Title: The Standard Commodity as a Tool of Economic Analysis: A Comment on Flaschel
Abstract:Sraffa, in his Production of Commodities by Means of Commodities (Sraffa [I960]), intended to achieve two purposes: to lay the foundation for a of neoclassical theory and to prepare for a return to th...Sraffa, in his Production of Commodities by Means of Commodities (Sraffa [I960]), intended to achieve two purposes: to lay the foundation for a of neoclassical theory and to prepare for a return to the classical theory of accumulation by providing a modern formulation of a classical theory of value. He showed that prices are determined and vary in function of the rate of profit, if the quantities to be produced are given with the technology in use. On the one hand, the variations in the total value of capital goods so induced are incompatible with traditional views of a determination of distribution and employment through supply and demand for capital as a factor of production. On the other hand, room was made for a determination of the levels of output and employment, and of distribution, through non-neoclassical theories. As a matter of fact, a given real wage rate had been the key to the explanation of distribution in the Ricardian system (with profits being a residual in the surplus after the payment of rents), and with the level of accumulation reached in any period determining the number of workers then to be employed. The theory of distribution (Pivetti [1985]), of the level of output (effective demand, Garegnani [1978]) and of its composition (Schefold [1985]) would have to be rather different under modern circumstances; the reconstruction of classical theory therefore remains a laborious task. The construction of the standard commodity takes a great deal of space in Sraffa's otherwise parsimonious exposition of the prelude to the critique and to the reconstruction. He himself indicates that it was a late addition to a work the essential propositions of which had been developed in the late twenties, but which was published only in 1960. There has therefore been some controversy as to the relevance of this concept. Flaschel, in a paper presented in this journal, joins those who believe that it is unimportant but he goes one step further and tries actually to prove that it cannot be important because, according to the interpretation he presents, it exists only under special circumstances. In this comment I want to argue that there may be good reasons to use the standard commodity, at least for purposes of exposition and in order to gain a better understanding of the background of Sraffa's theory of value in the history of economic thought. But, whileRead More
Publication Year: 1986
Publication Date: 1986-01-01
Language: en
Type: article
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Cited By Count: 8
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