Pierangelo Garegnani and the revival of the ‘submerged and forgotten’ surplus approach

Garegnani stressed that the theory of distribution is the foundation stone of all economic analysis and he focused on the existence, within the history of economic analysis, of two alternative approaches to the theory of value and distribution, namely the classical and marginalist ones. The upshot of Garegnani’s work is that economic science had been driven off course not by Ricardo’s classical approach but by Jevons, Marshall and Walras and that getting the discipline back on the right track requires the rediscovery and reactivation of the classical surplus approach that was abandoned in the mid-19th century. In this paper, some of the issues addressed by Garegnani to reactivate this approach will be discussed. They are the analytical method of the surplus approach, the relation between prices and outputs, and the implications of the phenomena of capital reversing and reswitching of techniques. Finally, some considerations on Garegnani’s interpretation of the labour theory of value and his analysis of exploitation will be advanced.