Sunday, January 10, 2010

Leontief's Work As Applied Sraffianism

Sraffa's critique is formulated in terms of physical quantity flows among industries and labor inputs into each industry. From this data, institutional assumptions, and, for example, the rate of profits, Sraffa deduces the set of constant prices that allow for the smooth reproduction of a capitalist economy.

Leontief independently developed the theory of Input-Output (I-O) analysis, and national income accounts include I-O accounts. The Bureau of Economic Analysis maintains I-O accounts for the United States.

A body of work exists in which the national income accounts are used to examine empirical questions. Sometimes the output of each industry is normalized to one physical unit of each industry, thereby allowing the national accounts to be thought of as closer to Sraffa’s data. Much of this work can be seen as classical in approach, not marginalist. Benjamin H. Mitra-Kahn's "Debunking the Myths of Computable General Equilibrium Models" (2008) shows that the classical nature of one such body of empirical work is often disguised by tendentious and incorrect history.

So Sraffa’s work is empirically applicable, although his own intentions seem to have been more focused on criticism.


Stephen Kinsella said...

Not only is Sraffa's work empirically verifiable, it is also constructive--that is, capable of being simulated exactly on a computer.

See Ploner & Fredholm, Metroeconomica, 2009 for empirical applications of a Sraffian-inspired indices, (

and Velupillai, J. Econ. Methodology, for details of Sraffa's constructive proofs. (

Alex said...

In fact, Kurz and Salvadori have a paper titled 'Input – Output Analysis from a Wider Perspective: a Comparison of the Early Works of Leontief and Sraffa' published in 2006.

Apart from this, in 1991 an abridged and translated work of Leontief was published in Structural Change and Economic Dynamics in 1991 under the title 'The economy as a circular flow'.

Anonymous said...

Hey, Chile in the OECD!

Thank you very much, Mr. Friedman and Chicago Boys!