On the empirical regularities of Sraffa prices
  • 1 The New School for Social Research, New York, NY, USA
  • | 2 Institute of Innovation and Public Purpose, University College London, UK
  • | 3 Levy Economics Institute of Bard College, Annandale-on-Hudson, NY, USA

This paper focuses on a key concern of the Cambridge capital controversies: Sraffa's theoretical demonstration that competitive relative prices, and hence the money value of aggregate capital, can vary in complex ways as the wage share (profit rate) changes. We find that, on the contrary, individual prices are usually linear or mildly curved. We develop a formal measure of curvature, and find that average price curvature does not fall with matrix size as proposed in Brody's random matrix hypothesis. Since the average curves are near-linear, it follows that aggregates such as capital, wages, and net output will exhibit the same behavior. We believe this explains the widely observed near-linearity of the wage–profit curve.

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