RENT THEORY IN A MULTISECTORAL MODEL 1

Abstract

PIERO SRAFFA 'S Production of Commodities by Means of Commodities2 has so far been almost exclusively interpreted as a contribution to the critique of the marginal theory of value and distribution. This interpretation is obvious because criticism concentrates upon the notion of 'capital', hypothesized by neoclassical writers conceiving of capital simply as a quantity that can be measured independently of, and prior to, the determination of the prices of the means of production. However, 'capital' being a central concept in economics, a critique of the prevailing neoclassical capital theory simultaneously is a critique of economic theory as a whole (at least a prelude to it, as Sraffa indicates in the sub-title of his book). This paper discusses Sraffa's critique of rent theory in the short eleventh chapter, 'Land'.3 A comparison with classical rent theory as formulated, in particular, by Ricardo brings out a close affinity of the two approaches such that Sraffa's analysis may be called 'neo-Ricardian'. The method adopted in this paper is that of comparative static analysis of stationary economies which was masterly handled by Adam Smith, Ricardo, and Marx.4 As is known, Sraffa was interested in dealing only with those properties of an economic system that do not depend on changes in the scale of production or on the proportions of 'factors'. The prices to be found in his theory therefore have the character of long-run equilibrium prices and thus are closely related to the concept of 'natural price', of which Ricardo writes: 'By the very definition of natural price, it is wholly dependent on cost of production, and has nothing to do with demand and supply. ' 5 At first sight this concept seems to hinder the possibility of adequately