Natural rates of profit, natural prices, and the actual economic systems - a theoretical framework
The aim of the present paper is that of exploiting the notions of vertically (hyper-)integrated sectors, as discussed in Pasinetti (1973) and Pasinetti (1988), and of natural system, as defined in Pasinetti (1981), in order to build up an analytical framework in which data from national accounts can be consistently inserted and hence used to analyse actual economic systems. Pasinetti (1981) built up an analytical framework in which the economy is divided into as many vertically (hyper-)integrated sectors as there are consumption goods. Each vertically integrated sector is summarised, as explained in Pasinetti (1973), by a composite commodity — a unit of vertically integrated productive capacity — made up by all the goods that enter, both directly and indirectly, the production of the corresponding consumption good, and a unit of vertically integrated labour, i.e. the quantity of labour that directly and indirectly enters the production of the consumption goods. Being the model developed in Pasinetti (1981) a vertical integrated model, there is a link between it and the analytical formulations provided by Pasinetti (1973) and Pasinetti (1988). However, such an analytic link has not been singled out explicitly, thus making it difficult to use the model itself for empirical purposes. The aim of the present paper is therefore precisely that of making this further step, in order to set up a theoretical framework which can be fruitfully used for empirical analyses of actual economic systems.
Natural system; vertical integrated sectors; functional income distribution; natural rates of profit; natural prices.
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