Comment on “Hollander’s Ricardo”

Abstract

The recent exchange between Roncaglia and Hollander (1982, pp. 339-75) in this journal concerning the validity of the surplus versus marginalist interpretations of Ricardo failed to reach a final resolution of the issues involved. Although the differences between the two are substantial, on at least one issue, the physical theory of the rate of profits, the two are closer than appears. In his book and in a series of articles, Hollander (1979, pp. 123 ff., 1973, 1975) challenges Sraffa's view that Ricardo held a physical theory of the rate of profits. To briefly recount, Sraffa (1951, I, p. xxxi) found the rational core of Ricardo's theory to be the idea that in the model employed in the on Profits (1951, IV, pp. 1-41), the rate of profits is determined independently of values by the physical ratio of corn profits to corn capital in agriculture. Hollander challenges this interpretation on the grounds that the one-commodity corn model cannot be attributed to Ricardo (1973, p. 260). Rather, Ricardo used corn as a convenient numeraire, not as a matter of principle (1975, p. 190). Nor did Ricardo assume either a single wage good or a fixed wage basket. Hollander argues (1975, 1979, pp. 125 ff.) that in Ricardo it is the money wage which determines the ruling rate of profit and that this is true in both the Essay and the Principles. This destroys what Hollander takes to be the two central propositions of Sraffa's position: the single commodity wage and the fixed wage basket. I wish to make two points regarding the physical profits rate theory before discussing what I perceive as the larger issues of historical interpretation which are involved in this controversy. First, the validity of the physical theory does not stand or fall on