Abstract

ABSTRACTIt is shown that well‐known propositions of Sraffa concerning the relation between the wage and the rate of profits are not valid without the assumption of constant returns or some other restrictive assumption. The paper recognises a distinction between classical and marginalist methods of analysis but disputes the view that the pursuit of the classical method in value theory obviates the need to assume constant returns. It is argued, on the contrary, that the assumption of constant returns is necessary to the fruitful application of the classical method.

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