Saturday, March 29, 2008

Samuelson Versus Sraffians, Recently

I've previously pointed out some of Samuelson's acknowledgements of the Cambridge Capital Controversy.

Some of Samuelson's compliments to Sraffians are backhanded. He also has some critical things to say. For such criticisms, I can pick out 1987, 1990, 1991, 2000, and 2007 essays. (I do not reference a couple of Samuelson and Etula papers which I have not read.) The 1987 and 2000 essays have rejoinders by John Eatwell, Pierangelo Garegnani, Bertram Schefold, and Heinz Kurz and Neri Salvadori, with replies and reactions by Samuelson. The 1991 essay can be read as a reply to Carlo Panico's rejoinder to Samuelson (1987 and 1990). Samuelson's 2000 essay resembles a rejoinder to Garegnani (2007a), with a reply by Garegnani (2007b).

Nowhere does Samuelson disagree with his acknowledgement of the phenomena of capital-reversing and reswitching. To Samuelson, these arise in valid long-period neoclassical theory. Any supposedly neoclassical theory which denies these logical possibilities is simply mistaken and not a theory that Samuelson now accepts. Samuelson was mistaken, he says, in his early 1960s understanding of neoclassical theory.

Samuelson disputes the existence of a valid Classical theory in which demand does not matter, Constant Returns to Scale prevail in manufacturing, equilibrium prices are proportional to embodied labor values, and the margin in agriculture can be taken as given. He presents some simple numerical examples in which, for example, the margin in agriculture is found endogenously and relative prices are unequal to relative labor values.

In his youth, Sraffa agreed that the Classical theory of value was based on Constant Returns to Scale in manufacturing (as opposed to agriculture), but he dropped that claim in his mature work. Nowhere that I am aware of do Sraffians claim that Sraffa's Standard Commodity is a justification of a simple Labor Theory of Value, that is, as a theory of relative prices. Sophisticated Sraffians, such as Garegnani, Kurz, and Salvadori, assert that the Classical theory of value includes the influence of consumer demand. The level and composition of output are taken as given in the theory of value, but explained within the broader range of Classical economics. This modular structure allows Classical economics to make no assumptions on returns to scale within the Sraffian reconstruction of the Classical theory of value, at least as long as the choice of technique is not being analyzed. As I understand it, the Sraffian position does not require challenging the logical validity of any of Samuelson's examples. Samuelson seems not to understand that demand can be modeled other than by a neoclassical theory of supply and demand schedules, in which they mutually interact. Garegnani (2007b) complains that Samuelson refuses to address this point.

References
  • Pierangelo Garegnani (2007a). "Professor Samuelson on Sraffa and the Classical Economists", The European Journal of the History of Economic Thought, V. 14, N. 2 (June): 181-242
  • P. Garegnani (2007b). "Samuelson's Misses: A Rejoinder", The European Journal of the History of Economic Thought, V. 14, N. 3 (September): 573-585.
  • Paul A. Samuelson (1987). "Sraffian Economics", in The New Palgrave: A Dictionary of Economics (edited by J. Eatwell, M. Milgate, and P. Newman), Macmillan.
  • P. A. Samuelson (1990). "Revisionists Findings on Sraffa", in Essays on Piero Sraffa: Critical Perspectives on the Revival of Classical Theory (edited by K. Bharadwaj and B. Schefold), Unwin Hyman.
  • P. A. Samuelson (1991). "Sraffa's Other Leg", Economic Journal (May): 570-574.
  • P. A. Samuelson (2000). "Sraffa's Hits and Misses", in Critical Essays on Piero Sraffa's Legacy in Economics (edited by H. D. Kurz), Cambridge University Press
  • P. A. Samuelson (2007). "Classical and Neoclassical Harmonies and Dissonances", The European Journal of the History of Economic Thought, V. 14, N. 2 (June): 243-271.

3 comments:

Gabriel said...

Thanks for the update!

I think that Samuelson would also dispute the claim sometimes made that exactly one price must be exogenous, but I don't have a reference.

Robert Vienneau said...

Sraffa presents equations that have one degree of freedom. I don't see how this can be disputed.

One can close this model in various ways, if one likes. I've already illustrated what might be called a neoclassical closure. And I've presented a Post Keynesian closure.

Much more could be said.

Anonymous said...

I love samuelson