Paolo Sylos Labini: critical economist in critical times

Unlike most others who followed in the footsteps of Sraffa focusing on the theory of value, Sylos Labini – while also taking an interest in the topic – went back to the British classics, and in particular to Smith and Marx, in search for a dynamic approach combining historical analysis and economic theory. This is the approach he followed in developing the first econometric model of the Italian economy (Sylos Labini, 1967). It was the first of its kind in Italy, shortly preceding the model formulated by the Bank of Italy in the same period under the guidance of Modigliani. It takes the economy as consisting of three sectors – agriculture, industries and services – characterized by different market forms (respectively competition, oligopoly, and monopolistic competition). The manufacturing industry is taken to be the driving sector of the economy; industrial investments are determined by the degree of utilization of productive capacity and the liquidity conditions of the economy. Together with exports and consumption, they determine product and employment trends. What characterizes this model is its heavy drawing from clearly defined theoretical models and concepts. While never abandoning empirical and applied work, Sylos Labini will increasingly distance himself from later developments of econometrics, mostly statistically driven and often devoid of economic theory.