IDEAS home Printed from https://ideas.repec.org/a/psl/bnlqrr/200042.html
   My bibliography  Save this article

Critique of the neoclassical theory of growth and distribution

Author

Listed:
  • Luigi L. Pasinetti

    (Universitˆ Cattolica del S.Cuore, Istituto di teoria economica e metodi quantitativi, Milano (Italy))

Abstract

The paper surveys the main theories of income distribution in their relationship with the theories of economic growth. First, the Classical approach is considered, focusing on the Ricardian theory. Then the neoclassical theory is discussed, highlighting its origins (Bohm-Bawerk, Wicksell, Clark) and the role of the aggregate production function. The emergence of a "Keynesian" theory of income distributionin the wake of Harrod's model of growth is then recalled together with the surprising resurgence of the neoclassical theory (following the contributions of Solow and Meade). But, as the paper shows, the neoclassical theory of income distributionlacks logical consistency and has shaky foundations, as has been revealed by the severecritiques moved to the neoclassical production function. Mainstream economic literature circumvents this problem by simply ignoring it, while the models of endogenous growth exclude the issue of distribution theory from their consideration. However, while mainstream economics bypasses the problems of incomedistribution, this is too relevant an issue to be ignored and a number of new research lines, briefly surveyed, try new approaches to it.

Suggested Citation

  • Luigi L. Pasinetti, 2000. "Critique of the neoclassical theory of growth and distribution," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 53(215), pages 383-431.
  • Handle: RePEc:psl:bnlqrr:2000:42
    as

    Download full text from publisher

    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9924/9806
    Download Restriction: no

    References listed on IDEAS

    as
    1. Bertola, Giuseppe, 1993. "Factor Shares and Savings in Endogenous Growth," American Economic Review, American Economic Association, vol. 83(5), pages 1184-1198, December.
    2. Baranzini, Mauro, 1991. "A Theory of Wealth Distribution and Accumulation," OUP Catalogue, Oxford University Press, number 9780198233138.
    3. Robert M. Solow, 2000. "The neoclassical theory of growth and distribution," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 53(215), pages 349-381.
    4. Pasinetti, Luigi L, 1969. "Switches of Technique and the "Rate of Return" in Capital Theory," Economic Journal, Royal Economic Society, vol. 79(315), pages 508-531, September.
    5. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 465-490.
    6. Burmeister,Edwin, 1980. "Capital Theory and Dynamics," Cambridge Books, Cambridge University Press, number 9780521297035.
    7. Oded Galor & Joseph Zeira, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Oxford University Press, vol. 60(1), pages 35-52.
    8. Fisher, Franklin M, 1971. "Aggregate Production Functions and the Explanation of Wages: A Simulation Experiment," The Review of Economics and Statistics, MIT Press, vol. 53(4), pages 305-325, November.
    9. Perotti, Roberto, 1992. "Income Distribution, Politics, and Growth," American Economic Review, American Economic Association, vol. 82(2), pages 311-316, May.
    10. F. H. Hahn, 1966. "Equilibrium Dynamics with Heterogeneous Capital Goods," The Quarterly Journal of Economics, Oxford University Press, vol. 80(4), pages 633-646.
    11. D. G. Champernowne, 1953. "The Production Function and the Theory of Capital: A Comment," Review of Economic Studies, Oxford University Press, vol. 21(2), pages 112-135.
    12. Stiglitz, Joseph E, 1969. "Distribution of Income and Wealth among Individuals," Econometrica, Econometric Society, vol. 37(3), pages 382-397, July.
    13. Harcourt,G. C., 1972. "Some Cambridge Controversies in the Theory of Capital," Cambridge Books, Cambridge University Press, number 9780521096720.
    14. Atkinson, A B, 1997. "Bringing Income Distribution in from the Cold," Economic Journal, Royal Economic Society, vol. 107(441), pages 297-321, March.
    15. Pasinetti, Luigi L, 1978. " Wicksell Effects and Reswitchings of Technique in Capital Theory," Scandinavian Journal of Economics, Wiley Blackwell, vol. 80(2), pages 181-189, July.
    16. Kazuo Sato, 1974. "The Neoclassical Postulate and the Technology Frontier in Capital Theory," The Quarterly Journal of Economics, Oxford University Press, vol. 88(3), pages 353-384.
    17. Hahn, Frank, 1982. "The Neo-Ricardians," Cambridge Journal of Economics, Oxford University Press, vol. 6(4), pages 353-374, December.
    18. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
    19. Labini, Paolo Sylos, 1995. "Why the interpretation of the Cobb-Douglas production function must be radically changed," Structural Change and Economic Dynamics, Elsevier, vol. 6(4), pages 485-504, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yoann Verger, 2015. "Sraffa and the environment," Working Papers hal-01186009, HAL.
    2. Emiliano Brancaccio & Giuseppe Fontana, 2013. "'Solvency rule' versus 'Taylor rule': an alternative interpretation of the relation between monetary policy and the economic crisis," Cambridge Journal of Economics, Oxford University Press, vol. 37(1), pages 17-33.
    3. Lindenberger, Dietmar & Kümmel, Reiner, 2011. "Energy and the state of nations," Energy, Elsevier, vol. 36(10), pages 6010-6018.
    4. Dünhaupt, Petra., 2013. "Determinants of functional income distribution : theory and empirical evidence," ILO Working Papers 994841223402676, International Labour Organization.
    5. Angelo Reati, 2001. "Total factor productivity - a misleading concept," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 54(218), pages 313-332.
    6. repec:sgh:gosnar:y:2017:i:5:p:5-30 is not listed on IDEAS
    7. Kurose, Kazuhiro & Yoshihara, Naoki, 2016. "The Heckscher-Ohlin-Samuelson Model and the Cambridge Capital Controversies," UMASS Amherst Economics Working Papers 2016-05, University of Massachusetts Amherst, Department of Economics.
    8. Avi J. Cohen, 2003. "Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 199-214, Winter.
    9. repec:ilo:ilowps:484122 is not listed on IDEAS
    10. Angelo Reati, 2001. "Total factor productivity - a misleading concept," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 54(218), pages 313-332.

    More about this item

    Keywords

    Distribution; Economic Growth; Growth; Income Distribution; Income; Neo Classical; Neoclassical;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:psl:bnlqrr:2000:42. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlo D'Ippoliti). General contact details of provider: http://www.economiacivile.it .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.