Massimo Di Matteo

Goodwin and the Evolution of a Capitalistic Economy: An Afterthought

I take this occasion as an opportunity to reflect upon what I have been learning from Richard Goodwin over the last few years since he has been associated with the Institute of Economics in Siena. I am interested in economic dynamics and therefore I will limit myself to say something on this topic though I am well aware that Richard’s interests are much wider and that I could have learned much more. I will expose some reflections that came to my mind when reading again, on a recent occasion, Harrod’s The Trade Cycle and Richard’s papers on the growth cycle and on the multiplier-accelerator models (see Goodwin (1982)).

Ultramarginal cost in da Empoli’s work: Towards a general approach to the theory of competition

Highlights the theory of competition advanced by da Empoli in the late 1920s. The main point is the existence of discontinuities in industrial concerns. This leads to the possibility that prices exceed marginal costs and depend also on ultramarginal costs, a new concept elaborated by da Empoli. They are costs that are incurred when the firm is producing beyond the marginal production. Also reviews the various implications of this approach. Stresses the innovative character of his approach and evaluates this in relation to contemporary and successive literature.

Early Discussions on Long Waves

In June 1985 Richard Goodwin and myself participated in a major conference on long waves in Weimar organized by IIASA and the Academy of Sciences of the German Democratic Republic. On that occasion I met prof.Thomas Kuczynski who alerted me to the absence of a translation in any western language of the book by Kondrat’ev and Oparin, Major Economic Cycles, published in Moscow in 1928. He kindly informed me that the book has two major features. On one hand we find the first thorough discussion of the long wave hypothesis by a number of economists and statisticians, on the other we have the first — and more refined — elaboration by Kondrat’ev of his theory of major cycles.

Towards a Rational Reconstruction of Pigou’s ‘Theory of Unemployment’

Abstract The chapter examines the core framework of A. C. Pigou’s Theory of Unemployment (TU) with the aim of providing a rational reconstruction of his analysis of the determinants of unemployment in the short period. This is accomplished without any comparison with Keynes’s criticism of TU, as often found in the previous literature. I reconstruct Pigou’s two-sector model, which only accounted for output in the wage good sector but not in the non-wage good sector, as a complete two-sector model to reveal his implicit assumptions about the passive behaviour of non-wage earners in the non-wage good sector. I also find classical elements, most notably the wage fund doctrine and the hypothesis on profits, in Pigou’s approach, which partly explains why the model is incomplete when viewed in terms of its neoclassical elements. In the “A Rational Reconstruction of the Two-Sector Model” section, I sketch a mathematical model to make Pigou’s analysis consistent. The chapter shows how unemployment is determined and how economic policy to deal with it is conceived in the work of a major exponent of the pre-Keynesian approach.

Relative Prices and Technical Change: A Suggested Approach to Long Waves

Over the last decade there has been an increasingly widespread feeling that conventional static economic theory is unable to offer a convincing analysis of the evolution of economic systems and reliable proposals for remedies to the situation of stagflation. As a consequence, in the last five or six years there has been renewed interest in the analysis of long waves described by Kondratieff (1926, 1928), which were consigned to oblivion after World War II. As early as 1913 Pareto wrote a paper, taking France as an example, which sketched very clearly the argument that the world economy was characterized by long-term oscillations. The idea was that a study of long-term tendencies, or the forces and mechanisms that shape and govern them, would help in answering in a more satisfactory way the questions posed by the real world.

Long Waves in Relative Prices: An Interpretation

After more than a decade the situation of the world economic system is now being increasingly regarded (possibly) as a new phase in the evolution of the economic system rather than as a transitory period in an otherwise uninterrupted period of growth. Indeed there is now a certain degree of awareness among economists that conventional static macrotheory may be considered insufficient for a really satisfactory explanation of a whole decade of stagflation.