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120 Piero SraffaFurthermore, the classical economists traditionally consider as separateproblems that of determining exchange values (or natural prices)and their relationship with income distribution and that of the marketmechanisms set into action by a discrepancy between supply anddemand. The latter mechanisms essentially concern the analysis of competitiveprocesses and, insofar as they do not presuppose a systematicmarket clearing, do not lead to definite results: ‘market prices’ are not atheoretical variable explained by a – purely metaphorical – ‘principle ofgravitation’. 12 Let us stress that all this does not imply that ‘demand’ –whatever is meant by such a term 13 – has no effect on prices or on quantitiesproduced, within the framework developed by classical economists.‘Demand’ influences the entrepreneurs’ decisions on how much of eachcommodity to produce and hence, whenever constant returns do notprevail, the relative difficulties of production; thus demand acts on thedata of the problem that Sraffa isolates for analysis. What cannot befound in the Classical (and Sraffian) framework is the assumption of anequilibrium set of prices and quantities determined by market clearingprocesses and by consumers’ choices stemming from preference mapsdefined by (bi-univocal and convex) functions connecting the quantitiesdemanded of the different commodities to prices and to the economicagents’ endowments. In the classical economists’ view, the changes inconsumption habits that take place over time are generally the effectrather than the cause of changes in technology and in the structure ofproduction; in any case, these aspects are to be kept quite distinct fromthose concerning the competitive processes of adjustment to the ‘suddenchanges in channels of trade’ (as Ricardo calls them in the title ofChapter 19 of the Principles).The separation of the problem of exchange value from that of therealisation on the market of the commodities produced, and indeed itsseparation from the problem of analysis of competitive processes and12See for example Smith (1776), book I chapter 7 (and the commentary inRoncaglia 1990b, 2009a), or Ricardo (1817), chapters 19 and 30.13The classical economists do not refer to demand functions relating the quantitydemanded to prices (of the commodity under consideration as well as ofother commodities, thus implying substitution among consumption goodsdepending in a well-defined way on their relative prices); they commonly referto needs, customs and habits, and occasionally to status, in explaining the consumptionstructure. Equally extraneous to the classical approach is the notionof the economic agent, connected to methodological individualism, maximisingutility through consumption and production choices; the classical economistsutilise, rather, categories such as workers, capitalists and landowners, firms andproductive sectors.Interpreting Production of Commodities 121market prices, exemplify the classical economists’ practice of addressingdifferent analytical areas separately. As we shall see, the possibility ofdistinguishing various logical areas within economic argumentation,and indeed the utility of breaking down the problem of representing thefunctioning of the economic system into different ‘theoretical pieces’,correspond to a methodological line that Sraffa seems to have suggestedin his exchanges with Wittgenstein.7.3 Classical versus marginalist conceptions of competitionA fundamental element in the frame of reference used both by Sraffaand the classical economists for the analysis of prices is the assumptionof equality of the rate of profits in the different productive sectors ofthe economy. Classical economists, as well as Marx, consider this equalityas a limit condition, unlikely to be effectively achieved in reality.Nonetheless, they believe that the mobility of capital between productivesectors, in search of maximum profitability, would ultimately bring out atendency of profit rates to move towards this benchmark position.It is only in this sense, and not in the marginalist sense of the conditionsthat ensure equality of supply and demand, that one can speakof ‘equilibrium prices’ within Sraffa’s system. Obviously, the tendencytowards a uniform rate of profits comes about through decisions takenin each individual sector, taking into account the expected ease andprofitability of the market as well as past levels of sales, which also influencethe decisions concerning the levels of production. However, supplyand demand are not expressed as mathematical functions of pricesas in the theories of prices developed within the marginalist approach.The assumption of a uniform rate of profits for given levels of productiondoes not necessarily imply that the prices and/or quantities thatare actually realised are those that were initially expected. Nor does itimply equality between supply and demand in the period considered,either for each individual product or for production in the aggregate, aswe shall see more clearly in the following section.The assumption of a uniform rate of profits in the various sectorsthus reflects the classical and Marxian conception of competition basedon freedom of entry of new firms into each productive sector. Undersuch conditions it is, in fact, impossible for any single sector to realisean above-average rate of profits continuously, for new firms would beattracted into the sector in question by the possibility of earning higherprofits. As a consequence, productive capacity and supply would riserelative to demand, putting a downward pressure on prices (and vice