The New Theory of International Values in the Context of the Ricardo-Sraffian Theory of Value and Distribution

In this article we introduce readers to the new theory of international values by placing it in the context of the Ricardo-Sraffian theory of value and distribution. Ricardo’s theory is described as that in which exchangeable values of commodities are regulated by the quantities of labour bestowed in their production, on which he established his theory on the distribution of the produce of the earth. Contemporary classical theory, founded by Sraffa, is described as preserving Ricardo’s perspective of the value independent of distribution and of demand by replacing the labour theory with the production-cost theory. After noting that Ricardo left the question of determination of values of the commodities traded internationally, it is shown that J. S. Mill argued that the law of demand and supply determines them, which conflicts with the classical perspective. We then demonstrate how the new theory of international values solves the question in line with the classical vision. Lastly, the similarity between this theory and Sraffa’s treatment of multiple products is indicated.