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Prices and Distribution in a Sraffian Credit Economy

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  • Giuseppe Ciccarone

Abstract

Sraffa's suggestion regarding the monetary determination of the rate of profits raises two fundamental questions addressed by this paper: (i) can the money rates of interest be envisaged as variables set by the financial system independently of the real sector of the economy? (ii) How can they determine the general rate of profits and so allow for the determination of natural prices and income distribution? To elaborate on the intuition that the competitive process must link the rate of profits earned in the financial sector (and ruled by the intermediaries' margin) to that earned in the production sector, a long-period credit economy is constructed. Unlike previous attempts, the system of equations describing such an economy leaves Sraffa's (1960) original price equations unaffected. If certain fairly unrestrictive conditions are met, the solution of this system is shown to exist and to be economically meaningful, hence supporting Sraffa's hint that the rates of interest are free to determine the rate of profits outside of the system of production.

Suggested Citation

  • Giuseppe Ciccarone, 1998. "Prices and Distribution in a Sraffian Credit Economy," Review of Political Economy, Taylor & Francis Journals, vol. 10(4), pages 399-413.
    • Handle: RePEc:taf:revpoe:v:10:y:1998:i:4:p:399-413
    DOI: 10.1080/09538259800000060
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    References listed on IDEAS

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    1. Benjamin M. Friedman, 1985. "Corporate Capital Structures in the United States," NBER Books, National Bureau of Economic Research, Inc, number frie85-1.
    2. Benjamin M. Friedman, 1985. "Corporate Capital Structure in the United States: An Introduction and Overview," NBER Chapters, in: Corporate Capital Structures in the United States, pages 1-12, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Riccardo Zolea, 2024. "An introduction to the distributional role of bank credit to workers in a surplus approach framework," Working Papers PKWP2403, Post Keynesian Economics Society (PKES).
    2. Eckhard Hein, 2006. "Money, interest and capital accumulationin Karl Marx's economics: a monetary interpretation and some similaritiesto post-Keynesian approaches," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 13(1), pages 113-140.
    3. Giuliano Toshiro Yajima & Lorenzo Nalin, 2022. "Financial Barriers to Structural Change in Developing Economies: A Theoretical Framework," Economics Working Paper Archive wp_1004, Levy Economics Institute.
    4. Eckhard Hein, 2006. "Interest, Debt and Capital Accumulation—A Kaleckian Approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 20(3), pages 337-352.
    5. Eckhard Hein, 2007. "Interest Rate, Debt, Distribution And Capital Accumulation In A Post‐Kaleckian Model," Metroeconomica, Wiley Blackwell, vol. 58(2), pages 310-339, May.
    6. Venkatachalam, Ragupathy & Zambelli, Stefano, 2022. "Self-replacing prices with credit and debt," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 451-466.
    7. Hein, Eckhard, 2004. "Money, credit and the interest rate in Marx's economic. On the similarities of Marx's monetary analysis to Post-Keynesian economics," MPRA Paper 18608, University Library of Munich, Germany.
    8. Michel Eduardo Betancourt Gómez, 2023. "Income distribution, banks and managers: A linear joint‐production model with financial assets," Metroeconomica, Wiley Blackwell, vol. 74(1), pages 74-93, February.
    9. Zolea, Riccardo, 2021. "The relation between interest rate and profit rate: the role of bank profitability in an endogenous money framework," MPRA Paper 108973, University Library of Munich, Germany.
    10. Di Bucchianico, Stefano, 2019. "The Impact of Financialization on the Rate of Profit: A Discussion," Centro Sraffa Working Papers CSWP36, Centro di Ricerche e Documentazione "Piero Sraffa".
    11. Riccardo Zolea, 2021. "La relazione tra saggio di profitto e tasso d'interesse e il ruolo della profittabilita' bancaria. (The relation between the profit rate and the interest rate, and the role of bank profitability)," Moneta e Credito, Economia civile, vol. 74(294), pages 97-111.
    12. Enrico Sergio Levrero & Giacomo Sbrenna, 2022. "Some Factors Affecting US Capital Profitability over the Last Decades," Bulletin of Political Economy, Bulletin of Political Economy, vol. 16(2), pages 77-101, December.

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