Towards a New Understanding of Sraffa

Insights from Archival Research

Scott Carter, R. Bellofiore

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137034328
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

This book provides fresh insights on Piero Sraffa's work, by examining previously unpublished papers from Sraffa archives. It offers new perspectives on the connection between Sraffa amd Marx, and examines Sraffa's approach to money, the role of equilibrium and of the surplus in economic theory.

1

Introduction

Riccardo Bellofiore and Scott Carter

The Sraffa Archive at the Wren Library, Trinity College, Cambridge, has been open for consultation by interested scholars since 1993, one decade after the economist’s death. A project of publishing in 3 volumes a substantial selection of his papers is on-going, coordinated by Heinz Kurz with the contributions of many serious Sraffa scholars. It is certain to be a landmark and no doubt an essential tool to deepen our knowledge of Piero Sraffa, and finally reopen the debate on his works, foremost of all his masterpiece Production of Commodities by Means of Commodities: Prelude to a Critique of Economic Theory (PCMC). But in the last twenty years the visitors consulting the mass of mostly handwritten notes of the Sraffa Papers (SP)¹ and his vast personal library known simply as the Sraffa Collection (SC) have been numerous, and many debates have been and remain conducted about the legacy of the Italian economist.

Among those regularly visiting the Cambridge archive were also many of us contributing to this volume, including the two authors of this Introduction. We, as others, were first curious as to what could be found in the archive, then somehow surprised by the documents we read: not only by the sheer amount of papers extant in contrast to the relatively few publications in his life, but also and especially by their content. The Sraffa Papers (SP) reveal a complex intellectual journey that has remained, it seems, mostly hidden to his friends, colleagues, and followers. We met an ‘other’ Sraffa, one different from the one usually transmitted by the literature certainly before his death but also left unchallenged for at least 15 year after his death; an ‘other’ Sraffa not in contrast with what he published, to be sure, but rather a Sraffa that could shine a different light on his printed articles and books. The opportunity to read the papers of this ‘other’ Sraffa was not one to be missed.

This was the original impulse behind the idea of organising a conference on the topic ‘The Other Sraffa: Surprises in Archive?’ at the University of Bergamo in December 2010, the immediate occasion being to honour the 50 years from PCMC. Most of the papers presented at that conference are here collected, after a thorough revision and rewriting. With very few exceptions, the conference had been organised by asking people who worked on the unpublished writings to provide new readings of Sraffa’s oeuvre, and offering them a forum for debate with comments and rejoinders, thanks to the participation of other renowned Sraffa experts. The main subjects around which this volume, as well as the conference, were articulated are among the most controversial ones, very often inter-related: (i) the (dis)connection between Sraffa and Marx (what about the role of the labour theory of value, of exploitation, of the law of the falling rate of profits, after Sraffa?); (ii) the importance of the Standard commodity, and its analogy or not with money; (iii) the meaning of the determination of prices with a uniform rate of profits in PCMC, and the related issue of the tenability or not of the notion of centres of gravitation; (iv) the essentiality of money in various moments of Sraffa’s thought as revealed through archival evidence; (v) the significance of the notion of the surplus in the 1960 book.

This volume opens with a chapter by Jonathan Smith, archivist at the Wren Library. Every scholar going to the Cambridge archive to study Sraffa has a debt to Jonathan Smith which we know well is impossible to be repaid. Whatever the approach to Sraffa’s intellectual output, Smith argues, the opening of his papers has provided unexpected vistas of Sraffa’s landscape. It has allowed us access to completely new material, such as his faculty lectures, and helped us to understand the routes he took to works with which we have become familiar, such as the preparatory work for PCMC, archived according to the Trinity Catalogue as D3/12. Indeed, it might be argued that one purpose of archival material is at times to surprise and shake us out of the familiar ideas that we have, and take us into more uncomfortable territory. But surprise is not evident in isolation from our knowledge of Sraffa’s work, rather it is a reaction to the identities we each impose on Sraffa based first on our understanding of his printed work – which is a carefully controlled subset of his potential intellectual output. However these identities, these ‘other Sraffas’, are not static, but are further contextualised as we grow more familiar with the Archive and as theories are contested in academic debate. According to Smith, while perhaps we should not be surprised that the archive has revealed some unexpected aspects of Sraffa’s thought, the vigorous debate occasioned by the nexus of our differing identities for Sraffa and the content of his archive has produced vital insights into his life and works.

Part I of this book consists of Chapters 2 and 3 and a comment on both, located at the end of Chapter 4. Chapter 3 is the contribution by Dario Preti, an independent, non-academic researcher, interested in Sraffa and Marx. He is likely the first researcher who noticed, in the 1990s and without any visit to the archive, that the normalisation in §10 and §12 of Sraffa’s book can be interpreted as an implicit endorsement of the labour theory of value (not so far from the postulated New Interpretation of Marx). The aim of Chapter 3 is a rejection of the criticism of redundancy mounted against the labour theory of value by some of Sraffa’s followers; Preti refers to it as the ‘critique of irrelevance’. To this end he first offers a solution to the transformation problem. He observes that that solution still appears insufficient to overturn the charge of irrelevance. Thus, in subsequent sections of the chapter he looks for the reason accounting for this result. The step that is needed to effectively defeat criticism is found in identifying the relationship between the living labour expended during the working day and the methods of productions (the ‘givens’ of the productive configuration in Sraffa). Preti levies an indictment against the neoricardian charge of irrelevance but also indicates how Marxian theorists too failed in appreciating the opportunity the technical critique against the labour theory of value had in further developing the latter. The chapter concludes by questioning the possibility of reaching a non-antagonistic relationship between Marx and Sraffa and developing the analytical points of contact between those approaches.

Chapter 4 is by Scott Carter, mostly focused on the notion of the Standard commodity. Carter follows how this theoretical construct is developed in Sraffa’s journey up to PCMC, with a special attention to the 1955–7 period of writing, especially the Majorca Draft of March 1955. The Standard commodity has been subject to wide scrutiny in terms of its mathematical properties and its economic implications. It is to the latter that Carter gives most of his attention. In his opinion the discovery of the Standard commodity occupied a key role in the development of Sraffa’s outlook, and may be seen as a bridge towards the category of exploitation, interpreted in accord with the New Interpretation. What Sraffa demonstrates is that the value of this uniform physicalist Standard ratio coincides with the value of the aggregate labour to means of production ratio as well as the maximum rate of profits. Archival evidence shows that the impulse behind this construction was to support his Hypothesis (or ‘Hypo’) regarding the fundamental constancy in the ratio of net product (social revenue) to means of production, while recognising its non-generality. Surprised by his own discovery, Sraffa recognised behind the Standard commodity the necessity of a degree of abstraction which is no less than that required by ‘paper-money’. Together with the proportional view about the wage and the closure of the price system through the rate of profits, Sraffa opened the door to the monetary sector.

The chapters by Preti and Carter are discussed by Pier Luigi Porta in a comment at the end of Chapter 4. Porta sees Preti’s effort as a promising starting point in the never-ending game of challenging the Marxian notion of value. For Porta, Carter is trying to make the Sraffian system more Marxian than it is, but he substantially agrees that Sraffa had a Marxian approach in rescuing classicism. Where there is a strong dissent is rather on the idea that Sraffa somehow continued, in his own way, Marx’s discourse on exploitation.

Part II of the volume opens with Chapter 5 by Ajit Sinha. The author starts by reminding us that in the Preface to PCMC Sraffa advances some specific remarks that are essential to understanding his book. Sraffa warns against reading his propositions in terms of an equilibrium of demand and supply, and claims that no assumption about returns to scale has been implied. Sraffa also affirms that he is taking up again the standpoint of classical political economy, from Adam Smith to Ricardo, and putting forward only a prelude to a critique of modern economic theory. If the propositions of the book are proved to be correct then they might provide a foundation for launching a critique of modern economic theory. Unfortunately, according to Sinha, none of these clear-cut statements of Sraffa have been given careful attention either by his followers or by his critics in interpreting PCMC. In his chapter Sinha discusses the above points in detail to develop a new perspective on Sraffa’s book. Sinha maintains that Garegnani’s idea of centres of gravitation given by effectual demand tacitly assumes constant returns. What Sraffa instead takes as given is the empirical knowledge of the actual input–output data ‘after the harvest’. The uniformity of the rate of profits is not in Sraffa the consequence of some kind of competitive gravitation mechanism among capitalists but rather a logical consequence of the manner in which Sraffa structures his system

The second chapter in Part II (Chapter 6) is by Stefano Perri and launches from Sraffa’s 1943 rebuttal of Bortkiewicz’s criticism of Marx’s theory of the falling rate of profits. Perri sees in Marx’s law two aspects. The first refers to technological progress as an historical, not mechanical, tendency towards the increase of constant capital per unit of labour as the main source of a growing productivity of labour. The second aspect is an analytical one: when this historical tendency prevails, the organic composition of capital grows, the maximum rate of profit decreases and eventually the actual rate of profit falls. Sraffa saw the law as built upon an abstraction from ‘real’ technological progress, and judged Marx’s analytical framework to be consistent. However, when writing his notes, Sraffa believed also that even in the ‘actual’ economic system the relation between aggregate income and aggregated capital does not vary when the distribution of income changes (the ‘Hypo’). Perri thinks that the Standard commodity can be used to support Sraffa’s view on Marx’s law even when the assumption of a constant relationship in the ‘actual’ economy between income and capital is dropped. The Standard relation should be interpreted as a value (not only physical) relation between the rate of profits and variable capital per unit of labour.

Andrea Salanti comments on Chapters 5 and 6 which appears at the end of Chapter 5. He starts from the observation that Perri is right in arguing that the analytical device of the Standard relation between wages and the profit rate may be employed to show that mechanisation, as a particular form of technical change, entails a fall in the maximum rate of profits. Salanti is less convinced by the extension of this conclusion to a fall also in the actual rate of profits. The point is the same as the one raised long ago by Joan Robinson, that a comparative statics comparison cannot yield definitive conclusions about the actual path of technical progress in capitalist economies. The criticism Salanti raises towards Sinha is methodological in nature: models have to accomplish some representational functions. Even though Salanti is, like Sinha, sceptical of the interpretation of prices of production as centres of gravitation, that approach at least openly deals with the issue of how to bridge the gap between the model and the ‘world out there’’– namely, which use might be made of Sraffa’s prices.

Part III is comprised of two chapters by Ghislain Deleplace and Jean Cartelier, respectively, and a comment on both by Guglielmo Chiodi which appears at the end of Chapter 8.

Chapter 7 by Deleplace focuses on a usually neglected aspect of Sraffa’s prices: their real versus their monetary character. Modern Walrasian equilibrium prices are real prices, since their determination depends upon forces which can be understood regardless of any assumption about money. Although the theory is supposed to be dealing with a monetary economy, money is then considered as neutral with respect to the determination of relative prices: whatever the way money is or is not ‘integrated’, the equilibrium price system remains unaffected. Then the question arises as to whether it is the same with the Sraffa system, that is whether money should also be considered as neutral with respect to the determination of relative prices. Drawing on the Sraffa Papers, the chapter consider various ways in which money could be viewed as playing a role in the determination of prices, and takes into account the unpublished notes written by Sraffa for his 1932 article against Hayek as well as those included in Sraffa’s copy of The General Theory. Deleplace reaches four conclusions. First, looked at in the rear-view mirror of the 1930s, Sraffa prices are money prices, so that we have to raise the question: how does money affect them? Second, contrary to a frequent assertion, §44 of Production of Commodities on the role of ‘the money rates of interest’ is not the appropriate answer to that question: money may only affect prices through distribution if it acts at a deeper level in the economic system (what this author calls Sraffa’s two-tier approach to money). Third, this deeper level is the role of money as a means of exchange and as a standard of deferred payments, not as a store of value. Fourth, and as a consequence, money in Sraffa is at the same time to be considered ‘essential’ but also outside the ‘natural’ system of production.

Chapter 8 by Cartelier is also focused on the balance between real and monetary analysis in Sraffa, although from a different angle. The question this author wants to discuss is what kind of objectivity we are dealing with when Sraffa considers two different economies, one without and the other with a surplus. The heart of the matter is whether it makes sense to take the technique as being physically given (i.e. observable by the ‘man from the moon’). Cartelier claims that the relevant objectivity is not physical but social. What is called a ‘technique’ crucially depends on the social conditions of production. Two main propositions are put forward: (i) in Sraffa’s framework, if natural prices are adopted by the market, it is impossible to objectively observe a surplus if all producers are independent; (ii) a surplus may be objectively observed only if individuals are not homogeneous from the point of view of production (the typical example is wage-earners working for entrepreneurs). Better than ‘techniques’ ’or ‘physical commodities’, monetary relations objectively reveal the crucial difference between a simple market economy (akin to Marx’s simple commodity production) and a market economy with surplus. A brief illustration is provided pointing to Kalecki and Keynes rather than Ricardo.

Guglielmo Chiodi’s comment on Deleplace disputes the idea of a two-tier approach to money. The determination of the rate of profits through the money rate of interest shows the essentiality of ‘money’ in the economy, and emphasises the key role of the financial sector in regulating the power relationships within society. Regarding Cartelier, the gist of Chiodi’s observations is probably the following: that what is ‘objective’ in Sraffa is not simply the physical ‘given quantities of commodities’ used and produced. Those ‘given quantities of commodities’ must be interpreted from a social viewpoint, where political elements and power relations are most important, and the historical profile of the community is summarised. Relevant for the criticisms mounted by Chiodi, in both cases, is the consideration that the oblivion of the notion of the subsistence element of the wage is unwarranted: subsistence is an essential part of the classical and Marxian heritage, and must be taken as a genuine social notion.

In the ...

Table of contents

• Cover
• Title
• 1 Introduction
• 2 Surprise in the Archive: Reactions to Sraffa’s Papers
• Part I
• Part II
• Part III
• Archival Index
• Index