ETD

• Kaldor
• Pasinetti
• Post-Keynesian

This thesis reconstructs and reassesses the debate between Luigi Pasinetti, Paul Samuelson and Franco Modigliani on the Post-Keynesian theory of distribution through a systematic analysis of previously unexplored archival material. Although the controversy is generally associated with the 1966 symposium published in the Review of Economic Studies, this study shows that its origins can be traced back to 1963 and that several of its most significant theoretical and methodological aspects never fully entered the published debate.

The controversy emerged within the broader development of the Post-Keynesian theory of growth and distribution initiated by Kaldor (1955-56) and reformulated by Pasinetti (1962). Building on the Keynesian principle of effective demand, this approach reverses the causal mechanism assumed in neoclassical theory: aggregate investment is treated as independently determined, while aggregate saving adjusts through changes in income distribution. In Kaldor’s original formulation, differences in the marginal propensity to save between workers and capitalists determine the income shares consistent with full employment and steady growth. Pasinetti’s reformulation extended the model by allowing workers to accumulate wealth and receive property income, deriving the result that under specific conditions the long-run rate of profit remains independent of workers’ saving behaviour.

Samuelson and Modigliani challenged both the analytical foundations and the generality of this result. Their criticism culminated in the 1966 article “The Pasinetti Paradox in Neoclassical and More General Models”, where they argued that Pasinetti’s conclusions depended on restrictive assumptions and could ultimately be interpreted within a more general neoclassical framework.

This thesis draws on documents preserved in the Paul A. Samuelson Papers at the Rubenstein Library of Duke University and in the recently opened Pasinetti Papers Archive at the Università Cattolica del Sacro Cuore. The archival evidence includes correspondence, unpublished notes, draft manuscripts, and editorial exchanges. By combining these materials with the published contributions, the thesis reconstructs both the intellectual development of the debate and the process through which it was transformed into a public controversy.

The analysis shows that the disagreement extended beyond the technical properties of distribution models. The correspondence reveals a deeper methodological conflict concerning the interpretation of economic theory, the role of behavioural assumptions, and the status of long-period equilibrium relations. During the initial exchanges, Samuelson and Pasinetti attempted to establish a common analytical framework through which their arguments could be mutually understood and evaluated. Samuelson approached Pasinetti’s model through the conceptual language of neoclassical equilibrium analysis, whereas Pasinetti regarded his framework as a system of necessary relations describing the conditions required for full employment and balanced growth.

The archival material also clarifies several ambiguities surrounding Pasinetti’s 1962 contribution and shows that important aspects of his later published responses were originally formulated in direct correspondence with Samuelson. Furthermore, it highlights the influence of economists such as Kaldor and Robinson in shaping Pasinetti’s position.

By reconstructing the evolution of arguments across correspondence, unpublished drafts, and editorial exchanges, this thesis contributes to the historiography of Post-Keynesian economics and offers a new interpretation of one of the most significant theoretical disputes in post-war economic thought.