Sraffa on the degeneration of the notion of cost

Abstract

The paper reconstructs the history of what Sraffa called the ‘degeneration of cost’, as emerges from his manuscripts of the late 1920s. In particular, Sraffa regards the Physiocrats as having the correct idea of cost as being the commodities that allow workers to subsist. The classical economists measured this bundle of commodities in terms of labour, which they also ambiguously viewed as ‘toil and trouble’. Then, the idea of labour as ‘toil and trouble’ was indicated by Marshall as an anticipation of the conception of cost as a sacrifice. Conferring also upon abstinence from consumption the nature of sacrifice, the neoclassical-marginalist theory understood wages and interest as compensation for the disutility of working and saving. Then, cost was ultimately seen as what induces workers and capitalists to produce. This completed the degeneration of cost from the objective-physical conception of the Physiocrats to the subjective-psychological view of the marginalist school.