Quaderni di Ricerca

1. The Smithian Origin of Ricardo's Corn-Ratio Theory of Profits: A Suggested Interpretation
Author: Fernando Vianello
The money price of labour, Smith maintains, 'must always be such as to enable the labourer to purchase a quantity of corn sufficient to maintain him and his family either in the liberal, moderate, or scanty manner in which the advancing, stationary or declining circumstances of the society oblige his employers to maintain him'. On this basis, he argues that a rise in the money price of corn consequent upon the establishment of a bounty on its exportation leaves the surplus produce obtained in corn-growing (the difference between the quantity of corn produced and the quantity of corn the money wage must enable the workers to purchase) unaffected, so that the overall money revenue received by farmers and landlords together rises in the same proportion as the price of corn. When, therefore, Ricardo put forward the thesis that the profits of the farmer (and thus the general rate of profits) fall as more capital is employed on the land, to treat the wage as consisting in a given quantity of corn must have appeared to him (as it appeared to many other followers of Smith, including Ricardo's close friend and mentor, James Mill) as a legitimate simplification, and one able to supply an effective argument to use in discussion. Malthus, however, dismissed it as both unrealistic and misleading. Compelled to desist from arguing his position on the basis of the above assumption, Ricardo conceded that the rise in the money price of corn causes the corn price of labour to fall. The consideration of the above fall, he did however contend, makes no substantial difference to his conclusions. This is why the corn-ratio theory of profits, as Sraffa warns us, 'is never stated by Ricardo in any of his extant letters or papers', while, at the same time, Malthus continues to see it as the logical basis of Ricardo's position.

2. Absolute Rent and the 'Normal Price' of Exhaustible Resources
Author: Marco Piccioni and Fabio Ravagnani
No abstract available

3. Professor Blaug on Understanding Classical Economics
Author: Pierangelo Garegnani
In Blaug's view,the interpretation he labels as "Sraffian" considers the classical economicsts through the "distorting lenses" of "linear models of production" amd overlooks the central importance those authors gave to institutional and political elements. This view appears however to be founded on a misreading. Unlike what Blaug supposes, that interpretation does not take outputs and real wages as ultimate data, but only as waht we may describe as "intermediate" data: they are determined, that is, prior to, and separately from, the non-wage distributive variables which are then obtained as the difference or surplus of a given output over the given subsistence-based wages (and means of production) consumed in its production. By ignoring that prior classical determination, Blaug in fact neatly excises from the interpretation he is criticising the very institutional and political factors ehich he, then, unsurprisingly, finds missing, and which are those playing the dominant role in the (separate) determination of wages and outputs. Blaug's detailed criticisms are shown to confirm that basic misreading. It is futher pointed out how the "Canonical" interpretation of classical wages which Blaug shares with Samuelson and other interpreters, and to which he essentially refers in his article, appears to beg the question of the demand and supply distributive mechanism it attempts to trace in Smith and Ricardo. It does so when it has to introduce a neoclassical type of elastic labour demand function to trigger off the wage changes destined to balance the growths of labour and capital - a process which in those classical writers is instead based, we argue, on the varying pressure of labour underemployment ("redundant population") implied in what they often describe as the "proportion of the deamnd to the supply of labour", two single quantities and not the modern functionswhich go by that expression. Blaug's contradictory rejection of the "Sraffian interpretation" - key elements of which, like the so called "corn model" or the recognition of permanent labour unemployment by classical authors, he has long shared - are then traced to his difficulty in conveiving the possibility of a theoretical paradigm alternative to the dominant one, such as it existed in the old classical economicsts before the drastic break in theoretical continuity which occurred after Ricardo's death.

4. Disinflation in Industrialized Countries, Foreign Debt Cycles and the Costs of Stability
Author: Andrea Ginzburg and Annamaria Simonazzi
The paper starts out from an empirical observation: in two "central" countries - respectively the UK in the 19th century and the U.S.A. in the 20th century - long phases of disinflation - prompted by a tightening in their monetary policy in a context far from full employment - were accompanied by a relative overall stability in the output of the "core" and by an increasing frequency and intensity of financial crises in the "periphery". The aim of the paper is twofold: to offer a framework for the anlysis of disinflation in the industrialised countries during the two disinflation phases mentioned above, and to draw attention to important redistributive effects of disinflation. We argue in fact that the observed relative output stability of "central" countries is but theother side of theincreased instability of "peripheral" countries. We suggest that Sraffa's framework - extended to take into account relationships that stay outside the "core" of the theory - can provide the basis for an analysis of a relationship between rate of interest and prices which is based not on Wicksellian lines but on the influences of the interest rate on production costs in an open economy. Changes in the rate of interest in the "central" countries affect their normal costs of production in a variety of ways, but in particular through their effects on the prices of of imported raw materials and industrial inputs. The terms of trade improvement in the "core" in turn opens the way to a series of debt deflation-induced real and financial crisis in the "periphery". By underlining the link between macroeconomic policies in "central" countries, falling commodity prices and debt cycles, our analysis emphasises the serious drawbacks which may derive in the long-run even to central countries from apparently successful anti-inflationary policies.

5. Cycles and Growth. A Note on Development in a Market Economy
Author: Pierangelo Garegnani and Attilio Trezzini
The paper moves in a theoretical context in which the level of economic activity is dependent on aggregate demand in the long as well as in the short period. The paper shows that giventwo simple hypotheses the economy will exhibit a tendency ot grow independently of the average level of investment (or other 'autonomous' demand) over time. The two hypotheses are a) that investment oscillates over time and b) that the community's marginal propensity to consume is lower when income contracts in the slumps than when it increases. The two assumptions thus point to a possible source of growth which is endogenous to the system.

6. The Irreversibility of Consumption and Economic Growth
Author: Attilio Trezzini
The thesis out forward in a previous paper by P. Garegnani and the author is here scrutinized in detail. In advanced capitalist economies the asymmetry of aggregate consumption, which decreases to a lesser extent during recessions than it increases during expansions, implies an endogenous source of growth and accumulation. The analysis is developed here in terms of different numerical and graphical examples. The connection with similar assumptions on consumption to be found in the literature is also examined and some implications of the hypothesisin relation to the meaning of the proportion of saving in income are pointed out.

7. On Some Missing Equations in Contemporary Treatments of Intertemporal General Equilibrium
Author: Pierangelo Garegnani
It has not been sufficiently noticed that in an Intertemporal general equilibrium system as many Walras's laws underlie the equations as there are dates in the system, with the implication that an equivalent number of equations are not in fact independent. This has been hidden from viewby the fact that an equal number of equationswhich had as much title to be included as the remaining ones have been omitted. These missing equations are those concerning savings and investment in each periodof the life of the economy. Thus, when the system is correctly written, such questions emerge as a part of the system as essential, or inessential, as e.g. the equationsconcerning the demand and supply of labour for the same dates - i.e. as much independent of, or dependent on, the remaining equations as those labour equations. The two associated shortcomings - i.e. the oversight of the dated Walras's laws and that of the dated savings and investment equations - compensate each other with respect to a merely formal view of the determinacy of the system, and are in fact likely to have seriously affected the analysis of its properties by leading the interpreter to ignoring the capital goods yearly indirectly demanded by the individuals as savers through the firms - a demand which obeys principles very different from those governing their demand for consumprion goods.

8. The Market for Savings in the Theory of General Intertemporal Equilibrium
Author: Sergio Parrinello
A recent debate on the theory of general intertemporal equilibrium with production id focused on whether this theory is immune from the criticism to the aggregate version of the neoclassical theory of value and distribution. This articles resumes two controversialand related issues of that debate: 1) whether a market of aggregate values (saving) for eachperiod is implicit in that theory and is as much relevant for the determination of an equilibrium as the markets for dated physical commoditieswhich appear in the generally accepted form of the corresponding model; 2) whether the possibility of reverse capital deepening and reswitching of techniques can intrude into the model through that hidden market and become a source of non meaningful equilibria. The arguments presented will lead to an affirmative responseto question 1). Furthermore they will provide, also in the light of a recent (2009) contribution by Garegnani to the same question, a revised version of the quasi-equilibrium model which he used to describe the possibility 2).