Markets, Productivity, and Happiness in a Historical Perspective

The influence of classical political economy on Italian economic thought in the 1980s: the case of Paolo Sylos Labini’s productivity equation

Palumbo Antonella, Università Roma Tre
Fontanari Claudia, Università Roma Tre

This contribution focuses on the analysis of productivity and the related ‘productivity equation’ proposed by Paolo Sylos Labini in the 1980s. This analysis exemplifies Sylos Labini’s original and autonomous route in the ‘return to classical political economy’ which characterized Italian economic thought starting from the late 1960s – an approach which collocated Italian economic thought at the centre of the international theoretical debate, but also gave rise to many original and penetrating applied analyses, which both founded on the national tradition of thought and stemmed from a critical and innovative standpoint. Sylos was especially concerned with dynamics and change, emphasizing the interrelations beteween growth, distribution and innovation. The productivity equation highlights the positive role of both the extension of the market and the dynamics of wages on productivity, thus offering a way out of the ‘wage problem’ as envisaged by Sylos – the possibility that high wages, though favourable to the growth of the domestic market, may also hinder accumulation and growth by compressing profits – and a ‘virtuous’ route to higher competitiveness. In line with the typical method of classical political economy, Sylos’s analysis is never cast in terms of clear-cut mathematical functions but rather in terms of influences and possible scenarios. Relationhips are context-sensitive, may take different strength and even direction according to circumstances, thus determining different outcomes. The following historical events, and the deep change in the intellectual environment which took place from the 1980s on, determined the marginalization of this kind of approach which, through rigorous and original theoretical analysis and detailed applied research well aware of the historical and institutional characteristics of the system under exam, had the potential for fruitful understanding of the dynamic problems of technical innovation, development and change.

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Keywords: productivity; technical change; classical political economy; Paolo Sylos Labini