ABSTRACT
Garegnani (1983; 1984; 1987; 1989) has done much to demonstrate the importance of the classical approach to wage theory, as a feature distinguishing it from marginalist economics in its analysis of the problem of value and distribution. Their approach to wage theory, in many respects relying on an exogenously determined wage, nevertheless constitutes part of the core of the basic ‘surplus approach’ to economic analysis.1 Given net social product, aggregate wages for the classical economists are taken to be sufficient to determine the surplus product of the economy in the form of shares other than wages, that is, profit, interest and rent. In addition, the classical approach to wages leaves room for the possibility of unemployment in the analysis, even when the natural wage rate rules in their system. Such an approach to wages, Garegnani (1989: 118) emphatically points out, stands in strong contrast to subsequent wage theories based, as they generally tend to be, on a form of supply and demand analysis. The classical view amounts to an entirely different relationship between income distribution and relative prices – an element of independence of distribution from relative prices (‘value through exogenous distribution’ – Bharadwaj 1963); and, at the same time, an essential interdependence between wages as a distributional variable and commodity prices. These distinctive features of classical wage theory emphasise the relevance of the first part of our title, pre-Smithian classical political economy, since they occurred in preliminary form well before 1776.
