The Making of Pasinetti’s 1960 Ricardian System: an Archival Exploration

The Pasinetti Archive is accessible online at https://llp-papers.eu/index.php. Documents pertinent to Pasinetti (1960) are kept in Wrapper 60, which con tains sixteen folders. In this chapter, we focus on Folders 15 and 16 that are analysed in Sections 7.2 and 7.3, respectively. Section 4 offers some conclud ing remarks. Our main findings may be summarised as follows. First, ever since he began to translate Ricardo’s economics into mathematical language for his Economics 214 examination term paper, Pasinetti was convinced that a logically consistent Ricardian model could be identified and revealed by stripping away the many layers of ambiguity, complications, and exceptions with which Ricardo himself had permeated the three editions of his Principles of Politi cal Economy, and Taxation. Second, the interaction with an economist of solid neoclassical training yet ec lectic in his approach, Franco Modigliani, Pasinetti’s supervisor of the term pa per on Ricardo, allowed the young Pasinetti, on the one hand, to clearly spot the analytical shortcomings of his own model while, on the other hand, to experience firsthand the difficulties faced by an orthodox economist in translating Ricardo’s economics into the analytical categories of mainstream economics. Third, so soon as Pasinetti left the unrealistic and oversimplified world of the one-commodity model and started investigating the formal properties of an n-commodity model, he became aware of the critical role played by the assump tions regarding the consumption patterns of the various social classes to close the Ricardian model. Pasinetti candidly acknowledged that the absence of a defini tive theory of demand represents one of the primary drawbacks of the Ricardian model and that reliance on Say’s Law limits the model’s validity to equilibrium situations. However, in the documents we have consulted, it appears that Pasinetti did not sufficiently emphasise the difficulties the Ricardian model encounters in disequilibrium situations, where recourse to Say’s Law can no longer be validly invoked.