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All three involve a judgement on the efficacy of a negative interest rate policy (NIRP) in tackling stagnation: according to the first it is unfeasible, according to the second it is ineffective (and even dangerous), and according to the third it is irrelevant. First, we argue that these theories face the fundamental difficulty constituted by the use of a (negative) natural (or equilibrium) rate of interest. We propose an original critique of the negative equilibrium rate of interest determined by the marginal efficiency of capital. Second, we claim that the negative interest rate policy is an inadequate tool to fight stagnation. While monitoring and fostering financial stability should be a fundamental role of monetary authorities, monetary policy is unable to stimulate growth, whereas fiscal policy is better suited to the task.

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The paper develops Pierangelo Garegnani’s notion of the ‘core’ of the classical theory of distribution to propose a wider integration of the concept of social surplus and institutions into economic thinking. Its main tenet is that the social surplus does not exist independently of the institutions (or social order) that oversee its production and distribution, starting from those that prevail in the sphere of production. In this sense, we supplement the surplus approach with important insights not only from the Polanyian approach, from economic archaeology and anthropology, but also from Sraffian authors and Sraffa’s manuscripts. Taking inspiration from Garegnani, this work is offered as a prelude to the design of different economic ‘cores’ for different stylized economic formations.