Report card on Sraffa at 100

Sraffa is lauded for (a) his magnificent editing of Ricardo's writings and (b) his 1960 classic on Production of Commodities by Means of Commodities. Regretted is the shortfall from his unlimited potential to his sparse bibliography of publications and oral lecturing, and his diffidence as an editor to interpret and criticize his classical heroes. Admired by Keynes and Wittgenstein and friend to the Marxist Antonio Gramsci, Piero was a much loved character. Because of, and not in spite of, the fact that he early lacked sympathy for the general equilibrium methodology and the mixed-economy ideology that dominated twentieth century mainstream economics, Sraffa was able to uniquely add value to the corpus of economic science.     

On the importance of institutions and forms of organisation in Piero Sraffa's economics: the case of business cycles,money, and economic policy

Abstract

This paper is based on an investigation of the Sraffa Archives and tries to characterise Piero Sraffa's approach to business cycles and economic policy. It includes two parts. The first part of the paper shows the importance of economic institutions and social conventions in Sraffa's contribution to economics and their relation with social conflicts. The second part of the paper shows how this importance permits to understand better business cycles and economic policy but also indirectly contributes to a re-interpretation of Sraffa's contribution to economics.     

The interaction between Leontief and Sraffa: No meeting,no citation,no attention?

Abstract

Samuelson often regretted that Leontief and Sraffa never cited each other (true), and seemed to pay no attention to the other's work (false). In the Foley interview Leontief suggested he never met Sraffa (false). Archival evidence shows that in the 1940s Sraffa studied Leontief's classic The Structure of American Economy; he also owned the rare mimeographed supplement, and did some calculations on Leontief's first input–output table. Leontief and Sraffa met in Cambridge (UK) in 1950 and later. In the 1980s Leontief wrote an ambitious empirical paper on technological change, rejected by the AER, and not widely read. It studied some Sraffian topics without Sraffian terminology. I construct a hypothetical reswitching example using Leontief's statistics.     

Shackle on Equilibrium: A Critique

This paper presents a critical evaluation of Shackle's views on economic method. Shackle's arguments against equilibrium analysis are shown to apply to orthodox theory, which has subjectivist foundations, but not to the objectivist classical approach associated with Sraffa. The long-period equilibrium method is indispensable to the analysis of how market societies function. Moreover, since the classical theory contains no trace of the factor substitution mechanisms that underpin neoclassical orthodoxy, its explanations of distribution, employment and outputs must take explicit account of institutions, power and ethical norms. Thus there is no conflict between social economics and the method of the classical economists and Sraffa. On the contrary, the classical approach provides a rigorous framework for the investigation of the very issues that are at the center of institutional and social economics.     

Keynes and Sraffa's 'Difficulties with J. H. Hollander'

The paper reports on Jacob H. Hollander's cooperation with John Maynard Keynes and Piero Sraffa in the preparation of the latter's edition of The Works and Correspondence of David Ricardo. The report is based on archive material from various sources, including the unpublished papers of Edwin Cannan, Piero Sraffa, Jacob H. Hollander, John Maynard Keynes, and Jacob Viner, and the archive of the Royal Economic Society. The archive material consulted by us shows that, put mildly, Jacob H. Hollander did not promote Sraffa's editorial project: he held back material which he had received from Frank Ricardo and did not disclose to Sraffa that he owned several important letters which he had privately purchased. Moreover, Sraffa was refused access to Ricardiana even after he had traced them down in laborious detective work to be in Hollander's possession. Hollander's unwillingness to cooperate with Sraffa considerably delayed the publication of the Ricardo edition.     

Foreword to the Symposium

This paper investigates a number of aspects of Piero Sraffa's early philosophical thinking by placing him within the historical materialist tradition of reasoning about the relation of ideas to the historical process. It first distinguishes Alfred Marshall's views about the historical development of ideas by addressing Marshall's responses to the criticisms of William Cunningham of the English Historical School. Marshall's concept of economics as a universal engine of discovery was rejected by Sraffa in his early writings. Sraffa's critique of Marshall is then argued to lead to two early philosophical commitments on Sraffa's part: that deductivist modes of explanation are inappropriate in economics and that economics aims to explain the underlying structures of causal interaction that had been the concern of the classical political economists. The paper closes with brief remarks on how Sraffa's later philosophical thinking might be approached.     

On the ‘Origins’ of Sraffa’s Production Equations: A Reply to de Vivo

In this rejoinder to de Vivo’s comment on Gehrke and Kurz (2018, ‘Sraffa’s constructive and interpretive work, and Marx.’ Review of Political Economy) we first ask what could possibly be meant by seeking to identify the ‘origins’ of Sraffa’s production equations. We then show that in his comment de Vivo has abandoned his original view, according to which the magnitudes in Sraffa’s ‘first equations’ are to be interpreted in Marxian (labour) value terms, without advising the reader. In addition, we show that his ‘new’ view is not supported by evidence from Sraffa’s papers. De Vivo misconstrues several propositions of Sraffa and misunderstands his ‘reduction method’ by means of which the values of commodities are reduced to some basic product or to labour. The criticisms de Vivo levels at the interpretation advocated by us are without any foundation.     

The <Emphasis Type="Italic">Acting</Emphasis> Person: Social Capital and Sustainable Development

Ron Stanfield has had a long and distinguished career as a social economist and commentator on the social economy. Of special concern to us in this article are Stanfield’s interests in social capital, sustainable development, and nurturance which we refer to as caring. We also take up several other virtues including sympathy, benevolence, and generosity that have been part of the economics literature from the time of Smith’s Moral Sentiments along with the associated vices of heartlessness, insensitivity, meanness, greediness, and others. This article attempts to show that (1) adding social capital to the machine-like individual of mainstream economics results in the acting person of personalist economics who becomes more fully a human person through social interactions that foster the development of several virtues or less fully a human person through other interactions that instill certain vices; and that (2) in matters relating to sustainability, becoming more fully a human person calls especially for the practice of the virtues of justice and moderation. In addition we have suggested a framework for thinking about sustainable development in terms of actuating and limiting principles and for developing critical values or performance standards for sustainable development that are person-centered.     

Sraffa on Fixed Capital,Money and the Phases of Capitalism

In this paper I address some elements in Piero Sraffa's thinking that are connected to his conceptualization of the phases of capitalism. Sraffa describes various stages of capitalism using similar categories to the ones employed in the model of the economy provided in Production of Commodities. This is done by distinguishing the role of population, land and (circulating, intermediate and fixed) capital in each stage. Sraffa changed his conceptualization of fixed capital over the years, until he reached its final formulation. The conceptualizations of fixed capital that Sraffa discusses, together with his remarks on money which are made through an analogy with circulating and fixed capital, provide some elements that shed light on Sraffa's view of the dynamics of capitalism.     

Capital theory and the origins of the elasticity of substitution (1932-35)

Elasticity of substitution was introduced into economics duringthe early 1930s. It was discovered independently by Hicks inThe Theory of Wages and by Joan Robinson in The Economics ofImperfect Competition, and then was the centre of a polemicinvolving Kahn and Sraffa, among others. The debate focusedon imperfect competition and capital-theoretical issues. Someelements of the 1950s and 1960s capital theory controversy,such as the idea of capital as a Giffen good or the difficultiesof measuring capital, were already discussed at this early stage.     

Testing Böhm-Bawerk’s theory of capital: Some evidence from the Finnish economy

This paper considers the pure labour theory of value and Böhm-Bawerk’s theory of capital as approximations of Sraffa’s model of single production, and tests them with data from the Symmetric Input-output Tables of the Finnish economy. The results show that (i) in comparison with the labour values, the actual Böhm-Bawerkian production prices are ‘equally’ good or even better approximations of the actual Sraffian production prices and market prices; and (ii) the Sraffian production price-profit rate relationship is, by and large, governed by the differences in the Böhm-Bawerkian average periods of production.     

Marx and Sraffa: A Comment on Gehrke and Kurz

This comment focuses on the assertion by Gehrke and Kurz (2018) that the origin of the equations which formed the backbone of Sraffa’s Production of Commodities by Means of Commodities is not related in any way to Marx, and particularly Marx’s reproduction schemes, as argued by the late Giorgio Gilibert and myself. This comment argues that the 2018 article by Gehrke and Kurz makes significant—but unacknowledged—retreats from positions previously presented by the authors, and that the relevance of Marx and his reproduction schemes for the origin of Sraffa’s (1960) work for Production of Commodities is beyond reasonable doubt.     

Gramsci,Sraffa, Wittgenstein: philosophical linkages

The paper assumes that since Gramsci influenced Sraffa and SraffA influenced Wittgenstein it may be possible to delineate a set of philosophical ideas which they shared in some degree. Gramsci's ideas are first reviewed on terms of his concept of hegemony, concept of caesarism and philosophy of praxis. On this basis three philosophical themes are identified in his thinking: the conept of emergence; catastrophic equilibrium; and the idea of a concrete universal. The thinking of Sraffa (both earlier and later) and the thinking of Wittgenstein (later) are then interpreted in terms of these same three themes. These links neither exhaust their philosophical thinking nor necessarily constitute the only links among the three. But these ideas provide one way of exploring connections among the three. The paper closes with brief remarks concerning two opposed philosophical traditions in modern European intellectual history at the turn of the century — one associated with thinking in Britain and one associated with continental thinking — meant to suggest the distinctiveness of a line of thinking running through Gramsci, Sraffa and Wittgenstein.     

Contracts,incentives and organizations: Hart and Holmström Nobel Laureates

This article reviews the contribution of Hart and Holmström, the 2016 Nobel Laureates in economics. Holmström's work on the principal-agent problem answered questions as to what should (and should not) be included in an incentive contract. His work helped explain the simple structure of incentive contracts we typically observe in the real world. The models he developed have been used to address questions of CEO compensation, organizational design and optimal regulation. A key element of Hart's research focused on the question of what are the optimal boundaries of a firm (and indeed, what a firm actually is). In doing so he developed the incomplete-contracts framework, which has subsequently been used to explain many economic phenomena whenever renegotiation is important, including authority and decision-making structures in firms, why financial contracts look the way they do, and various questions in international trade and public policy.     

Experimental evolution of color preference for oviposition in <Emphasis Type="Italic">Drosophila melanogaster</Emphasis>

Preferences are the foundation of economics. Preferences are taken by economists as fixed by some implicitly biological process. In recent decades, behavioral economics has documented the divergence between the nature of human preferences and the assumptions of standard economics. In this study, we use the tool of experimental evolution to study the evolution of color preferences in fruit flies (Drosophila melanogaster). In particular, we select for a preference for laying eggs on the color aqua. We find that the flies evolve to lay more than twice as many eggs on aqua. However, this evolution occurs entirely because the flies lay more eggs overall. The flies in this study, do not evolve to lay a higher percentage of eggs on the selected color, aqua.     

“Social Freedom” in the Twenty-First Century: Rereading Polanyi

Karl Polanyi’s analysis of the genesis, crises, and institutional transformations of contemporary society is grounded on a theory of the basic features and dynamics of capitalism as a peculiar form of society. This article intends to develop this thesis on the basis of a reading of Polanyi’s The Great Transformation, with references to Polanyi’s preceding and later research. Polanyi’s theoretical and methodological achievements suggest a wide comparative outlook and offer a critique of economics, in addition to being deeply connected with his political philosophy. Polanyi’s approach seems to be nearer to the original institutional thought — from Karl Marx to Thorstein Veblen, from Max Weber to Adolf Löwe and Karl William Kapp — than to current neo-institutional tendencies in economics, sociology, and historiography. The hard problems society presently faces suggest the need to adhere to Polanyi’s radical point of view — that is, to a radical approach to Polanyi’s thought.     

The choice of numeraire,capital intensity uniqueness,and the reswiritching of techniques

This paper examines the condition for capital-intensity uniqueness and the phenomenon of reswitching of techniques in a two-sector linear capital model when the prices and wages are measured in terms of the value of net output per man (the Sraffa numeraire). It is shown that when the Sraffa numeraire is used, a) the capital-intensity condition is not sufficient to ensure a unique relationship between the value of capital per man and the rate of profit; and b) reswitching of techniques is possible even if there is only one capital good in the system. The results arise only from the interaction between the price and composition effects in the model using the Sraffa numeraire.