Luigi Pasinetti - Theoretical Contributions - Keynes and The Cambridge Keynesians

Keynes and the Cambridge Keynesians (2007) is the latest book published by Pasinetti. Therein, Pasinetti proposes to consider Keynesian economics as an alternative paradigm to Neoclassical economics, emphasizing the contributions of the Cambridge Keynesians as well as future development lines on these issues.

Probably, Pasinetti -recognized as the heir of the Cambridge economists-, is the most suitable economist to talk about that ambience, because, as he himself acknowledges:

“I happened to become, at a certain point, part and witness of this School. The inevitable emotional involvement of a participant may well have influenced my judgements, for better or worse. But I hope this will be counter-balanced by those insights that only insiders have the privilege to perceive.”

—L.Pasinetti

The gestation period of the book, as is usual for Pasinetti's books, was long: about 15 years. In fact, with the notable exception of part three, the book is a collection of writings that Pasinetti had prepared years ago. Part three, on the other hand, is new and presumably the most important part of the book. That is, Keynes and the Cambridge Keynesians is composed of three parts or, more properly, of three Books.

Book I is a summary of what has been known as the "Keynesian Revolution". It is taken from set of lectures delivered by Pasinetti in memory of the Italian economist Federico Caffé, in October 1994 at La Sapienza University, Rome. In this Book, Pasinetti makes a chronological overview of the outbreak of the "Keynesian Revolution", from the first attempts of Keynes in the early 1930s, to the evolution of Keynesian thinking and the subsequent misinterpretation of his theory by the economists of the “Neoclassical synthesis”. Book I also contains some reflections on the progress of knowledge in economics and the rise and fall of scientific paradigms based on the work of the famous epistemologist Thomas Kuhn. The conclusions of Book I also advocate the revival of Keynesian economics with a touch of hope for future generations of economists:

“Perhaps, in spite of all, as a final consequence of the mounting difficulties in the attempts at reconciliations, it may well be the task of a new generation of economists to produce that break with orthodox economics that was started, genuinely attempted, strongly pursued, but not accomplished by Keynes and the Keynesian group. Many dramatic changes took place in the last two decades of the twentieth century on the economic and political scene. New minds –liberated from the prejudices that have been obfuscating our visions- may well have become better equipped to bring about that genuine Keynesian revolution which has so far remained unaccomplished.”

—L.Pasinetti

Book II, entitled The Cambridge School of Keynesian Economics is by far the longest part of the book. It is composed of, in this order, by the biographies of Richard Kahn, Joan Robinson, Nicholas Kaldor, Piero Sraffa and Richard Goodwin. All of them had already appeared in various places several years earlier, although for this book Pasinetti re-arranged them. The chapter on Kaldor, for example, is a synthesis of two articles written on different occasions. In terms of space, Sraffa is the economist treated in greatest detail by Pasinetti, dedicating to him three, quite independent biographical essays.

Besides the importance of each one of the biographies, the purpose of all of them is:

“The foregoing biographical sketches on Kahn, Joan Robinson, Kaldor and Sraffa may help –I hope- to highlight the multifaceted and significant aspects of the Cambridge School of Keynesian Economics. I hope the reader may have been able to grasp the unity, in some basic sense, of their purposes and at the same time the intriguing disparities in their approaches in many other respects I shall therefore argue that the relevant message that should be extracted from the works of the Cambridge School of Keynesian Economics is, in fact, positive –not negative.

—L.Pasinetti

Book II ends with some suggestions, nine in total, which according to Pasinetti are at the heart of the "Keynesian Revolution". The issues involved are:

  1. Reality (and not simply abstract rationality) as the starting point of economic theory.
  2. Economic logic with internal consistency (and not only formal rigour).
  3. Malthus and the Classics (not Walras and the Marginalists) as the major inspiring source in the history of economic thought.
  4. Non-ergodic (in place of stationary, timeless) economic systems.
  5. Causality versus interdependence.
  6. Macroeconomics before microeconomics.
  7. DIsequilibrium and instability (not equilibrium) as the normal state of the industrial economies.
  8. Necessity of finding an appropriate analytical framework for dealing with technical change and economic growth.
  9. A strong, deeply felt social concern.

Finally, Book III is a conclusion, not only of the previous chapters of this volume, but also of the whole conception of how Pasinetti would like economic analysis to be carried out. He asserts the need to rise above and go beyond Neoclassical economics through a genuine resurgence of a Classical-Keynesian paradigm, which can be rescued and strengthened and developed by the methodology that Pasinetti has pursued during the whole of his life, made explicit for the first time in his Structural Change and Economic Growth. Basically, he argues for the possibility of formulating, at a first level of investigation, a pure economic theory, independently from the institutional framework of society, and then, at a second level of investigation, of developing an analysis of the relevant institutions, thus achieving a theoretical framework that may allow us to understand the basic features of the monetary production economies in which we live today.

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