An Integration of Sraffa's Price Equations inside Marx's Capitalist Monetary Circulation

Abstract

ABSTRACT This paper explores the integration of Sraffa's prices in Marx's ‘money-commodity-money’ circuit. We develop our interpretation of Marx's theory of new value based on the so-called ‘New Interpretation’ by Foley, Duménil, and Lipietz. The value of money allows us to sum up at the aggregate level the two factors that enter the production process: the means of production (a monetary quantity) and the living labour. Regarding Sraffa, we aim to retrace the path that leads him to believe that the labour employed is not an arbitrary but a natural measure unit of prices. The main points on which to base our reasoning are: i. in Marx, the new value or value added is identified with the aggregate living labour; ii. the distinction between new value and surplus value (which is only a part of the former) is linked to the distinction between constant and variable capital; iii. in Sraffa, the equality between employed labour and national income is considered the ‘truly natural unit' of measure of prices; iv. consequently, in both approaches, the wage rate equals the share of national income that goes to labour. Finally, we develop Marx's capitalist monetary circuit including Sraffa’s prices.