Sunday, November 14, 2010

On "A Splendid Contribution"

The appendix of Omkarnath's aprreciation of Bharadwaj's review of Sraffa's book contains an exchange of letters between Bharadwaj and Sraffa. Here's Sraffa's letter:
"As from Trinity College, Cambridge
Sabzburg, Austria
September 8, 1963

Dear Mrs. Bharadwaj,

Thank you so much for your kind letter, which I receive abroad, just as I am about to return to Cambridge.

I am delighted with your excellent article, which will be of great help to many who have been puzzled by my book. I have no doubt that you have correctly grasped the main lines of the argument and also guessed some of the directions in which, in my view the criticism of marginalism should be developed.

There are only one or two minor points in which I think your exposition is perhaps not as lucid as it is in general. One (p. 1452, col 3, first para), on deriving 'land theory of value'. I suppose this is an echo of Samuelson, but I do not see the implications. (I have the impression that you somewhat underestimate the historical importance of the labour theory of value: in my view much of modern theory is, whether consciously or not, a polemic against it.) Another one is p. 1453, col 1, from 'To a particular wage' to the end of the paragraph: I find this obscure and have some doubts about what I seem to understand. Also, a small point of disagreement is the very last words of your final footnote. I insist that the construction of a subsystem is a purely bookkeeping operation!

These, however, are very minor blemishes and the article remains a splendid contribution for which I am most grateful. I hope very much you will continue to work on these lines.

With kind regards,

Yours sincerely,
Piero Sraffa"

Sraffa criticizes three passages in Bharadwaj's review. I agree the second passage is not well written:
"To a particular wage, given in any standard, there may correspond several alternative rates of profits. This shows the absolute necessity of measuring the wage in terms of the Standard commodity, if unequivocal conclusions regarding the movements of the rate of profits given the wage rate are to be drawn. Measurement of the wage in terms of the Standard commodity gives us definite information regarding both the direction as well as the extent of change in the rate of profits, consequent upon a change in the wage rate. No other standard possesses this predictive value." -- Krishna Bharadwaj (1963)
The wage is only defined in terms of some standard. Once the standard is specified, a unique rate of profits corresponds to that wage, no matter what the standard. A different rate of profits may correspond to the same numeric value in a different standard. But one would not expect the same properties to be displayed by a substance at zero degrees Celsius and zero degrees Fahrenheit.

I think Sraffa's criticism of the third passage is a disagreement about the level of emphasis. Here is that passage:
"Nevertheless, while reading the paragraphs relating to the construction of the Standard system (pp. 23-4) and more particularly the subsystems (p. 89), one gets a feeling as though the assumption of constant returns-to-scale is necessary. Such doubts could easily be warded off since the Standard commodity is purely an auxiliary construction having no physical existence in production relations. Similar is the case of the subsystems which are used to derive the direct and indirect labour content of commodities (at zero profit rate)." -- Krishna Bharadwaj (1963)

  • Krishna Bharadwaj (1963) "Value Through Exogenous Distribution", The Economic Weekly, (August 24): pp. 1450-1454.
  • G. Omkarnath (2005) "'Value Through Exogenous Distribution': A Review Article in 1963", Economic and Political Weekly, (January 29): pp. 459-464.


Anonymous said...

"I have the impression that you somewhat underestimate the historical importance of the labour theory of value: in my view much of modern theory is, whether consciously or not, a polemic against it."

Interesting fact: Léon Walras wrote a book attacking Proudhon in 1860.

An Anarchist FAQ

Robert Vienneau said...

Walras also, like Jevons, attacked Ricardo. Bohm-Bawerk explicitly criticized Marx. I don't know how to establish whether the reception of Marginalism owed more to a reaction against Marx, Ricardian socialists, or Henry George.