Capital Theory, the Surplus Approach, and Effective Demand

This book presents a representative set of Pierangelo Garegnani’s (1930-2011) works on the theory of value and distribution. It features a selection of essays, chosen by Garegnani himself, concerning central aspects of his work: first and foremost, the continuation and development of Piero Sraffa's effort to elaborate an alternative to the dominance of marginalist thought on the theory of value and distribution. Garegnani articulates and extends Sraffa’s contribution in two directions: the critique of marginalist theory with respect to the treatment of capital, and the reappraisal of the surplus approach to distribution proper to classical political economy. In turn, these two strands of analysis are combined in Garegnani’s project to make the Keynesian principle of effective demand more robust and general by dropping the unnecessary elements of marginalism and linking it to the classical explanation of distribution. This book reveals how Garegnani’s contribution has advanced the degree of theoretical elaboration for several issues that fall within the developmental paths of economic analysis opened by Sraffa and Keynes. It begins with a comprehensive introduction in which Garegnani illustrates the conceptual path that links the contributions presented here. The starting point of this intellectual journey is Garegnani’s previously unpublished doctoral thesis ‘A Problem in the Theory of Distribution from Ricardo to Wicksell,’ prepared at the University of Cambridge under the supervision of Piero Sraffa and Maurice Dobb, which is followed by various essays selected by Garegnani on the critique of marginalist theories, the classical approach to value and distribution, and the role of aggregate demand for the long-run trends of output and capital accumulation. The book is a must-read for all scholars interested in the resumption and development of the classical approach, as well as economic theory in general, and the history of economic thought.