedon the assumption of a stationary technology,
has not proved to be easy.
The re-discovery of technical progresseffectively began with Roy Harrod's very
simple device of considering a rate ofproductivity growth side by side with the rateof population growth, in a dj'namic model(Hanod, 1948). When empirical researchcreated a shock by revealing that almost all
the growth of production per man that had
taken place in fie frst half of this century
was due to a 'residual' - i.e. to something
tha! astonishingly, had not been considered,and that could not be an].thing but technicalprogress - the response of the economic
profession was not a re-shaping of the tools of
econonic analysis to suit this newly
discovered empirical evidence, but the
introduction of further assumptions about how
the facts would have to be in order to be
frtted into the pre-conceived theoreticalscheme. The conception of capital
accumulation, based on the distinction
betwe€n changes of scale at constart retums
and changes of factor proportions, was not
modifred. lnstead, it was further complicated:a third element of change was super-imposedon the others, in the form of a 'shift' tkoughtine of the production function.rz The
arbitrary nature of the resulting tripartition
was never called into question, in spite of it
not even being exhaustive. So much so that,of its aspects: inventions, innovations,diffusion of knowledge, etc.) has taken placein the last few decades. Economists seem atlast to have woken up to the necessity andimportance of investigating the effects oftechnical change.
The situation is quite puzzling. According

to logic, one should e>r:pect that theinvestigation of the econornic consequences oftechnical change ought to b€ carried out withthe characteristics andspecificities of the phenomenon to beinvestigated, namely technical change; withoutof course precluding the possibility ofresuming, at the appropriate place, the othersources of production and of grovth. But thishas not happened, Somehow, within theframcwork of current economic theory, what
would appear as sometling to be expectedreference toaccording to logic is revealed to be somethingthat is difficult to achieve.
Is there perhaps something else that may belearnt from the authors of the l8l5
pamphlets'/ Let me note that they clearly
perceived two important features of the
problem they were investigating. First of all,they realised that, with a growing population,
the economic future of mankind would be
decided by the prevalence of one of two

opposite and countervailing trends: theimprovem€nts of technology and theincreasing limitations of nature. Secondly,
they perceived (and this is ar asp€ct that canbe seen in an extraordinarily clear way in
Ricardo's essay) that, for analytical reasons,L Pasinetti
they had to make a choice and concentrat€ on
only one of the two opposite aends; hopefullyon the more important one.
By a dramatic under-estirnation of historicalevents, they made the wrong choiceBut the ensuing generation of economists
have not corrected this error. On the contrary,
they exasperated it. Effectively, they ended up

the real world.

with changing the original content ofchallenging thoughts.
An obvious question arises: why not startagain from where Malthus, West Torrens,
and Ricardo began and radically change theirinitial hlpotheses? They had to make a choice
between two opposite trends and they thought
they had picked up the winning trend - theone that was going to b€ the more important.
History has since revealed that their original
choice was mistaken. The logical course to
take would se€m to be to go back to theeconomics itself, From a science that inquires
into the nature and causes of the wealth ofnations, as it was intended by Adam Smith,they made it (as Lionel Robbins, 1931, could
conclude a century and a half later) a sciencethat deals with the use of scarce means toachieve given ends.
Nobody can obviously deny that, in taking

advartage of our increasing technologicalknowledge for the production of our wealth,
we face today, no less than two centuries ago,
the task of how to allocate with efficiency andjudiciousness and according to our choices(individual and social) th€ natural r€sourcesthat we have inherited, at the same timepreserving the environment with which our
wonderful planet is endowed. But increasing
technical knowledge irnplies that - even withgiven natural resources - the constraints andlimitations are not givan: very far from being
constant, th€y are mo'ving all the time!

This seems to be the characteristic striking
impasse of modem economic theory.

9. Concludiag thoughts

Let us retum to where we starEd. After along journey, a rehrrn to the 1815 Political
Economy panphlets never c€ases !o prompt

starting point and reverse the original choice.

Granted that analytical reasons impose, as
they realised, that one should focus, at least at

the start, on only one of the twocountervailing trends, which so

perspicaciously they perceiyed, why not begin
by developing a political economy based on
the progress of technical knowledge a1one,13rather than - as they actually chose io do - on
the scarcity of given resources alone?

pre-developed economics that deals with thecharacteristics of an efFrcient management ofscarce resources, with a given techlology,
seems to r€veal a sort of Fofound difFrculty.

The most inportant factor behind thewealth of nations is Gchnical progress. Once
this has been appropriately investigated, in a
way that is not stifled by possibly
contradictory features imposed by other,pre-shaped, frameworks of analysis, it may
tum out to be easier, at a later stage ofinvestigaiion, b introduce the integrations andcomplications connected with the linitationsof nature. The opposite approach has so far
led to enormous complications and scarce.A.ssumption after assumption seems to become

rewards.

A kind of opposition seem to haveemerged. A sort of incongruity - as I defined
it at the beginning seems to have comeabout. Super-imposing now an economics that-

deals with an eyolving techlology, on !o asolidly pre-established, pre-shaped,

necess.ary inorder to steer clear ofcontradictions rather than in order io facilitate
investigation or to grapple with the features ofEconomic Issues, Vol. 4, Pqrt 2, September 1999

1903, p. 280).

Endnotesl. Universitir Cattolica del Sacro Cuore,

4. The richness of Ricardo's framework is

Milan. This paper started as an extended
English version of a 'Comment' (inGerman), for the companion book to thefacsimile €dition of the five l8l5
pamphlets listed in section 2 of the text
(Die Com-Law Pamphlets von 1815,

so remarkable as to have stimulated many

modem economists to set it up in theform of a rigorous mathematical model. I
myself gave a formulation of it in my

Mathematical Formulation oftheRicardian Systen ( 1960). One may view
the simplified two-commodity version of

Verlag Wirtschaft und Finanzen GMBH

Diisseldorf. 1996). In the course ofextensions, it has slowly beensrrch a mathematical formulalion as an aid
to interpret Ricardo's l8l5 Essay.

transformed, from a comment on an issue
in the history of economic thought, into a
new contention conceming the source of

5. See Cannan (1903, p. 1a6).
6. See Malthus 1803, 2nd ed., p. 472.
Malthus considers the case of an

the dilficulties that modem economic
theory is facing in developing a truly
dynamic economics. I am grateful forcomments, criticism, and suggestions to
Amafb€ Sen, Geoffrey Harcour! Pier
Luigi Porta, Emma Rothschild, Roberto
Scazzier\ Bertram Schefold, Gianpaolo
Mariufti. Financial support from CNR and
MURST is gratefully acknowledged.

accidental de-population, quite logicallyremarking tha! in such an event,cultivation would be abandoned on theleast fertile lands.

7. This can be seen clearly in Pasinetti(1960, pp.8l-84).

8. Arnong historians of economic thought,

2. These data are taken from Cannan (1903,
pp. 148-150). A more rec€nt

Schumpeter was perhaps the most acuteof all in pointing this out, though in the
midst of many other hints in various
diections (Schumpeier 1954, pp.

reconstruction by Mitchell (1962) diffen
in details, but shows the same kind ofhuge flucfirations. Mitchell gives theWinchester peak price at 148.50s. per

570-574).

Winchester quader in the year 1800.
(Mitchell, 1962, p. 487).

9. In a dynamic context, the process of
substitution of capital for labow is indeed
very importanl but it emerges as an effect

3. This was not enough to satisfy W€st, who- after Ricardo's death - made strongof phenonena that are quite different

from those of diminishing retums toclaims for hinself, mainly with reference
to the law of diminishing retums (see hischanging proportions. (On this see, forexample, Pasinetti, 1977, and Sylos-'Intoduction', in West 1926). 'HisLabini, 1995.)

evidgnt resentrent against Ricardo wasprobably unjustified', Schumpeter writes(1954, p. 476). Cannan is even more
severe on West's complaint, which he

10. Schumpeter is, as usual, very quick inperceiving John Bates Clark's route:'...whathe did was to turn the 'Ricardian'theorv of rent. which with Ricardo had

considers'quite unfounded' (Cannan,-15-

L Pdsinetli- exactly the opposite of what Solow's

no other function than to eliminatE rent
from the price problem by making it an
intranarginal surplus, into a principle thatwas of general application to all kinds ofcompetitive retums ('law of three rents').'(Schumpeer, 1954, p. 868).

subdivision had led him to conclude.
13. This proposal of course is not made in the
abstract. To provide a complete model inwhich the increases of production are
entirely due to continually improving

knowledge drat generates growdr oflabour productivity, while the evolution of
output proportions are governed byindividuals' and social choices in
consumption pattems, is indeed possible.
Since I discovered these possibilities, I
have made of them a research programmethat I have pursued over tle past 30 years(see Pasinetti 1981, 1993). To my
distress, I have to record that the great
majority of my colleague-economists areshongly unwilling to grant technicalprogress the privilege of an exclusive,
even if provisional, teaonent; while they
are perfectly willing to continue to go on
granting such privilege !o the principle ofdiminishing retums.

11. It may well be an open question whether
the generalisation of the marginal

principle was mainly due to extension of
the theory of rent in production theory or
to the development of the notion of

marginal utility in the theory of
consumption. There is no doubt in any
case that the two developments reinforced

each other.

12. The standard reference is Solow (1957),

who estimated that the change of
productivif in the U.S. economy,
1909-1949, was 87.5o/o due to the'residual', re-interpreted as a 'shift' ofthe

production function, and 12.5% due io
increased proportion of capital to labour(i.e., increased capital intensity). I had theopportunity of shongly criticising ihese
results (in Pasinetti, 1959). I pointed outthat even Solow's subdivision is notwarranted. because of the arbitrariness oftle assumptions made. And I gave an
example referring to the variation of theReferences
Anderson, James (1777a) Observalions on themeans of exciting a spirit of National
Industry; chieJly intended to promote theagriculture, eomme rce, manufactures andfsheries of Scotland, Edinburgh: T CadellC Elliot.

proportions among the factors of
production. The capitaVoutput ratio andthe capital/labour ratio always change inAnderson, James (1777b) An Enquiry into thenalure of the Corn Laws, with a view to the
new Com Bill proposed for Scotland,
EdinburgJr: Mundell.

the same direction in a stationary

economy. But when there is technicalprogress, they may well change in
opposite directions. In the specific caseconsidered by Solow, I pointed out, byusing his own data, that the capital-ou$ut
ratio in the U-S. economy, far fromincreasing, actually decreased from 2.75
in 1909 to 2.20 n 1949, implying that
capital intensity decreased in that period

Andetson, James (1801),4 calm investigationof the circumslances that hqve led to thepresent Scarcity of Grain in Britain,
suggesting the metms of alleviating the eviland of preventing the recurrence of such acalamity in the future, London: Johl

-16-

Economic Issues, VoL 4, Pqrt 2, September 1999

Milf, James (1821) Elemenls of Political

Cumming.

Ec onomy, London : Baldwin.

Cannan E (1903) A History of the Theories ofMill J S (1848) Principles of Political

Production and Distribution in English
Politicdl Economy from 1776 to 1848,2e,London: P S King and Son.

Economy, \ilh some of their Applications

lo Social Philosophy, London: John W.
Parker.

Carey H C (1837) Principles of Pohtical

Mitchell B R and Deane P (1962) Absbact ofBritish Historical Statistics, Cambridge:

Economy, Part I, 1837; Part II, 1838; Part
III, 1840, Philadelphia: Carey.

Cambridge U P,

Chafmers T (1832) On Political Economy inconnection with the Moral Slate and Moral

Pasinetti, Luigi L (1959) 'On Concepts andMeasures of Changes in Productivity",
Review of Economics and Statistics, vol.
41, 270-82.

Prospects of Society, Glasgow: William
Collins.
Clark, John Bates (1899) The Distribution of

Pasinetti, Luigi L (1960) 'A Mathematical
Formulation of the Ricardian Sysbm' , The
Review of Economic Studies,1959-60, vol.
27 , 78-98.

Wealth, New York: Macmillan.

Harrod R F (1948) Towards a Dynamic
Economics, London: Macmillan.

Malthus T R (1798) An Essay on the
Principle of P opulation, le, 1798; 2e 1803,l,ondon: J Johnson.

Pasinetti, Luigi L et al. (1966) 'Paradoxes in
Capital Theory: A S1'rnposium', Quarterly
Journal of Economics, vol. 80, 503-17.

Malthus T R (1814) Observation on the
Efects of the Corn Laws, and of a Rise or
Fall in the Price ofCom on the Agriculureand General Wealth of the Country,

Pasinetti, Luigi L (197f 'On non-substitution
in production models' , Cambridge Joumal of
Economics.vol. l, 389-94.

Pasinetti, Luigi L (1981) Structural Change
and Economic Growlh - A theoretical essayon the dynamics of the wealth of nations,Cambridge: Cambridge U P.

London: J Johnson and Co.

Malthus T R (1815a) An Inquiry into the

Nature and Progress of Rent and The
Principles by whichit is regulated,London.

Pasinetti, Luigi L (.1993) Structural Ftonomic

John Murray.

Dynamics - A theory of the economic

Malthus T R (l8l5b) The Grounds of an
Opinion on the Policy of restricting theImportation ofForergn Carn, London: John

consequences of human learning,
Canbridge: Cambridge U P.

Ricardo D ( 1815) 'An Essay on The Inlluence

Murray.

of a Low Price of Corn on the Profits of

McCulloch, John Ramsay (1828), as editor of
Adan Smith, An Inquiry into the Nalure

Stock', London: John Murray, reprinted in

P Sraffa (ed) (1951) Ihe Works andCorrespondence of Daid Ricardo,

and Causes of lhe Wealth of Nations. 4
vols.: London and Edinbursh: Adam Black.
-77 -L Pasinetti

Cambridge: Cambridge U P, vol. 4, 9-42.

Ricardo D (1817) 'On the Principles of
Political Economy and Taxation', London:
John Murray, reprinted in P Sraffa (ed)(.1951) The lltorks and Conespondence ofDavid Ricardo, Cambridge: Cambridge U
P, vol. l.
Robbins L (1932) An E.tsay on the Natureof the Cobb-Douglas production function
must be radically changed', Slruclurol
Change and Economic Dynamics, vol. 6,
485-504.

Torrens R (1815) lz Essay on the Extemal
Corn Trade, London: J Hatchard.

[West, Edward] (1815) Fssay on the
Application of Capital to Land, London: T

and Signifcance of Economic Science,

Underwood.

London: Macmillan,

West, Edward (1826) Price of Com andWages of Labour, wilh Observations upon
Mr. Smith's, Mr. Ricardo's and lt4r.
Malthus's Doctrines, London: J Hatchard.

Schumpeter J A (1954) History of Economic

lnalysis, New York: Oxford U P.
Smittr A (1776) An Inquiry into the Naturc
and Causes of the Wealth of Nations, E
Caman (ed) in 2 vols., London: Methuen,
1904.

Solow R M (1957) 'Technical Change and dre
Aggregate hoduction Function', Review o/Fxonomics and Stafr'slr'cs, vol. 39,312-20.

Sraffa P (1925) 'Sulle relazioni fra costo equantitiL prodotta', Annali di Economia,vol.

2,277-328; [English tanslation in ltalian

Economic Papers, vo1.3, edited by Luigi
Pasinetti on behalfof 'Societi Italiana degli
Economisti'; Bologna: il Mulino; Oxford:

Oxford U P, 1998, 322-3631.
Sraffa, P (1951) 'Note on "Essayon Profits"',in P Sraffa (ed) with the collaboration of M
HDobb,The Works and Correspondence ofDavid Ricardo, :rol. 4, Pamphlets andPapers I I I 5-I 823. Cambridge: Cambridgeu P, 3-8.
Sraffa P (1960) Pra duction ofCommodities bymeans of Commodities - Prelude to a

critique of economic theory, Ctmbidge:
Cambridge U P.
Syloslabini P (1995) 'Why the interpretation-18-