Piero Sraffa

Piero Sraffa was born in Turin on 5 August 1898. His mother, Irma Tivoli (1873–1949), and father, Angelo Sraffa (1865–1937), both came from Jewish families. His father was a well-known professor of commercial law and — for many years — rector of the Bocconi University in Milan. Piero was their only child, born about a year after their marriage, which took place in Courmayeur on 4 July 1897.

The 1926 paper published in the Economic Journal had considerable impact, especially in Cambridge, and Keynes had no difficulty in offering Sraffa a position as lecturer at the university which was then — and would continue to be for many years to come — the most prestigious centre for the study of economic theory in the world. In 1926 Sraffa had also been awarded a professorship in political economy in Italy, at Cagliari, but after Gramsci’s imprisonment and the threats he himself received as an anti-fascist,¹ he decided to move to England. He lived there from 1927 until his death, on 3 September 1983.

This chapter is devoted to Sraffa’s major contribution: a relatively slender volume — 92 pages of text, including the Preface — work on which began in 1927, when the author moved to Cambridge, and was finally published in 1960 in English, with the Italian edition following a few weeks later.¹ As we shall see, in Production of Commodities by Means of Commodities Sraffa comes up with a solution to the problem of value framed in terms of the classical conception, simultaneously determining relative prices and one of the two distributive variables, the wage rate and the rate of profits, with the other distributive variable considered as exogenously given.

As already noted, Sraffa aims at a complete turnaround in economic science, rejecting the dominant marginalist approach and proposing in its place the classical economists’ approach, though modified so as to take Keynes’s contributions into account. The first step he takes in the direction of his critique of the marginalist approach is to tackle the Marshallian variety that dominated the academic teaching of economics both in Italy and England (Sraffa 1925, 1926, 1930). The second step is taken with his critical edition of Ricardo’s writings (Ricardo 1951–5), where the conceptual framework and the analytical scheme constituting the foundations of classical political economy are re-proposed, cleared from the misinterpretations superimposed on it in nearly a century of marginalism. Finally, the third and analytically decisive step is the publication, in 1960, of Production of Commodities by Means of Commodities: an analysis of the relationship between relative prices and income distribution that provides both a solution to fundamental problems left unsolved by classical theorists and the basis for an internal critique of the traditional marginalist theories of value and distribution.

Nearly 50 years have passed since Production of Commodities by Means of Commodities was first published, but interpretation of the text still arouses lively debate. Any particularly concise dissertation — and Sraffa’s certainly is — may be open to various interpretations, but the extraordinary precision of Sraffa’s prose should leave little room for misunderstanding. Nevertheless, some misunderstanding did arise from an additional difficulty, namely the radical difference between his type of analysis and the lines of argument customarily followed by the vast majority of contemporary economists. Sraffa himself refers to the problem in the opening lines of his book:

Anyone accustomed to think in terms of the equilibrium of demand and supply may be inclined, on reading these pages, to suppose that the argument rests on a tacit assumption of constant returns in all industries. (Sraffa 1960: v)

Two related themes emerge from this short passage (and from the pages that follow it). In the first place, Sraffa suggests that at least two categories of economists exist: those who are ‘accustomed to think in terms of the equilibrium of demand and supply’, and those who are not. Secondly, Sraffa points out that a crucial difference between these two groups of economists — or between these two approaches, para-digms or theoretical frameworks — lies in the role that the quantities produced play in the analysis of prices and their relationship to income distribution.

This chapter aims at providing a broad overview of the role played in the current economic debate by the contributions of Piero Sraffa and those contemporary economists who joined in with his proposal of a return to the approach of the classical economists, from William Petty to François Quesnay, from Adam Smith to David Ricardo, up to Karl Marx. To begin with, it must be stressed that our discussion of the different positions will not be neutral, if any discussion can be, given the present writer’s direct participation in the debate to be surveyed in the following pages.