Knowledge, Truth and the History of Economic Thought
Edited by Stephan Boehm, Christian Gehrke, Heinz D. Kurz and Richard Sturn
Chapter 21: Produced quantities and returns in Sraffa's theory of normal prices: textual evidence and analytical issues
21. Produced quantities and returns in SraffaÕs theory of normal prices: textual evidence and analytical issues Fabio Ravagnani* In Production of Commodities Sraffa (1960) provides a rigorous formulation of the classical theory of value and distribution. In accordance with his reconstruction of the basic features of the classical approach (Sraffa, 1951), he takes as independent variables (i) the outputs of the various commodities, (ii) the methods available for producing those outputs and (iii) one distributive variable, and demonstrates that with this set of ÔdataÕ the exchange ratios of commodities, as well as the residual distributive variables, can be determined univocally and in an economically significant way. In this theoretical framework, no distinction is made between the price of a commodity entering the production cycle as an input and the price of the same commodity considered as an output at the end of the process. To use a concise expression, we may say that the theoretical prices are assumed to be ÔconstantÕ over the production period. Let us now consider the position of the economy defined by the independent variables (i)Ð(iii) together with the relative prices and values of the distributive variables resulting from the equations of production. How should this position be interpreted? One widely accepted view is based on the passages of Production of Commodities where Sraffa relates his analysis to the theories of the old classical economists (p. v) and identifies his theoretical prices with their Ônatural pricesÕ or Ôprices of productionÕ (¤ 7). It is accordingly...
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