Piero Sraffa - Free

136 Piero SraffaThe bridge between Sraffa’s analysis of prices and Keynes’s analysisof production levels can be built along the following lines. In Sraffa’sanalysis, which focuses on the conditions for reproduction of the economicsystem, the prices of commodities used as means of productionare equal to the prices of the same commodities included in the product,and the technology is given. When technology changes, if we ruleout the entirely hypothetical case of an equi-proportional reductionin all the coefficients of production, relative prices also change. If thechanges in technology were known ex ante, we would have continualarbitrage between current and future products, with a mechanism offorward prices and own interest rates which constitutes a theoreticalcontribution by Sraffa (1932) taken up by Keynes in Chapter 17 of hisGeneral Theory (and modified by the introduction of liquidity preferenceand the liquidity premium). 33 However, in general it is implausible toconsider changes in technology as known ex ante, and all the more sowhen reference is not to productivity growth in the economy or in themanufacturing sector as a whole but to sectoral technical changes, as isnecessarily the case in the context of an analysis of relative prices. Indeed,we may argue that it is precisely here that the major element arises – in sofar as it operates continually and systematically, even in ‘normal times’ –of the all-pervasive uncertainty which constitutes a key feature of Keynes’svision. 34 For this reason the two problems – Sraffa’s and Keynes’s – must bekept apart. Nevertheless given Sraffa’s approach to his problem – isolating itfrom the determination of quantities produced, while avoiding any openingto ‘Say’s law’ – we may consider his analysis of the prices–distributionlink conceptually compatible with Keynes’s analysis of employment, oncethe latter has been cleared of marginalist encrustations.Interpreting Production of Commodities 137from within, demolishing the traditional marginalist theories of valueand distribution; in this context, some parts of the book – such asthe discussion of the standard commodity – may appear pleonastic oresoteric. On the other hand, we may read Sraffa’s book as a foundationalcontribution for an analytically solid reconstruction of the classicalapproach, focused on a central but specific issue. The distinctionbetween these two different readings is connected to recognition ofthe existence of two clearly distinct representations of the working ofmarket economies: on the one hand the classical vision, based on thecircular flow of production and consumption and on the notion of thesurplus, and on the other hand the marginalist approach, based on aone-way avenue leading from factors of production to consumptiongoods and the satisfaction of consumers’ preferences.Failure to grasp the distinction between these two different readingsof Sraffa’s book has often led to a number of crucial misunderstandings.Sraffa’s critical contribution is often seen as a nihilist, purely destructiveattitude; the constructive elements of Sraffa’s analysis have beenoverlooked or, under the influence of the marginalist tradition, areinserted in an inappropriate framework. Yet, the distinction betweenthe two readings is clearly stated in the opening pages of Sraffa’s book.Bearing this in mind, together with the inferences we may draw fromthe Sraffa–Wittgenstein connection, we can appreciate the open natureof Sraffa’s constructive contributions, and specifically the possibility ofintegrating the classical and Keynesian approaches.7.7 Summing upIn short, Production of Commodities by Means of Commodities is opento two quite different readings. On the one hand, we may draw fromSraffa’s book a number of analytical results that can be used for a critique33On the relationship between Sraffa’s 1932 article and the chapter in Keynes(1936), cf. Kregel (1983), Tonveronachi (1991), Ranchetti (1998, 2001). Amongother things, Ranchetti shows, on the basis of the Sraffa Papers, how Sraffaobjected to Keynes’s notion of liquidity preference, which implies a uniquefunctional relationship between quantity of money held and the rate of interest.More generally, for interpretations of Keynes oriented in the direction suggestedhere, cf. Kregel (1976) and Tonveronachi (1983).34Cf. Roncaglia (2009b).