Equilibrium is an organising principle of economic thinking subject to incompatible interpretations. The idea of a Keynesian equilibrium as a position of rest with involuntary unemployment contrasts with Pasinetti's notion of an equilibrium situation, that is, an unstable position with full employment. In the former, an equilibrium state cannot be separated from the mechanisms that may (or may not) lead to it, whereas in the latter, the explicit separation between both layers is crucial.

This chapter explores how Pasinetti's methodological standpoint, formulation of the principle of effective demand and conceptualisation of equilibrium, cumulatively build up into a scheme of structural dynamics. It is argued that compositional changes in the structure of demand and the uneven pace of productivity increases render equilibrium situations impossible to maintain through time, especially as regards (full) employment. Therefore, rather than seeking explanations as to why the economy does not return to its equilibrium path, it proves fruitful to specify and empirically implement computable norms to quantify how far (or close) actual economies are from them, providing a compass for policy.

The chapter aims to show how many conceptual points of the classical-Keynesian analysis are essentially based on a suitable interaction between causal and interdependent relationships. Throughout the analysis, the terms ‘causality’ and ‘interdependence’ are interpreted following the interpretation given by Herbert Simon as analytical characteristics of the relations between the magnitudes involved in the theory, rather than a feature of economic reality. A meticulous work of revisiting the analytical formulations of some important foundations of both classical and Keynesian theories has been presented here to bring to the surface the sequential or the simultaneous nature of the determination of the main variables and the economic meaning attached to these analytical properties.

Our comment to Pasinetti’s fourth point starts from Robinson’s distinction between ‘logical’ and ‘historical’ time and from the critique based on that distinction that she addressed to both the neoclassical and the classical theory of value and distribution. We find that there are two sides to Robinson’s critique: one by which that critique can legitimately be addressed to both theories, but that should be rejected; and the other, that with one reservation should be accepted but that has to do with the specific nature of the neoclassical theory inasmuch as this theory is based on demand and supply curves. Moving to further questions with a ‘chronological’ dimension, we argue that the interpretation which is sometimes proposed of the classical theory as a theory aimed at determining single ‘pictures’ of the economic system taken at different ‘points of time’ should also be rejected. Finally, we point out that the distinction between two notions of time reappears in the neo-Walrasian reformulation of the neoclassical theory, where, differently from what happened in Robinson’s case, it has the effect of obscuring the very possibility of comparing that theory with alternative economic theories.

We propose a rational reconstruction of Sraffa’s strategy for theory assessment with a focus on the issue of the realism of the premises and the role of internal logical consistency as distinct from formal rigour. Sraffa appears to follow a two-stage strategy: first, a rigorous logical reconstruction of the theory under scrutiny and the identification of its explicit and implicit assumptions; second, an accurate description of the empirical phenomena the theory, once logically reconstructed, is able to explain. The explanatory value of a given theory depends on its ability to select among the various economic forces and mechanisms in action in a given situation the one(s) that the theorist holds to be the most relevant and provide a logically consistent description of the chosen mechanism(s). No theoretical explanation of a given economic phenomenon may be considered acceptable if it is based on ill-defined theoretical notions since such notions stand in the way of an exact theoretical measurement of the magnitudes under investigation and thus prevent the theory of being correctly applied to the phenomena it was designed to explain.

Emphasis on structural change as an essential element of long-run growth in capitalist economies since the Industrial Revolution is a main characteristic of Pasinetti’s scientific work. Technical progress is the main driver of structural change and economic growth.Pasinetti integrates structural change in economic analysis by considering the double-sided nature of technical change and the interaction between the supply side (growing productivity) and the demand side (increasing per-capita income) and the evolving structural dynamics of employment and consumption. The analysis is conducted on the basis of vertically integrated sectors which may differ in the growth rates of productivity and demand. In order to maintain full employment over time, an effective demand condition and a capital accumulation condition must be satisfied. In his modern theoretical analysis of Ricardo’s machinery problem Pasinetti shows that a continuous process of structural change is a precondition to avoid technological unemployment. Furthermore, full employment has to be actively pursued by an economic policy raising effective demand and promoting research and development thus combining the insights of Keynes and Schumpeter.

Cambridge economics can still be seen as a distinctive subdiscipline, involving a revival of classical and Keynesian economics and contributing to macroeconomics, to the theory of growth and distribution, to capital theory and to the history of economic thought. Pasinetti has been a major representative of this school for more than half a century. The present essay is the concluding chapter of a Festschrift for him. It provides a synthesis of the other chapters, which are dedicated to individual aspects of Pasinetti’s contributions to Cambridge economics. It leads from the methodological foundations and the theory of prices, based on production, to the theory of investment under uncertainty and to distribution, to capital theory and to growth with structural change. This is explained with Pasinetti’s normative turn. The formal conditions for the maintenance of full employment in an economy with differential rates of productivity growth in the different sectors have to be separated from the institutions, the legal and ethical rules and the historical conditions that may be required to realise full employment. The exposition is in part critical and concerns shortcomings of neoclassical approaches, and in part constructive.

The years of prosperity after World War II are known as Les Trente Glorieuses. But while they were glorious for white Americans, African Americans were left out of the economic expansion. The Great Migration continued as Blacks tried to improve their lot, but good jobs were getting more scarce as the economy was experiencing technical change that destroyed factory work. Blacks were cut out of the GI bill because it was administered by states. Blacks therefore could not get good education for the new technology, mortgages for houses in the new suburbs, and were often denied membership in unions. Brown v. Board of Education was designed to create integrated classrooms, but whites moved to private schools and suburbs to avoid integration. Lyndon Johnson’s 1965 Voting Act provided wars to outlaw Jim Crow laws, but it was severely limited in its effect by the Supreme Court. Some Blacks were able to get a good education and graduate from college. They became a Black Elite.

Many of the great masters of post-Keynesian economics – think of Lunghini, Garegnani, Graziani, but the list is long – are no longer with us. Those belonging to the following generation have been marginalised and reduced to irrelevance, at least in the academic arena. The ‘neoclassical group’, on the other hand, has closed its ranks and built a powerful machine of cultural hegemony. It is very difficult for those who pursue non ‘mainstream’ lines of research to build an academic career – and thus continue to do research. And still, if paradigm shifts are most likely to happen in the wake of epochal transformations, the world is changing rapidly enough to advocate for one.

The building-blocks of this ‘new’ paradigm are all there. All we have to do is to circumscribe its perimeter, and close ourselves our ranks to join forces and knowledge and provide a complete, coherent and alternative interpretative framework to the dominant one. In this chapter, I make the bold attempt to connect these blocks, giving a (non-comprehensive) list of readings, authors or research lines which could fruitfully cooperate in creating the school of thought Pasinetti is advocating for.