Reappraising Pasinetti: Proportions, Prices and Economic Planning

In the introduction to Structural Change and Economic Growth (1981), Luigi Pasinetti describes the birth of Marginalist economic theory as a reaction to Karl Marx’s political ideas — ‘the powers of old Europe [entering] into a holy alliance to exorcise [the] spectre’ of communism (Marx and Engels [1992]. Communist Manifesto. Oxford: Oxford University Press, p. 29). In fact, the publication of Das Kapital came right after the birth in London of the First Socialist International (1864); European elites had to find a way to dispute Marx’s theory on an academic ground in order to belittle his political arguments: ‘If only one could find an economic theory that made no reference to labour, no reference to means of production, possibly even to production itself … that would surely be the sort of thing that a frightened Establishment could not but most warmly welcome. Marginal utility theory provided precisely that’ (Pasinetti [1981]. Structural Change and Economic Growth. A Theoretical Essay on the Dynamics of the Wealth of Nations. Cambridge: Cambridge University Press, p. 13). Criticizing the dominant theory, as both Sraffa and Pasinetti did, means criticizing and rejecting its political foundations. The aim of this article is to highlight the political consequences of Pasinetti’s approach and to show how its theoretical apparatus demonstrates the necessity of economic planning and collective control of the means of production.