Piero Sraffa - Free

56 Piero Sraffaof production. 24 But there is nothing inherent in Sraffa’s scheme thatmakes the one-year assumption essential.In fact, different processes of production will, as a rule, generally havedifferent length (namely, different periods of production). In order todetermine prices in such circumstances we may construct a system ofequations in terms of the highest common denominator of the variousdifferent periods of production. In such a system each industry is subdividedinto a number of parallel production processes, each correspondingto a stage in the overall process of production. The semi-finished outputsobtained at the end of the first stage can then be treated as means ofproduction for the next stage, and so on up to completion of the process,when the final output emerges as finished goods. In theory this highestcommon denominator of the various periods of production could beinfinitely small, or, more realistically, one working day. In practice, as themost important period of payments is usually that for wages, the outlayson both raw materials and the other means of production can be arrangedin a period or groups of periods of length equal to the period of paymentof wages. Reference can then be made to the latter as the proper length(or unit of time) of the period of production. This approach obviouslyaccords with the assumption that wages are paid post factum. At the sametime, the prices of those final commodities requiring a period longer thanthe period of payment of wages for their production will include an elementof profit calculated on the wages advanced for the period betweenthe payment of wages and the emergence of finished goods. 253.6 The Sraffian revolutionTaking an overall view of Sraffa’s work, we can see it as the sum of threeparts: reconstruction of the authentic nature of the classical approachwith his edition of Ricardo’s Works and Correspondence; critique of marginalisttheory, whether in the Marshallian version (with the papers of1925, 1926 and 1930) and in Hayek’s macroeconomic version (withthe 1932 paper), or when it proposes a theory of capital as a factor ofproduction (with the 1960 book and a brief reply, in 1962, to a reviewby Harrod,1961); finally, an analysis of value and distribution that is24Cf. for example Mill (1821: 185): ‘A year is assumed in political economy as theperiod which includes a revolving circle of production and consumption’. (Thispassage is quoted in Sraffa 1951: xlii.)25For illustration of the assumptions of wages being paid at the beginning orthe end of the production period, and the respective implications, cf. Roncaglia(1975: 84–94).Production of Commodities by Means of Commodities 57both analytically consistent and rooted in the classical conception ofthe functioning of the economic system.Thus, through his research Sraffa provides us with all the basic pointersnecessary to set economic science on a path away from the marginalisttradition and back towards the classical tradition. Reviving theclassical approach, he frees it from the misleading interpretations accruingfrom marginalist readings; he provides a logically self-consistentsolution to the problem of exchange values where Ricardo – and Marxafter him – had fallen short of the goal, constituting one of the causesthat led to the abandonment of the classical framework and the rise ofthe marginalist approach. Indeed, Sraffa demonstrates that what themarginalist approach offers is marred by an equally basic flaw regardingthe theory of capital – a flaw, moreover, which cannot be remedied.There are at least two points in this contribution that deserve closerconsideration in view of the interpretative controversy they gave rise to,namely the relevance of his critique of the marginalist theory of valueand the relations between the revival of the classical approach andKeynesian theory. We shall consider the two issues in Chapters 6 and 7,but it may be useful to anticipate here a summary treatment.As we have suggested (and as we shall see in more detail later, inChapter 6), in Production of Commodities by Means of Commodities Sraffaprovides the tools for a radical, and indeed destructive, critique not onlyof the version of the marginalist theory implying an aggregate functionof production, but also of all the versions in which the distribution ofincome among social classes is tackled as a problem of ‘equilibriumprices’ (rent, wage and rate of profits) of ‘factors of production’ (land,labour and capital) determined by demand and supply just like all othercommodities. It has been argued that this criticism does not apply tothe modern theory of general economic equilibrium, which containsno mechanism to ensure a uniform rate of return on all the variouscapital goods, if valued in terms of their costs of production. However,as early as 1926 Sraffa points out that the general equilibrium approachis in its generality utterly sterile. 26 Indeed, it is precisely for this reason26‘To examine the conditions of simultaneous equilibrium in numerous industries:a well-known conception, whose complexity, however, prevents it frombearing fruit’ (Sraffa 1926: 541). In those happy times economists did not relysolely on internal consistency when evaluating a theory, but also required theoriesto be useful in the analysis of the real world; thus, for instance, in 1922 anotherparticipant in the debate on the theory of the firm, Allyn Young, wrote (in a letterto Knight): ‘I have yet to see that the method of general equilibrium gives usanything at all that gets us anywhere’ (quoted by Marchionatti 2001: 70).