Table Of ContentProduction, Value
and Income Distribution
This book investigates the relationship between wages, profits, values and
labour employment from a classical-Keynesian perspective. The starting
point of this approach is classical political economy (in particular, Smith,
Ricardo and Marx), suitably reformulated in modern terms by Sraffa and
then integrated with the Keynesian theory of employment. Such an approach
proves to be more appropriate in understanding the complexities of current
economies and in identifying the instruments to pursue the final goal of eco-
nomic systems: putting each person in a position to earn what is necessary to
live with dignity.
The approach undertaken by these chapters is in contrast to the ‘margin-
alist’ or ‘neoclassical’ school, which constitutes the mainstream of economic
analysis. Especially in recent decades, several critical analyses of the present
state of economic research have emerged due to the failure of contempo-
rary economic analysis to acutely penetrate and guide the workings of actual
economic systems. However, these analyses have not always been e ffectively
presented in a coordinated manner. This work presents one possible unifying
framework—grounded in a solid tradition of economic thought—which aims
to describe the basic forces operating in capitalistic economies and to iden-
tify the main objectives to pursue in production economies in order to fully
e xploit their potential. Most importantly, the focus of such classical-Keyensian
a nalysis concerns the production of goods and services, and this book shows
how several factors typical of contemporary (post-) industrial societies thus can
be understood in a way that the standard economic theory has not been able
to explicate (due to the reduction of everything to a question of exchange).
The book provides key reading for those on master-level economics courses.
Moreover, it constitutes a solid introduction to modern classical-Keynesian
analysis. It may also be of interest to readers who are keen to develop a critical
view of economics, political economy and history of economic thought.
Enrico Bellino is Full Professor of Political Economy at the Università
C attolica del Sacro Cuore, Piacenza, Italy.
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Production, Value and Income Distribution
A Classical-Keynesian Approach
Enrico Bellino
For more information about this series, please visit: www.routledge.com/
Routledge-Frontiers-of-Political-Economy/book-series/SE0345
Production, Value and
Income Distribution
A Classical-Keynesian Approach
Enrico Bellino
First published 2022
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
605 Third Avenue, New York, NY 10158
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2022 Enrico Bellino
The right of Enrico Bellino to be identified as author of this work
has been asserted in accordance with sections 77 and 78 of the
Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or
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or registered trademarks, and are used only for identification and
explanation without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Bellino, Enrico, 1963– author.
Title: Production, value and income distribution: a classical-
Keynesian approach / Enrico Bellino.
Description: Milton Park, Abingdon, Oxon; New York, NY:
Routledge, 2022. |
Series: Routledge frontiers of political economy | Includes
bibliographical references and index.
Identifiers: LCCN 2021036798 (print) | LCCN 2021036799 (ebook) |
ISBN 9780367273354 (hardback) | ISBN 9781032170671 (paperback) |
ISBN 9780429296178 (ebook)
Subjects: LCSH: Keynesian economics. | Wages. | Profit. | Economics.
Classification: LCC HB99.7.B44 2022 (print) | LCC HB99.7 (ebook) |
DDC 330.15/6—dc23
LC record available at https://lccn.loc.gov/2021036798
LC ebook record available at https://lccn.loc.gov/2021036799
ISBN: 978-0-367-27335-4 (hbk)
ISBN: 978-1-032-17067-1 (pbk)
ISBN: 978-0-429-29617-8 (ebk)
DOI: 10.4324/9780429296178
Typeset in Bembo
by codeMantra
To Chiara, my wife
Contents
About the author xiii
Preface xiv
PART I
Brief historical excursus 1
1 Forerunners of classical political economy: the
physiocrats 2
1.1 Introduction 2
1.2 The Tableau économique 2
2 The ‘surplus theories’ of production and
distribution: a general introduction 6
2.1 Introduction 6
2.2 The logical structure of surplus theories 6
2.3 Theory of value 9
3 Ricardian theory of distribution and value 14
3.1 Introduction 14
3.2 A model representing Ricardo’s ‘early writings’ 14
3.2.1 Assumptions 14
3.2.2 Solution of the model 20
3.2.3 A graphical representation 22
3.2.4 Characteristics of the solution 23
3.2.5 A decreasing relation between wages and the
rate of profit 24
3.2.6 Accumulation of capital 24
3.3 Generalization: income distribution in the Principles 26
3.3.1 The adoption of the labour theory of value 26
3.3.2 Uniform capital intensity 28
viii Contents
3.3.3 The labour theory of value as an
‘approximation’ and the need for an ‘invariable
measure of value’ 28
4 Theory of value and of prices in Marx 31
4.1 Introduction and definitions 31
4.2 ‘Transformation’ of values into prices of production 33
4.3 A numerical example 34
4.4 Marx’s ‘error’ and Bortkiewicz’s solution 36
5 Marginal and neoclassical theories 40
5.1 Introduction 40
5.2 A pure exchange model of general equilibrium 42
5.2.1 ‘Rational’ choice of individual i 42
5.2.2 Collective demand and supply functions 44
5.2.3 General equilibrium 45
5.2.4 Convergence to equilibrium (some hints) 46
5.2.5 The economic meaning of equilibrium prices 48
5.3 General equilibrium with production 48
5.3.1 Individual and collective demand and supply
functions 49
5.3.2 Production 50
5.3.3 Demand for the services of productive factors 51
5.3.4 General equilibrium 51
5.3.5 One degree of freedom 53
5.3.6 Some final remarks 53
5.4 Production of capital goods 55
5.4.1 One capital good 55
5.4.2 More than one capital good - Walrasian approach 56
5.4.3 Capital as a single magnitude 58
5.4.4 John Hicks’ turning point – the
‘neo-Walrasian’ approach 59
5.5 A logical necessity to get rid of the neoclassical approach 61
PART II
I nter-industry analysis: A reappraisal of classical
political economy 67
6 Input-output tables 68
6.1 Physical flows of commodities 68
6.2 Technical and consumption requirements 68
6.3 Input-output table 69
6.4 An algebraic formulation of the input-output table 71
6.5 Quesnay and Ricardo through input-output tables 73
Contents ix
7 The Leontief system 75
7.1 Introduction: constant technical coefficients 75
7.2 The closed Leontief system 75
7.2.1 From identities to equations 75
7.3 The closed Leontief system 76
7.3.1 Matrix notation 76
7.3.2 Existence of non-trivial solutions 77
7.3.3 Semi-positive solutions 79
7.4 The open Leontief system 79
7.4.1 Introduction 79
7.4.2 Existence of semi-positive solutions 81
7.4.3 Economic interpretation of the Leontief
inverse matrix 83
7.4.4 A synchronic and a diachronic representation
of production processes 85
7.4.5 Reprise of the numerical example 86
8 Sraffa’s analytical framework 89
8.1 Introduction 89
8.2 Production for subsistence 89
8.2.1 Example of a subsistence system 89
8.2.2 The case with C commodities 91
8.3 Production with a surplus 92
8.3.1 Example of a system with a positive surplus 92
8.3.2 The case with C commodities 94
8.3.3 Two different kinds of commodities: basics and
non-basics 96
8.3.4 Economic meaning of prices 99
8.4 Surplus distributed between capitalists and workers 100
8.4.1 The price equations 100
8.4.2 Second degree of freedom and income distribution 101
8.4.3 Surplus entirely perceived by workers 102
8.4.4 Surplus shared by capitalists and workers 104
8.4.5 Again on basics and non-basics 104
8.4.6 Beyond mathematics 106
8.5 Changes in prices and wages as the rate of profit
changes 106
8.5.1 The particular case of uniform proportions of
labour to means of production 107
8.5.2 Non-uniform proportions of labour to means
of production 108
8.5.3 Towards a solution - the Standard commodity 111
8.5.4 Transparency of distributive relations in the
Standard system 112
