Piero Sraffa - Free

114 Piero SraffaIn his analysis Sraffa is quite unequivocal on the point that he takesthe quantities produced as given. Thus he is able to consider as giventhe techniques of production, while avoiding any assumption onreturns to scale. 1 In a text of exemplary concision, he actually repeatshimself to stress the point:No changes in output and (at any rate in Parts I and II) no changesin the proportions in which different means of production are usedby an industry are considered, so that no question arises as to thevariation or constancy of returns. The investigation is concernedexclusively with such properties of an economic system as do notdepend on changes in the scale of production or in the proportionsof ‘factors’.(Sraffa 1960: v)For Sraffa the point is not only crucial, but also a potential source ofmisunderstanding. It is, indeed, an assertion that can hardly go downwell with readers taking demand and supply equilibrium theory to theirperusal of the book. For such readers – the overwhelming majority ofcontemporary economists – it is easier to see Production of Commoditiesby Means of Commodities as half (the half they consider the supply side)of a system of general economic equilibrium. Indeed, flying in the faceof these explicit statements (which, moreover, are not obiter dicta butthe pondered opening to a deeply pondered text), a number of economistshave advanced this interpretation. 2This interpretative mistake re-evokes the error Marshall made in relationto the theory of Ricardo, and of the classical economists in general.Marshall, as we well know, held that they were aware of only one ofthe two ‘blades of the scissors’ determining price – the supply side, butnot the demand side. 3 In this case, too, classical analysis was rendered1Cf. earlier, §§ 3.3–3.5, and Bellofiore-Potier (1998: 94–5).2Cf. for instance Johnson (1962); Robinson (1961); Hahn (1982). Joan Robinsondid, however, eventually modify her interpretation: cf. Robinson (1978: 122).3Cf. in particular the appendix to Marshall’s Principles (1961: 813–21; here wefind – on p. 820 – the famous reference to the blades of scissors: ‘The “cost of productionprinciple” and the “final utility” principle are undoubtedly componentparts of the one all-ruling law of supply and demand; each may be compared toone blade of a pair of scissors. When one blade is held still, and the cutting iseffected by moving the other, we may say with careless brevity that the cuttingis done by the second; but the statement is not one to be made formally, anddefended deliberately ’.). For Sraffa’s critique of Marshall’s economics, cf. above,Chapter 1.Interpreting Production of Commodities 115comparable to analysis in terms of demand and supply equilibrium byintroducing the assumption of constant returns. Such an assumption,however, cannot be held to represent a general constitutive elementof classical analysis: the classical economists had quite different ideasabout returns to scale, and moreover conceived them in the context ofa dynamic analysis. Let us recall, for example, Smith’s ideas about therelationship connecting division of labour (and hence productivity)to the size of the market, or the role played by decreasing returns inagriculture in determining land rent in the analyses of Malthus, West,Torrens, Ricardo and others.Sraffa foresaw quite clearly that the same error would once again cropup in connection with his own analysis. Indeed, he appeared readyto accept the inevitable, though up to a point. If you really cannothelp reasoning in terms of demand and supply equilibrium, he says ineffect, then go on and assume – but only as an initial step – that I amconsidering the case of constant returns: ‘If such a supposition is foundhelpful, there is no harm in the reader’s adopting it as a temporaryworking hypothesis. In fact, however, no such assumption is made’.(Sraffa 1960: v: these lines come between the first and second of the twopassages quoted above.)Here a problem arises. If the hypothesis of constant returns constitutessuch a dangerous misunderstanding, how can Sraffa possibly deemit acceptable for the first few steps?Luckily, the answer here is simple enough. The fact is that Sraffa’saim in writing Production of Commodities by Means of Commodities wastwofold. On the one hand, he set out to provide the ‘prelude to acritique of economic theory’, as indicated by the subtitle (where ‘economictheory’ means ‘the marginal theory of value and distribution’, asSraffa himself takes care to specify in his Preface: Sraffa 1960: vi); at thesame time, on the other hand, he intended to solve certain analyticalproblems – in particular the link between relative prices and the distributionof income – that the classical economists left unsolved, andwhich contributed to the crisis of the classical approach and thus tothe rise to dominance of the marginalist approach. Now, those broughtup in the marginalist tradition must first of all learn to recognise thelogical difficulties inhering therein; only then will it prove useful to discoverthat the classical approach does not collapse simply because thelabour theory of value does not hold. But criticisms – or the premisesfor a critique – of the marginalist theory of value and distributioncan perfectly well be advanced, studied and discussed referring to oneparticular case of marginalist theory itself, namely that of constant