Piero Sraffa - Free

vi Contents4.6 The relation to von Neumann’s theory of proportionalgrowth 714.7 The effect of taxes on basic, non-basic and wage goods 734.8 On the existence of positive prices for non-basiccommodities 755 The Standard Commodity 785.1 The standard of measure in Smith and Ricardo 785.2 Marx on Bailey on Ricardo 825.3 Sraffa’s specific problem and its solution 845.4 Standard commodity, labour commanded andthe von Neumann system 885.5 The relation of the standard commodity to theaverage commodity 906 Critique of the Marginalist Approach 956.1 The analytical structure of the marginalist approach 956.2 Critique of the Austrian theory 996.3 Critique of capital as a factor of production 1036.4 Extensions of the critiques 1097 Interpreting Production of Commodities by Means of Commodities 1137.1 Interpreting Sraffa: The assumption of givenquantities 1137.2 The clash between the classical and marginalistapproaches 1167.3 Classical versus marginalist conceptions of competition 1217.4 The realisation problem 1237.5 Sraffa and Wittgenstein: The problem of method ineconomics 1267.6 Sraffa and Keynes 1317.7 Summing up 1368 The Sraffa Legacy 1388.1 Introduction 1388.2 The rediscovery of the classical approach 1398.3 The analytical contributions stemming from Sraffa 1418.4 The ‘Ricardian’ reconstruction: Pasinetti 1448.5 The ‘Marxian’ reconstruction: Garegnani 1478.6 The ‘Smithian’ reconstruction: Sylos Labini 1518.7 A preliminary evaluation of the three lines of enquiry 154References 162Index 178IntroductionPiero Sraffa is, together with Keynes, probably the greatest economistof the twentieth century, and among the outstanding figures in theEuropean culture of his times. This book sets out to substantiate thisassertion, which is far from universally accepted.In fact, apart from periods (the 1930s and the 1960s–1970s) in whichcontroversy raged around the central nucleus of economic analysis – thetheory of the firm and the industry, and the theory of capital anddistribution – Sraffa’s contributions appear to be a field of interestfor specialists only, with no substantive role in present-day economicdebate. However, this is an easy way around certain crucial difficultiesin the field of economics which have yet to be surmounted. As amatter of fact, mainstream economic theory has neither demonstratedthe existence of errors in Sraffa’s analysis (as we shall see, there wereattempts in this direction, but all failed) nor adjusted to his results,which would have implied a drastic change in the direction of research,with the abandonment of its core, namely the marginalist approach tovalue and distribution. The mainstream consensus has simply followeda strategy of ignorance and detour, with the result of fragmentationbetween ‘high-brow’ analysis, internally consistent but based on unrealisticassumptions and incapable of providing clear-cut results, andhence irrelevant when it comes to dealing with real-world issues, anda host of disjointed ‘low-brow’ analyses of specific issues, such as thosedominating textbook macroeconomics, the theoretical foundations ofwhich are irremediably faulty.The distinction between ‘high-brow’ and ‘low-brow’ analyses wasexplicitly invoked by Paul Samuelson (1962: 193–4) in answer to theSraffian critiques of the mainstream economic theory consensus of thepost-Second World War decades. If you care for internal consistency, youchoose high-brow analyses (that is, pure general equilibrium theory); ifyou care for practical relevance, you choose the simplified models oflow-brow analyses. These, however, are marred by indefensible simplifyingassumptions, the role of which is to circumvent issues such as thoseraised by Sraffa, with recourse, for instance, to one-commodity macromodels, or partial equilibrium analysis.The result is to be seen in the marked fragmentation of present-dayeconomics, with researchers specialised each in a separate sub-field.viii