page_title: Luigi Pasinetti
section_title: Lectures on the Theory of Production
hierarchical_section_title: Luigi Pasinetti / Theoretical contributions / Lectures on the Theory of Production
caption_attribution_description: Français&#160;: Portrait de François Quesnay (1694-1774)
context_page_description: Luigi L. Pasinetti is an Italian economist of the post-Keynesian school. Pasinetti is considered the heir of the "Cambridge Keynesians" and a student of Piero Sraffa and Richard Kahn. Along with them, as well as Joan Robinson, he was one of the prominent members on the "Cambridge, UK" side of the Cambridge capital controversy. His contributions to economics include developing the analytical foundations of neo-Ricardian economics, including the theory of value and distribution, as well as work in the line of Kaldorian theory of growth and income distribution. He has also developed the theory of structural change and economic growth, structural economic dynamics and uneven sectoral development.
context_section_description: Lectures on the Theory of Production first appeared in Italian in 1975. Already in 1956 some parts of the book circulated in the form of lecture notes in several Italian universities. The insistence of students to give these notes a more structured and compact form prompted Pasinetti to compile these lectures, enlarging them and then bringing them to the form in which the book appeared.
  This is the main reason why the Lectures on the Theory of Production turned out to be the most successful of his publications didactically (translated in French, Spanish, German and Japanese). The English version, appeared two years later, in 1977 and maintained the character and the structure of the Italian version, although Pasinetti added some enlargements, in the form of more sections and new appendices.
  At a theoretical level, Lectures on the Theory of Production is a book dedicated to the analysis of the theory of production, that is, the way in which societies produce wealth and then how it is distributed. It is curious to notice the unusual way in which Pasinetti introduced his Theory of Production. He begins Chapter I by contrasting two possible definitions of wealth:
  The concept of “wealth” appears, at first sight, to be perfectly clear and familiar. It is traditionally defined as “the abundance of goods and services at the disposal of an individual or of a community” […] The principal distinction to be made is that “abundance of goods” might mean an endowment, or fund, of existing goods, i.e., wealth as a stock of commodities or claims, or it might mean a sizable periodic flow of goods and services, i.e., wealth as a flow of commodities or income. These two meanings are often confused, even today.
  — L. Pasinetti
  In fact, the understanding of wealth as a stock can be useful for investigations at the level of single individuals; but at the macroeconomic level, it is wealth as a flow that is the most relevant concept. Therefore, Pasinetti considers it as a great contribution – made already by the Physiocratic school of 18th century France – to have concentrated on the concepts of surplus and economic activity presented as a circular flow in the Tableau Economique, devised by François Quesnay. The Physiocratic ideas were developed by the Classical economists in Scotland and England and then by Marx. All of them saw the importance of production and wealth as a flow concept and further developed the Physiocratic ideas. Curiously enough, the Marginalist revolution of the late 19th century preferred to go back to study the concept of wealth as a stock, thus largely de-emphasizing the problems of production and distribution, and to focus on models of "pure exchange".
  From this point onwards, Pasinetti develops and presents, in a terse way, a truly Classical theory of production. This book became a book from which a whole generation of Italian students (and in some universities also non-Italian students) have learnt the theoretical scheme of Piero Sraffa, expressed in matrix notation (with a mathematical appendix devoted to the basic elements of matrix algebra) and the Input-Output analysis of Wassily Leontief.
  In chapters 4, 5, and in an Appendix to Chapter 5, Pasinetti respectively deals with the Leontief model, with the Sraffa system, and Marx's transformation problem. He shows how, although the Leontief model and the Sraffa system were designed for different purposes, the former as an empirical tool and the latter as a theoretical framework, both have their basis in Physiocracy and Classical economics. The greatest theoretical achievement of the Sraffa system, Pasinetti says at the end of chapter 5, is that:
  …in this construction is to be found in the demonstration that it is possible to treat the distribution of income independently of prices and in the demonstration, moreover, that this possibility is not tied to the pure labor theory of value. It is at last possible to state rigorously that the shortcomings and inadequacies of the Classical pure labor theory of value or, indeed, even the abandonment of such theory, leave quite uns
caption: François Quesnay.
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