Abstract
ABSTRACT The author seeks to demonstrate that the price system proposed by Piero Sraffa in his major work Production of Commodities by Means of Commodities - Prelude to a Critique of Economic Theory is compatible with both David Ricardo and Karl Marx’s labour embodied theory of value and with Adam Smith’s labour-commanded theory of value. In reality, Sraffa’s measure of prices, the Standard Commodity, satisfies rigorously the mathematical condition of invariability in relation to income distribution between wages and profits. In this sense, it offers a consistent solution to the transformation problem of embodied labour values into production prices. Besides, the Standard ratio or the maximum rate of profits R can be used to analyse the evolution of the three major types or forms of technical progress in a capitalist economy, as follows: labour-using, neutral and capital-using techniques.
Highlights
The economic literature encompasses an endless number of articles, comments and warm discussions concerning the determination of prices from labour values, especially among the Marxian economists and those later known as Neo-Ricardians, whose magna opus is Piero Sraffa’s Production of Commodities by Means of Commodities – Prelude to a Critic of Economic Theory published in 1960
We will demonstrate that the measure of prices and wages proposed by Sraffa, that is, the Standard Commodity, can be a consistent solution to the transformation problem of labour values into prices of production, because it satisfies rigorously the mathematical condition of invariability in relation to income distribution between wages and profits
The existence of a connection between the Standard Commodity and the measures proposed by Smith e Marx, is a hint that the Sraffa model could not be dissociated from the classical approach, whose basic characteristics are: i] the economic system is a circular process, with a defined production cycle. ii] the existence of a surplus, comprised of heterogeneous goods. iii] the rate of profits and the wage are uniform in all production branches. iv] the society is divided in classes. v] the technology is given previously to price determination. vi] the human labour is the source of value
Summary
The economic literature encompasses an endless number of articles, comments and warm discussions concerning the determination of prices from labour values, especially among the Marxian economists and those later known as Neo-Ricardians, whose magna opus is Piero Sraffa’s Production of Commodities by Means of Commodities – Prelude to a Critic of Economic Theory published in 1960.In this paper, we will demonstrate that the measure of prices and wages proposed by Sraffa, that is, the Standard Commodity, can be a consistent solution to the transformation problem of labour values into prices of production, because it satisfies rigorously the mathematical condition of invariability in relation to income distribution between wages and profits.We will show that there is a connection among the measures of value proposed by Smith, Marx and Sraffa. We will demonstrate that the measure of prices and wages proposed by Sraffa, that is, the Standard Commodity, can be a consistent solution to the transformation problem of labour values into prices of production, because it satisfies rigorously the mathematical condition of invariability in relation to income distribution between wages and profits.
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
