On Sraffa's Standard commodity

Abstract

The necessity of expressing the relative price of a commodity in terms of another commodity makes it impossible to distinguish that part of any change that can be ascribed to the characteristics of the commodity itself from the part of that change that is to be ascribed to the characteristics of the commodity of reference, i.e., the numEraire. Ricardo (1817) was the first to point out this problem and the need to find an 'invariable measure of value', but he was not able to solve the problem. In 1960, Sraffa suggested using a bundle of commodities, that he called 'Standard commodity', to accomplish this function, claiming that it was a standard of value invariant with respect to changes in the distribution of income. But in Sraffa's book there is no explicit proof of this claim. This gave rise to many misunderstandings about the Standard commodity and its role as invariable measure of value. This paper proposes a proper definition of an 'invariable measure of value', and then proves that the Sraffa 'Standard commodity' does fulfil the requirements of this definition. Copyright 2004, Oxford University Press.