Piero Sraffa

Piero Sraffa (born August 5, 1898 in Turin , † September 3, 1983 in Cambridge , Great Britain ) was an Italian economist .

theory

Sraffa developed a theory of production prices . His approach is that every commodity requires a certain amount of goods for its production . For each commodity, an equation can be set up that lists which other commodities and in what quantities are necessary for their production. When this has been done for each commodity, a system of equations is obtained that indicates the ratio in which the various commodities must be exchanged. If a product is Numéraire , then all prices are given. However, the system of equations still has a “degree of freedom”, so that a variable, such as wages, must be determined. If one assumes, for example, that the workers have to buy a certain shopping basket so that they can receive their labor (subsistence wages), then this determination has been made. Profit remains as the “remainder” and a profit rate can be calculated that is lower the higher the wage rate is set. If the profits are fully reinvested in more workers and more means of production, or to put it another way, the surplus product is used in full each time to expand the overall economic scope of production, then the economy grows at a rate that is the same as the rate of profit (consumption by the entrepreneur also increases apart). If the rate of profit is around 5%, then 5% more workers are employed every year and 5% more of everything is produced annually.

Sraffa and Ricardo

At Sraffa, the rate of profit has to fall when wages rise. David Ricardo had already said the same thing . That is why the Sraffa School is also called Neo-Cardian . With Marx, on the other hand, both wages and the rate of profit can fall if, for example, the capital expenditure for the means of production increases correspondingly.

Sraffa was also the editor of the collected works of David Ricardo .

Sraffa and the neoclassical

Sraffa saw his model as a criticism of neoclassical models . His model led to the “reswitching” debate. According to Neoclassicism, rising wages mean that capitalists choose production techniques that require less labor, but more means of production such as machines. The capitalists therefore avoid the increasingly expensive labor and choose techniques that require more means of production to compensate. They substitute “capital” for work.

Sraffa compared different techniques with different labor intensity with each other, in particular he looked at how the profit rates develop with the different techniques when wages rise. The rate of profit will decrease for all techniques, but the order of the techniques, ranked according to the size of the rate of profit , may change. A technique that has the highest rate of profit when wages are low may fall behind when wages rise, but can get the highest rate of profit again if wages continue to rise. For the capitalists, this means that when wages rise, they switch to another technology with a higher rate of profit, but if the wage continues to rise, they switch back again (" reswitching ") because the old technology now has the highest rate of profit again. The fact that this can happen under certain circumstances contradicts neoclassical production theory, which does not provide for this case.

Capital controversy

In its production functions , neoclassicism assumes that certain quantities are used by the production factors labor and “capital”. The problem that freight locomotives and thumbtacks cannot easily be added in the capital stock is solved by adding the prices of the various capital goods to one size, so that a capital stock of so many billion euros is available. "Pure" price changes over time are deducted using certain methods.

According to Sraffa, this is not permissible. If the unions enforce a higher wage rate, then this reduces (under the Sraffa assumptions such as a uniform new rate of profit in all branches) the rate of profit and changes all prices of goods, including capital goods such as freight locomotives and thumbtacks. The size of the capital stock as the sum of the prices of all capital goods thus depends on which wage level is enforced, which contradicts the neoclassical assumption of a “real” capital stock. The rate of profit and the capital stock cannot be determined independently of one another, but only simultaneously. The controversy over this problem is known as the capital controversy .

Sraffa and Marx's economic theory

Through his criticism of the neoclassical, Sraffa was classified as a leftist economist. His models also seemed to provide a modern mathematical basis for Marx's economic theory . Marx's statements were checked using the Sraffa model, but not always confirmed. In the course of the debate, several strategies of Marxian counter-criticism have emerged, which either interpret Marx alternatively within the basic framework of Sraffian analytics or criticize this framework itself. For example, the Marxist authors of the US " Temporal single-system interpretation " since the early 1980s criticize the fact that Sraffian models are subject to the restrictions of the neoclassical general equilibrium theory and that such an interpretation of Marx only leads to the problems identified by the Sraffa school. Fritz Helmedag, on the other hand, points out that Marx's labor theory of values ​​is empirically closer to reality and logically more consistent than neo-Cardian theory of production prices, which, moreover, are not universally compatible with the social division of labor. Emmanuel Farjoun and Moshe Machover also refer to the efficiency of labor theory of value and propose in their book "The laws of chaos" (1983), instead of assuming a uniform average profit rate, to differentiate the profit rate into several profit rates. For Farjoun and Machover, the "pure" labor values ​​then represent the statistical mean values ​​which, as a "first approximation", come closest to real price events.

Labor theory of value

When The Wealth of Nations was half-written, Adam Smith took over thinking in cycles from the Économistes in Paris. It determines the beginning of the book, which Ricardo repeats verbatim in the Principles. These late additions by Smith led to inconsistencies in the Wealth of Nations that Ricardo wanted to replace with a logical circular model. A cycle model needs an arithmetic unit, a numéraire (reference value). Ricardo's first attempt - reconstructed by Sraffa - was the grain-grain model with grain as capital and wages. In the Principles, Ricardo, like Smith and many others, used labor as numéraire because the value of any product can be expressed by the labor contained in the product and its preliminary products. He found his attempts to combine the return on previously performed work with the price unsatisfactory until his last days. Sraffa's labor theory of value follows this tradition.

After Marx's publication in 1867, Walras , Jevons and Menger rushed to show that capital and land are also productive. This was a milestone in the formulation of the neoclassical theory , which claims a "one-way street" (Sraffa) from resources via production factors to the final destination of consumer benefit.

Sraffa like Ricardo choose “work” as numéraire for their view of the “economy as a cycle” ( Wassily Leontief 1929) . It is true that work can be replaced by coal or steel in a mathematical equation (Leontief 1929), but not in the production process.

Law of the tendency of the rate of profit to fall

The law of the tendency of the rate of profit to fall was also mathematically checked and refuted by the Okishio theorem - within the Sraffa world. If the subsistence wage is given and an individual capitalist can choose a production technique with a lower use of labor but an increased use of means of production and thus achieve a higher rate of profit for himself, then this will result if the new technology has been generally accepted in the respective branch and the Distribution of production to the various branches of the economy is reorganized in such a way that the overall economic rate of profit is as high as possible, and also macroeconomic at ever higher profit rates. According to Marx, the opposite would have been expected, although the question of the underlying assumptions remains critical. A counter-criticism against the Sraffian argument goes back, for example, to the authors Alan Freeman and Andrew Kliman of the "Temporal Single System" approach.

A political classification

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Social democrats originally invoked Marx, but gradually came to an increasingly favorable assessment of capitalism , so that Marxist economic theory was also increasingly questioned. Keynes had shown (or seemed to have shown) how economic crises occur, but can also be overcome through state measures without having to abolish capitalism immediately. He stood between the market fundamentalists on the one hand and the fundamental opposition of Marxism on the other.

One gap in Keynesian theory, however, was the long term. Keynes himself had said "in the long term we are all dead" and his idea of ​​a long-term declining "marginal efficiency of capital" was suspiciously reminiscent of Marx's law of the tendency for the rate of profit to fall.

It was therefore fortunate that, in Sraffa, another left-wing economist had been found, whose theory seemed suitable to also question the long-term tendencies towards crisis and stagnation, as claimed by Marx's theory and which had not yet been refuted with Keynes with corresponding political consequences ( reformism ).

Criticism of Sraffa

In the Sraffaschen approach, the comparative-static analysis is to be criticized. Different economies that use a certain production technique are compared with one another. If there is a technical improvement, then it is examined how an economy behaves with this new technology. Within the Sraffa world, it is actually trivial that, viewed in this way, economies with ever better production techniques can grow faster and faster, that is, show ever higher "profit rates".

With Marx, on the other hand, the introduction of new technologies is a never-ending process, old systems are constantly being devalued by technical progress, and ever larger parts of the profit no longer serve to create additional jobs, but to increase the use of means of production per job. This dynamic cannot be captured by the Sraffa model.

This view is often found in the literature. It assumes that Sraffa wanted to come up with a complete system. The subtitle of commodity production through commodities (1960) is: Introduction to a critique of economic theory . The task Sraffa set himself was to solve Ricardo's difficulties in determining prices when the organic composition of capital varies. Ricardo's attempt at Absolute Value and Exchangeable Value remained unfinished after his death. If Sraffa is seen as someone who only completes Ricardo's work, then his work is part of the economic classic that began with Adam Smith's justification of the advantages of the division of labor.

Personal connections

Sraffa is known for his close friendship with the Italian Marxist thinker Antonio Gramsci and for saving Gramsci's prison notebooks from the fascist authorities after his death in 1937. Gramsci published a letter from Sraffa in 1924 under the title Problems of Today and Tomorrow (without signature , signed S.). Sraffa emphasized the role of the bourgeois opposition in the fight against fascism and the importance of democratic institutions for the social and political development of the proletariat. Given the weakness of the Communist Party , Sraffa recommended working with the bourgeois opposition to fascism. Gramsci in his reply rejected Sraffa's proposal, but followed him a few years later.

According to Norman Malcolm , Sraffa caused Ludwig Wittgenstein to rethink through a rude gesture , which led to the Philosophical Investigations (1953, posthumously ): Wittgenstein insisted that a sentence and what he describes must have the same "logical form", the same "Logical diversity". Sraffa made a gesture familiar to Neapolitans, meaning disgust or contempt, and asked, "What is the logical form of this?"

In the introduction to the Philosophical Investigations , Wittgenstein mentions these discussions with Sraffa, which lasted for years, and says: “I am committed to 'this' incentive; he gave me the most consistent ideas for this book ”. In 1946 Sraffa broke off his weekly conversations with Wittgenstein despite the latter's protests; When the philosopher said he would talk anything as Sraffa wanted, Sraffa replied, "Yes, but in 'your' way". Sraffa and Wittgenstein influenced each other deeply. They discussed and reviewed each other again and again in magazines and notebooks. Both authors looked at the form of positivism prevalent in their respective disciplines - economics and philosophy. During Wittgenstein's famous turn from the Tractatus Logico-Philosophicus to the Philosophical Investigations , in which he rejected the previous idea that the world was an atomistic set of propositional facts, in favor of the idea that the meaning derived from their use in a holistic, self-contained one System results. Accordingly, Sraffa rejected the neoclassical paradigm, which was similarly atomistic, individualistic and derivative. Although there are disputes over how Sraffa should be understood - especially between the neoclassical camp of Paul Samuelson and the neo-Ricardian camp of Pierangelo Garegnani - there is consensus on Sraffa's influence. One can say that, like Wittgenstein in Philosophy, Sraffa wants to replace the individualistic and positivistic understanding of price as the result of a balance of supply and demand in neoclassical economy with the price, which has the social function, a stationary or growing economy for a given Reproduce income distribution.

Sraffa is described as a very intelligent man with a proverbial shyness and a devotion to study and books. His library contained over 8,000 volumes, some now in the Trinity College Library. A popular anecdote claims that Sraffa made a successful long-term investment in Japanese government bonds, which he bought the day after the atomic bombing on Hiroshima and Nagasaki . Another version says that Sraffa bought the bonds at very low prices during the war because he was convinced that Japan would honor its commitments.

Sraffa received the Söderströmska Gold Medal of the Swedish Academy in 1961 (the Swedish Reichsbank Prize for Economics in memory of Alfred Nobel had not yet been created). He received an honorary doctorate from the Sorbonne in 1972 and from Madrid's Complutense University in 1976 . Since 1954 he was a member of the British Academy .

Work (selection)

• Production of Commodities by Means of Commodities , Cambridge University Press, Cambridge, UK, 1960.
• Production of goods by means of goods. Afterwords by Bertram Schefold , Suhrkamp, ​​Frankfurt / Main, 1976. [Akademie-Verlag, Berlin, 1968, Ed .: Johannes Behr, Gunther Kohlmey ( German Academy of Sciences in Berlin , Institute for Economic Sciences), J. Behr, transl.] .
  • Revised facsimile edition: Metropolis-Verlag, Marburg 2014, ISBN 978-3-7316-1065-6 .
• as editor with Maurice Dobb : David Ricardo , Works and Correspondence , 11 vols., Cambridge University Press, Cambridge, UK, 1951–1973.

literature

• Bertram Schefold , afterwords , in: Piero Sraffa, goods production by means of goods , Frankfurt / Main, 1976, pages: np [129] -226.
• Alan Freeman, Price, value and profit - a continuous, general, treatment in: Freeman, Alan and Carchedi, Guglielmo (eds.) "Marx and non-equilibrium economics". Edward Elgar, Cheltenham, UK, Brookfield, US, 1996.
• Fritz Helmedag , Goods Production Using Labor, Metropolis-Verlag, Marburg, 1994.
• Nicholas Kaldor : Piero Sraffa, 1898–1983 . In: Proceedings of the British Academy . tape 71 , 1985, pp. 615-640 ( thebritishacademy.ac.uk [PDF]).

Web links

• Literature by and about Piero Sraffa in the catalog of the German National Library
• Piero Sraffa - Production of commodities (PDF; 2.4 MB)
• Alessandro Roncaglia: Piero Sraffa (=  Great Thinkers in Economics ). palgrave macmillan, 2009 ( online [PDF]).

Individual evidence

1. ^ L'Ordine Nuovo, 1-15. April 1924, p. 4 [1]
2. ^ Sraffa, Piero di Alessandro Roncaglia - Il Contributo italiano alla storia del Pensiero - Economia (2012) [2]
3. ^ Norman Malcolm: Ludwig Wittgenstein: A Memoir , pp. 58-59.
4. ^ R. Monk, "Ludwig Wittgenstein" (1991) p. 487
5. ^ A. Sinha, "Sraffa and the Later Wittgenstein" (2009)
6. ↑ H. D. Kurz, "Critical Essays on Piero Sraffa's Legacy in Economics" (2000)
7. ^ A. Sinha, "Sraffa's Contribution to the Methodology of Economics (2015)
8. ↑ [https: / /web.archive.org/web/20000902055854/ Archived copy ( memento of the original from September 2, 2000 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. Profile of Sraffa at the new school] 
9. ^ Jean-Pierre Potier (1991). Piero Sraffa, Unorthodox Economist (1898-1983): A Biographical Essay (1898-1983: a Biographical Essay). ISBN 978-0-415-05959-6 /
10. ^ Fellows: Piero Sraffa. British Academy, accessed August 1, 2020 .