History of Political Economy 35.1 (2003) 164-166
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Critical Essays on Piero Sraffa's Legacy in Economics. Edited by Heinz D. Kurz. Cambridge: Cambridge University Press, 2000. xiv; 458 pp. $120.00.
This book, which grew out of unresolved issues from a 1985 conference (Bharadwaj and Schefold 1990), focuses on three questions: (1) Is Piero Sraffa's reinterpretation of classical economics faithful to the original authors, and are there fundamental differences between classical and neoclassical approaches? (2) What is the role of given output in Sraffa, and how does it relate to neoclassical conceptions of demand? (3) Does the significance of the Cambridge capital controversies extend to intertemporal general equilibrium models? Advocates and critics of Sraffa were invited to write on these questions, and could comment on others' papers, with replies by the original authors.
In chapter 1, Heinz D. Kurz and Neri Salvadori set the stage by providing a useful, focused survey of Sraffa's contributions. Chapter 2 reprints Paul Samuelson's “Revisionist Findings on Sraffa” (from 1990) with comments by John Eatwell, Pierangelo Garegnani, and Bertram Schefold. Samuelson follows up in chapter 3, arguing that Sraffa's system is “an empty set of results” without constant returns to scale, that the Standard commodity has limited empirical and theoretical importance, and that continuity prevails between classical and neoclassical economics. In the most valuable exchange in the book, Kurz and Salvadori comment and Samuelson replies. Samuelson identifies significant limitations on what Sraffa's system can say without constant returns when there are changes in independent variables, but Kurz and Salvadori successfully argue that the results are by no means an empty set. They essentially agree that the Standard commodity is “not indispensable,” and on Samuelson's continuity claim “we agree and we do not,” they explain. They agree that both classical and neoclassical long-period price theories satisfy Sraffa's equations of production. But they emphasize the classical treatment of wages and output as independent variables [End Page 164] and profits as a residual, versus the neoclassical treatment of endowments, preferences, and technology as independent and all factor returns as dependent variables. In reply, Samuelson acknowledges “some important differences” between classical and neoclassical writers, but asserts, without argument, that despite reswitching and the Hahn problem, “an approximation to intertemporal Pareto-optimality seems to characterize the micro-allocations of macro-accumulations.”
In chapter 4, Salvadori provides a thorough textual analysis of Sraffa's treatment of demand. He argues that Sraffa did not believe that demand was unimportant, but rather that utility-based demand was not a solid foundation for a theory of value and distribution because preferences are influenced by production and hence are endogenous. Samuel Hollander contributes in chapter 5 textual evidence that Thomas Malthus consciously spelled out an analytical corn-profit model (in contrast to Sraffa's rational reconstruction of David Ricardo) but was cautious about its application. Garegnani comments on an early draft of Hollander's paper (inexplicably so—why did he use an early and not the final draft?), and then adds crucial comments at the end on differences between drafts. This interchange will tax the patience of readers, as it did the editor, who allowed the bifurcated comments only to avoid “any further delay.”
Kurz examines the Hayek-Keynes-Sraffa controversy in chapter 6 and offers three compelling accounts: of Friedrich Hayek's Prices and Production (with an enlightening three-quadrant diagram showing the relations between the output as a function of roundaboutness, the wage-profit relation, and the equilibrium between savings and investment), of the Keynes-Hayek debate, and of the Sraffa-Hayek debate. The chapter cries out for a response from authors of alternative accounts who are criticized, especially Bruce Caldwell.
Edwin Burmeister's “The Capital Theory Controversy” is one of three chapters addressing the empirical significance of reswitching and capital reversing. In a thoughtful and balanced evaluation, Burmeister raises “questions about the appropriate role of assumptions and approximations” stemming from the inability to generalize the neoclassical parable beyond one-commodity models. Is the simple model nonetheless a valuable parable...