Critique of the neoclassical theory of growth and distribution

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

BNL Quarterly Review, 2000, vol. 53, issue 215, 383-431

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.

Keywords: Distribution; Economic Growth; Growth; Income Distribution; Income; Neo Classical; Neoclassical (search for similar items in EconPapers)
JEL-codes: B22 E25 O33 O41 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (32)

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