Monday, April 23, 2007

Lord Eatwell Celebrates Sraffa

"...But Sraffa's most dramatic scholarly achievement went further than mere correction of perspective. His reconstruction of Ricardo's surplus theory, presented in but a few pages of the introduction to his edition of Ricardo's Principles, penetrated a hundred years of misunderstanding and distortion to create a vivid rationale for the structure and content of surplus theory, for the analytical role of the labor theory of value, and hence for the foundations of Marx's critical analysis of capitalist production...

...But the greater achievement was yet to come. Neoclassical orthodoxy survived the attacks on Marshall by retreating to the less persuasive but apparently secure general equilibrium theory. By the late fifties the neoclassical resurgence was well under way, overwhelming the Keynesian critique, armed, as it was, with seemingly invincible algebraic weapons. Sraffa punctured the balloon. He demonstrated in Production of Commodities that the foundations of neoclassical theory are logically unsound, and, remarkably, demonstrated simultaneously that the old surplus approach to problems of value and distribution, which had been cast aside with ascent of neoclassical theory, was logically sound and, indeed, was the ideal basis on which to develop a satisfactory analysis of market economies.

At first sight, these precise logical exercises, dramatic though their influence may have been in theoretical circles, might seem to be the very stuff of arid academic debate. But on the contrary, they represent the very nucleus of the interpretation and evaluation of the operation of capitalism. Sraffa's demonstration that price formation and the distribution of income cannot be the outcome of the forces of supply and demand, as believed by the orthodox theorists, eliminates the case for the market system as a mechanism which brings about an efficient allocation of scarce resources. Thus the theoretical arguments which are commonly claimed to support so many of today's economic policies, including those of the monetarists, are revealed to be the utterly unfounded claims of sectional interests...

...The objective analysis which Sraffa sought he found in the surplus theories of Ricardo and Marx. The classical theory of value and distribution takes as its starting point quantities which are all, in principle, objectively measurable, and behind those quantities lie the objective characteristics of social institutions. There is no place for utility or disutility. For example, labor requires a given quantity of commodities as wages, and this must be replaced from the product. The wage is a set of physical magnitudes, its determination rooted in the character of contemporary society. It is not a measure of how the worker subjectively feels about working. Orthodox theory asks us to believe that real cost is the sum not only of the disutility of labor, but also of the subjective pain suffered by the capitalists, who must be induced to sacrifice their wealth to engage in the acquisition of profit." -- John Eatwell (1984). "Piero Sraffa: Seminal Economic Theorist", Science and Society, V. 48, N. 2 (Summer): 211-216.


John Ryskamp said...

My Lord hasn't researched Sraffa's links to "natural" mathematics. When he does, he will find out that it negates everything he says. Here are two papers to inform His Exceedingly Ignorant Lordship:

Ryskamp, John Henry, "Paradox, Natural Mathematics and Twentieth-Century Ideas" (April 14, 2006). Available at SSRN:

Ryskamp, John Henry, "The Pratt-Ryskamp Exchange on Set Theory, Paradox, Garciadiego and the Foundations of Computer Science" (May 2, 2007). Available at SSRN:

Rakesh Bhandari said...

But Sraffa took a step back from the classical economists. As Freeman and Giusanni have long emphasized, his equations cannot be solved unless the "output" goods are assumed to be the same as the input "goods"; moreover Sraffa must assume that the output commodities have been produced with the same exact techniques as the input goods. That is, to get the mathematics to work he has to stick fast to things and freeze them in time. The economy is conceived as having the same basket of goods on the input side as the output side, and it is assumed that they were produced in the same way!

This is not objective or materialist as Eatwell and Steedman loudly proclaim but a phantom world in which mathematically minded economists have become more comfortable than the real world. The net product is in fact not well described as a quantity of use values; that only reifies the actually objective and real unpaid labor time which can take and usually does take ever changing concrete forms.

In other words, Sraffa represents a step back from the classical economists whom Marx lauded in this rather amazing quote from his chapter on Richard Jones:

"The phantom of the world of goods fades away and it is seen to be simply a continually disappearing and continually reproduced objectivisation of human labour.  All solid material wealth is only transitory materialisation of social labour, crystallisation of the production process whose measure is time, the measure of a movement itself."

The materialism and objectivity that Eatwell claims to have found in Sraffa was lost after Marx's encounter with the classicals. Sraffa did not recover it but tried to give it the final burial. Meek, Dobb and Steedman followed him.

Rakesh Bhandari
UC Berkeley

Anonymous said...

Of course a Marxist would challenge the Sraffian system on account of its phantom like objectivity and materiality. But the most important point is the common basis of neo classical and Sraffian economics in equilibrium thinking. In the lecture entitled "Profit and Loss," delivered to the Mont Pelerin Society in September, 1951, Ludwig von Mises wrote:

"The average man lacks the imagination to realize that the conditions of life and action are in a continual flux. As he sees it, there is no change in the external objects that constitute his well-being. His world-view is static and stationary. It mirrors a stagnating environment. He knows neither that the past differed from the present nor that there prevails uncertainty about future things...
"The imaginary construction of an evenly rotating economy is an indispensable tool of economic thinking. In order to conceive the function of profit and loss, the economist constructs the image of a hypothetical, although unrealizable, state of affairs in which nothing changes, in which tomorrow does not differ at all from today and in which no maladjustments can arise…The wheel turns spontaneously as it were. But the real world in which men live and have to work can never duplicate the hypothetical world of this mental makeshift.

"Now one of the main shortcomings of the mathematical economists is that they deal with this evenly rotating economy—they call it the static state—as if it were something really existing. Prepossessed by the fallacy that economics is to be treated with mathematical methods, they concentrate their efforts upon the anlysis of static states which, of course, allow a description in sets of simultaneous differential equations. But this mathematical treatment virtually avoids any reference to the real problems of economics. It indulges in quite useless mathematical play without adding anything to the comprehension of the problems of human acting and producing. It creates the misunderstanding as if the analysis of static states were the main concern of economics. It confuses a merely ancillary tool of thinking with reality."

Rakesh Bhandari said...

It's clear that Marx would have seen in the Sraffian theory the crude material fetishism he ascribed to McCulloch! Eatwell is free to laud this putative materialism, but it is important to see why Marx would have not.

In Theories of Surplus Value Marx writes:

"According to Hodgskin, circulating capital is nothing but the juxtaposition of the different kinds of social labour (coexisting labour) and accumulation is nothing but the amassing of the productive powers of social labour, so that the accumulation of the skill and knowledge (scientific power) of the workers themselves is the chief form of accumulation, and infinitely more important than the accumulation—which goes hand in hand with it and merely represents it—of the existing objective conditions of this accumulated activity. These objective conditions are only nominally accumulated and must be constantly produced anew and consumed anew.
“… productive capital and skilled labour are […] one.” “Capital and a labouring population are precisely synonymous” ( [Hodgskin, Labour Defended against the Claims of Capital, London, 1825,] p. 33).
These are simply further elaborations of Galiani’s thesis:
“… The real wealth … is man” (Della Moneta, Custodi. Parte Moderna, t. III, p. 229).
The whole objective world, the “world of commodities”, vanishes here as a mere aspect, as the merely passing activity, constantly performed anew, of socially producing men. Compare this “idealism” with the crude, material fetishism into which the Ricardian theory develops in the writings “of this incredible cobbler”, McCulloch, where not only the difference between man and animal disappears but even the difference between a living organism and an inanimate object. And then let them say that as against the lofty idealism of bourgeois political economy, the proletarian opposition has been preaching a crude materialism directed exclusively towards the satisfaction of coarse appetites."

Two points here.

First, the Sraffian theory tries to remain fixated on the objective world, the world of commodities, the production of commodities by commodities The Sraffians take get pride in this empiricism (though of course the world is never frozen as it is in their equations). But in this economics we have fixed inputs transformed into fixed outputs on the basis of fixed technology. We have the whole objective world, the world of commodities.

This reified world never vanishes for the Sraffians as a mere aspect of, as the merely passing activity, constantly performed anew, of socially producing men.

Marx would have described the Sraffian framework as a crude material fetishism closer to McCulloch than Ricardo! At the same time even though Sraffa tries to remain fixated on the world of commodities, he is forced to abandon the actual and changing world of commodities and retreat into a world where nothing changes, time is frozen--inputs and outputs are the same and technical conditions fixed.

So the theory aims to be materialist but fails to be so. It is in fact a Platonic escape from the real, material world.

Second as to the origins of surplus value the difference between the animate and the inanimate disappears in the Sraffian framework as the new money value added is attributed to animate or living labor and dead labor alike.

At any rate it's no surprise the Sraffians try to kill off the labor theory of value as part of Marx's discredited humanism.

This is the only way they can stay at the empiricistic level of the objective world of commodities, not see commodities as a mere aspect of, as the merely passing objectificaton of activity, constantly performed anew, of socially producing men.

Rakesh Bhandari
UC Berkeley