Facoltà di scienze economiche

Economic theory and technical progress

Pasinetti, Luigi

Economists’ recent outburst of interest in technical progress follows upon a widespread feeling of inadequacy of current economic theory. The author traces back the origin of this inadequacy to the historical circumstances that led an influential group of English economists in 1815 to put forward the “Law of diminishing returns” to land cultivation, jointly with the theory of rent. He shows... Plus

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    Summary
    Economists’ recent outburst of interest in technical progress follows upon a widespread feeling of inadequacy of current economic theory. The author traces back the origin of this inadequacy to the historical circumstances that led an influential group of English economists in 1815 to put forward the “Law of diminishing returns” to land cultivation, jointly with the theory of rent. He shows how technical progress, though not denied in principle, was eliminated by assumption for analytical reasons. That choice - he argues – arose from historical circumstances specific to a particular country in a particular time. Yet it has influenced the development of economic theory ever since. Later on, neoclassical economists have further exacerbated the effects of that initial choice. The author argues in favour of going back to the origin and reversing the Classical choice.