Review of Keynesian Economics

Garegnani’s ‘theoretical enterprise’ and the theory of distribution*

Enrico Sergio Levrero *

Keywords: capital theory, surplus approach, Sraffa, subsistence and surplus wage rates, interest rates and income distribution, Cambridge equation, normal rate of profits


This paper reconstructs the essential traits of Garegnani's thought on the theory of distribution. In particular, it reconstructs the central point of his work (which saw him involved in debates with economists such as Blaug, Bliss, Hahn, Hollander, Joan Robinson and Samuelson) – namely, the development of Sraffa's work, both regarding the critique of the marginalist theory of value and distribution, and the revival of the surplus approach of Smith, Ricardo and Marx. It also reconstructs a characteristic which was a constant of Garegnani's activity – that is, his attention to concrete economic phenomena and the search for economic policies able to assure high levels of employment and the well-being of the greatest part of the population. These two traits of Garegnani's work are traceable since his first contributions to economic theory – namely, from his 1958 PhD thesis entitled A Problem in the Theory of Capital from Ricardo to Wicksell to his 1962 work for Svimez, where Garegnani faced the issue of how to achieve a higher rate of growth in a case like that of Italy, characterised by large areas with high labour underemployment. The two traits were of course strictly interconnected, as, for instance, the suggestion in favour of Keynesian economic policies, or the criticism (especially in the absence of full employment of resources) to Pareto optimality and its implications for policy analysis could not but pass through a critique of the marginalist theory and the simultaneous clarification and development of an alternative theoretical approach.

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