Reply to Parrinello

First of all, we sincerely thank Sergio Parrinello for his detailed comments and criticisms about our book essay. Parrinello's notes allowed us to critically explore several issues related the topics covered in possibly clarify point view. In this note, try offer some replies keep debate open push understanding a little further. Since many (although not all) concern Pasinetti's work, it seems convenient start note by presenting analysis explaining how Sergio's criticism may be placed context reading work. It that questions posed are better understood if recall, first model structural dynamics, fully developed Pasinetti (1981, 1993) books, basically represents normative type analysis. Like Joan Robinson's ‘Golden Age’ dynamics (1956), serves as benchmark defines conditions system grow full employment equilibrium. The interest originality due its ability study dynamic overall economic an analytical framework disaggregated at sectoral level. way, is easy understand different trends technological progress labour productivity, spending habits consumer behaviour, allocation profits investments between sectors (essential features modern capitalist societies) unlikely satisfy (if chance) requirements growth. On contrary, they tend produce significant phenomena unemployment and/or Keynesian (due lack effective demand). For Pasinetti, bolstered 1960s critique neoclassical theory capital, these imbalances cannot resolved through automatic adjustments based on appropriate changes factor prices. Therefore, moving ‘institutional’ level analysis, more comprehensive set adjustment mechanisms required bring actual closer adapt evolution forces guide dynamics. They must, place, measures aimed accelerating processes reallocation work among various productive sectors, training workers making them capable adapting innovations change; secondly, deliberate interventions policymakers must directing flows income filling gaps demand aggregate reference he called ‘natural system’ 1993, 2007), there no room concept causality ‘perturbation normal state’ or ‘deliberate manipulation’ view specific policy objectives (Woodward, 2003). Nonetheless, occasions, recommended younger economists engaged levels theoretical investigation build models able cope with endogenous adopting formal structures should least partially decomposable. paper, will go arguments order from one followed. Section 2, recall skeleton static version model, which stands basis points raised discussion. supposed ‘over-determinacy’ analysed 3, consequences 4. relation problem choice techniques technical dealt 5. Some considerations concerning contraposition ‘causality versus interdependence’ presented 6. rationale use vertically integrated approach tackle explained 7. possible opportunity macroeconomics before microeconomics discussed 8. Finally, 9, reply short annotations margin nine ‘canons’. 1 unit final good c requires l ${\mathscr{l}}_{c}$ units composite capital good, is, means production taken given proportions, industry (for reason, call ‘capital c’ employed c); each period constant proportion, δc, wears out; produced λc labour, = 1, …, C. Magnitudes cc, jc, , πc given; magnitudes qc, qN, kc, pc, zc w unknowns. Beyond punctuation, probably condition (4) considered cause ‘over-determination’ since involves only parameters. This would conclusion satisfied fluke (a similar can drawn (3) closed Leontief system).1 Normally, outcome interpreted observing both contain but also consumption coefficients, last column matrix A (1a-1b) coefficients cc (-2b′). And precisely have ensure fulfilment (4). synthesis, (-2b′) over-determined; particular, inclusion (5) does induce any over-determinacy model. impression over-determined arise fact that, exclude trivial solutions, enter However, entail treated unmodifiable magnitudes. [t]he removal described II arbitrary without theory. example, introduce residual variable public expenditure taxation, defined terms standard value, fills gap excess supply labour. transform descriptive into recalls idea deus ex machina. sufficient claim exogenous parameter become endogenous; else state materialize. necessary solve meaningful way. But ‘what do’ depends purpose built. could highlighting absence automatisms when output determined according 2C equations (2a), principle expressed, case, sector. highlights aspect leaves shadows: failure satisfying prevent satisfaction (2a). equilibrium sector (where satisfied) while having disequilibrium macroeconomic From viewpoint, what aims say, besides (probably) unfortunate title seventh methodological issue canon: ‘Disequilibrium instability (not equilibrium) industrial economies’. relevant result: provides multisectoral notion ‘under-employment equilibrium’. existence possibility imagining process quantities prices, such outline situation under-employment economy. paragraph 2.3, observes comparative involving has yet approach. His contention certainly correct. Yet, change studying effects demand2; hence, time horizon consideration medium-long run, where observed adopted mainly constituted switches known new techniques. Along horizon, plurality moment time, thus them, less than introduction devoted. term ‘causality’ pretentious. fact, throughout essay included volume (see Bellino Nerozzi, 2021), alternate ‘sequentiality’. latter reflects too. Sequentiality indicates variables (or, least, them) instead being simultaneously. Thus ‘right’ ‘sequentiality simultaneity’. terminology Hoover's statement, sequential transformed simultaneous (and vice versa) though linear combination equations. statement obviously true. find logical-mathematical criterion distinguish determination variables: sequentiality form decomposable; otherwise, simultaneity. two examples quoted (the non-substitution theorem Sraffa's distinction basics non-basics) perfectly fit criterion. 5th canon collective Volume resume elaborated Herbert Simon early Fifties within circle Cowles Commission. Still, remove almost completely […] development accounts subsequent decades. acknowledged certain limited scope Simon’s initial causal ordering, although author strived overcome it. limitation derives – ‘causal ordering’ perhaps too demanding expression (assuming necessary) assign roles effect Recalling notorious stemming logical positivism, proposed (1953): intended analytic characteristic rather feature reality’: … ontological, characterization. systems, interdependent equations, frameworks. definition chain been provided contains itself empirical facts. simply meaning asymmetric framework. Instead starting mathematical property need select systems observationally equivalent. Pasinetti’s view, econometrics brought light approaches were dividing profession distinct opposing fields: ‘[t]he discussions occurred econometricians appear, sphere, particular broader controversy foundation itself. peculiar interesting episode: frameworks quite visibly emerge connection very practical purpose: quantifying, estimating parameters relationships’. According present-day persuasion prevails most theorists (philosophers, scientists neural networks, few economists), even allows simultaneity causes (hence, said recursive) interdependence variables. premise, convincing attributed general asserted presence Classical models. Too loose language used claim: ‘everything everything’ denote former’ ‘the latter. Walrasian ‘simultaneity’ applies variables, again formally ontologically. point, aim stress difference (but partial model), prices simultaneously, consumption, savings, national income; indeed, simultaneously once established; same price system, distributive outside We agree qualified using like causality. While lexical clarifications undoubtedly improve exposition thought, think abovementioned As ‘simultaneous causality’, was questioned compatible & 2017, fn. 10). himself admits decomposable subsystems illustrates their structure (Bellino p. 1659). steady economy, (or Von Neumann model) uncaused sense inertial velocity physics. persistence/reproduction over causeless, because net deviation -makers (only cancel other out exist). agree. say von quantity (output rate growth) value profits) Also again, well adjust solutions. far concerned, balancing difference-makers growth economy derive, grasp correctly, assumption Walras' law always market clearing all markets. Assuming above ‘normal ‘cause’ state’, then extent imbalance driving steady-state growth, departure full-employment path. 3.3, raises difficulty arguing carries describes directly reduction) coefficients. derived original input-output writes: ‘[s]uch negative implications applied notions control, manipulability, controlled independently another: variation - free’. seem apply here, Input-output matrices constructed commodities industries so take reduction commodities. Anyway, much complicated phenomenon consists way doing things (new processes, production, goods) thriftier inputs (on this, see 1981, chap. VI, § 3). All reasons explain represent level.3 terms, suggestion advanced 3.4. do interpretation adequately mainstream ‘micro-foundations’. Micro-foundation often method genuine analyses aggregation myriads choices individuals deemed homogeneous behavioural rules rational criteria representative agent plot whole behave faced shocks opportunities individual. With sole exception network families agent-based models, relationship agents crucial determining micro-foundation substitute eventually, lose autonomy discipline. alternative macro-foundation opposite equally undue) resolution micro macro careful individual behaviour bounded level, incomes, supply, demand. When inadequate excessive, individuals' saving plans fulfiled, pursue kind microeconomic optimisation. Moreover, basic shared classical-Keynesian school themselves impose priority macro-over micro-approach: ‘surplus’, production. If (correctly) physical pertains whole, or, less, firms. Section, give reply/comment annotation made I canons) qualifying reader's convenience, reproduce quotation canon. Beside addressed widespread armchair theorizing, mean observation reality theory? observation, distinguished philosophers Duhem up Kuhn Feyerabend, ‘theory-laden’. absolutely correct dismissing alleged neutrality proper realism research. believe Pasinetti. true assumptions reasonably realistic. never assumed external objective being, independent scientist's perspective clearly states real world, perceived scientist agents, maintained selecting hypotheses underlying reasonable support relation. Between naïve positivism assumes neutral complete Feyerabend's style epistemic relativism, assumes, intermediate position. At ever mentioning him, position Friedman, who validity evaluated ex-post, predictive capacity. application entrepreneurial Cristina Marcuzzo her contribution example research carefully grounded assumptions. How disentangle ‘economic logic, internal consistency rigour’ logic tout court’? where, equal cost […], values p’s necessarily positive. moved continuously 0, move continuously, p zero. wages positive, commodity zero until entering negative. Thus, other, none all. More generally, underlie Economic rigour sound reasoning. valid fundamental diverge excessively emerging observation. words, characteristics ordinary experience. Of course, collapsing model: properties mechanically conferred reality’; sort mediation (tolerable) divergence account. might be, remain cognitive tool, useful contexts answering limits difficult assess precisely. main neither nor task complex evolving systems. pillars, changing fail resist severe scrutiny strictly grounds, Cambridges' debates showed. inclined write ‘a major’ left inspiring, classical, weak attempt enucleate pillars Kurz shows essay, Malthus had uncertain reliable source paradigm Ricardo's. Keynes's overstating achievements, follows Cambridge master tributing really deserved. stake, wanted emphasise, building block aiming analyse long-term potential accumulation, human force, technology, activate amount available resources. prescribe restrictive advice denies usefulness stationary/states timeless. Again, indication one. make (we add) under circumstances, non-ergodicity imperfect reversibility choices. stationary framework, ergodicity sense, explicative power low long-run considered, she makes today switch option another; already yesterday, range options disposal same. particularly decisions accumulation and, more, leads discovering come exist yesterday best utterly obsolete today. strong path-dependency follow path historical depending casual circumstances past. hold one, configurations compared present knowledge, deem preferable. misleading. Interdependence synonymous mutual admitted See above, advocates invoke “macro foundations microeconomics”. clear why macro-level prescription, questioning such. assuming holds time. hand, extraneous classical economists, old modern. presupposes co-determination while, political (produced employed) stage distribution determined. ‘brought markets’ respective demands but, emerges equalities (expressed (2a) above) capacity force. Actually, disequilibrium—that non-satisfaction (4)—most (in opinion) exactly unduly state. did spend energy analysing disequilibrium. Keynesians, Goodwin Minsky, whom extraordinarily admired, did. Which appropriate? exposed important limitations. Limitations approaches. advantages disadvantages own. recalled 7 effectively outlines evident achieved, methods, kinds goods merit addressing non-trivial social progress, ignored disregarded matter persistent conceivable rigidity constraint hinders attainment equilibrium, mostly market. naturally spontaneously diverging assume ad hoc hypothesis. flexibility attaining reabsorption unemployment, design attain result. exhortation non-Classical well. entirely ground. Social regarded exclusive school. commitment improvement poverty, inequality, stood top economists' concerns. That suffices draw additional trait portrait schools economists. anonymous referees whose suggestions Reply. Financial Università Cattolica del Sacro Cuore, linea di ricerca D.1, gratefully acknowledged.