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96 Piero Sraffaconsumption goods), we go on to models concerning both exchangeand production. In the latter case, endowments include productiveresources; the relationship between endowments and consumers’preferences is mediated by productive activity, which comes into playside by side with exchange and consumption activities. Three groupsof givens are here considered: preferences of economic agents, initialendowments and technical knowledge. This basic model can then befurther extended when produced means of production are includedamong the initial endowments, and it is recognised that they can beincreased in amount over time through an accumulation process,the pace of which depends on investment decisions on the part ofeconomic agents.Thus, Sraffa is pointing to central features of the marginalist approachwhen referring, in the very first lines of his book (Sraffa 1960: v) to ‘anyoneaccustomed to think in terms of the equilibrium between supplyand demand’, as well as when referring, at the end of his book (Sraffa1960: 93), to ‘a one-way avenue that leads from “Factors of production”to “Consumption goods”’.These central characteristics hold whatever variety of marginalismwe consider. Scarce endowments and final consumption (or satisfactionof the needs and desires of economic agents) are confronted andconnected by market mechanisms acting in such a way as to bring outa balance between the two opposite sides, so that for each commoditysupply is equal to demand. Differences in specification of this basicscheme may be seen, for instance, in the extent of the role attributed tothe subjective element, which may underlie the demand side alone, orthe supply side as well, as in Jevons’s analysis of the producer’s equilibrium,based on the disutility of working, or in Wicksteed’s opportunitycost approach. Other differences are to be found in the specification ofthe original resources: either a detailed list of commodities in generalequilibrium models, or the usual textbook list of ‘factors of production’– land, labour and capital. In the latter case income distributionbetween rent, wages and profits 1 is not conceived as a separate issue,but as an aspect of the general question of value, with distributivevariables being simply the prices of a particular kind of commodities,namely the ‘factors of production’. Still other differences may emerge inaggregation (for instance, with the use of the category of ‘industries’ as1Traditional marginalist terminology uses interest and rate of interest instead ofprofit and rate of profits, as utilised by the classical economists and Sraffa. Herewe follow Sraffa’s terminology.Critique of the Marginalist Approach 97intermediate entities between the individual producer and the economyas a whole), or the way of dealing with the element of time (as we shallsee in § 6.2 below when dealing with the notion of the average periodof production).Now, it is obvious that no critique can have direct and immediate applicationto all varieties of marginalist theory. Notwithstanding, as we shallendeavour to show, Sraffa’s analysis can be attributed with general impacton the marginalist approach as a whole. Indeed, unless it is defined insuch general terms (as in Debreu’s axiomatic general equilibrium model)as to be inapplicable to the interpretation of any real issue, 2 then Sraffa’scriticism, suitably modified, will apply. This is due to the very basicstructure of the marginalist approach, where original resources are takenas given, unlike the classical approach, which represents ‘the system ofproduction and consumption as a circular flow’ (Sraffa 1960: 93).Clearly, economic theories, even when utilising axiomatic analysis,should not be conceived in terms of purely formal structure, but as asubstantive attempt to understand reality. This implies, among otherthings, that the assumptions on which the analysis is based be realisticallyevaluated. Of course, any theory requires abstraction; the point tobe considered is whether the specific abstractions involved (for instance,the idea of a single price for each commodity, or that of a uniform rateof profits), though far from being perfectly and systematically realised,are admissible simplifications for the purposes of the specific analysisunder consideration. This requires, among other things, that, whenevera main feature of the model utilised in our analysis simplifies away thecomplexities of the real world, such complexities can be introducedin our model as successive approximations which do not overturn theanalytical results of the first-approximation analysis. For instance, theaggregate income multiplier in its simplest form is based on the assumptionof a closed system, with no external trade, and no governmentsector; but a generalised multiplier can easily be constructed withoutsubstantive modifications to the results of our first-approximationtheory. On the contrary, generalisations of one-commodity modelsinto multi-commodity models imply drastic changes in the analyticalresults; for instance, the monotonically inverse relation between the2In particular, in general equilibrium models the idea of a uniform rate of profitsis ruled out: competition only concerns the formation of a single price for eachcommodity. The only ‘policy’ result that can be derived from general equilibriummodels is how specific and unrealistic the theoretical conditions are for the fulland general validity of the idea of the ‘invisible hand of the market’.