Marx and Pasinetti versus Proportional Dynamics: Causality, Simultaneity and the Law of Value

This contribution will critically appraise Luigi L. Pasinetti’s rehabilitation of causality in economics in its link with a rehabilitation of a labour theory of value. Pasinetti highlighted how the incorporation of accumulation into models of simultaneous equations entailed the assumption of fixed coefficient of productions, an assumption at odds both with ‘two centuries of industrialization’ (Pasinetti, 1993) and with the classical and Marxian approach to capital accumulation and technological change. In the next section, the author will show how a methodology centred on interdependence was explicitly developed in antithesis to Marx’s ‘successivist’ approach and to core aspects of his critique of political economy. The author will then give an account of von Charasoff’s, Cassel’s and von Neumann’s quasi-stationary growth models. The third section will introduce Pasinetti’s re-evaluation of the notion of causality, together with its critique to the models of proportional dynamics. In the last section, the author will discuss some of the limits of Pasinetti’s structural dynamics.