Notes on the Sraffa—Hayek exchange

Abstract

Previous writers on the Sraffa–Hayek exchange have tended to view it in four ways. First, as an ambiguous position that represents a half-way house between Sraffa's early and later work. Secondly, as representing the analytical basis for the most elaborate analysis by Keynes, in The general theory, of the ‘essential properties of interest and money’. Thirdly, as Sraffa's opening shots in his long critique of subjectivism. Fourthly, as an early discussion of the true problems associated with the attempt to integrate money into a Walrasian general equilibrium model. Our article adds another interpretation that focuses primarily upon those issues being explicitly discussed by Sraffa and Hayek. This raises many interesting issues, not least in providing us with some new insights on Sraffian scholarship. …when the definitive history of economic analysis during the nineteen-thirties comes to be written, a leading character in the drama (and it was quite a drama) will be Professor Hayek (Hicks, 1967: 103). The term‘fascination’, though perhaps slightly unacademic, aptly describes the effect of the first impact of Professor Hayek's ideas on economists trained in the Anglo-Saxon tradition…to whom it suggested aspects of the nature of capitalistic production they were never taught to think of. This was the first impact. On second thoughts the theory was by no means so intellectually satisfying as it appeared at first. There were admitted gaps here and there in the first published account which was merely intended as rudimentary, and when one attempted to fill these gaps, they became larger instead of smaller, and new and unsuspected gaps appeared – until one was driven to the conclusion that the basic hypothesis of the theory, that scarcity of capital causes crises, must be wrong (Kaldor, 1942:359). Nor should we be surprised that a Sraffa, with his taste for the concrete and his characteristic irony, has at the same time put us on our guard against a certain loose manner of conducting politics and tackling economic questions (Napolitano, 1978:67).