On the Neoricardian Criticism of Irrelevance

The publication in the early 1960s of Piero Sraffa’s Production of Commodities by Means of Commodities (PCMC) (Sraffa 1960) triggered a storm of criticism directed at the core of Marxian theory, threatening to undermine it. Why did Sraffa’s book have the power to induce so potent a theoretical cataclysm? The answer is easy. A few years earlier, Seton’s (1957) important work ‘The “Transformation Problem”’ had been published, in which prices of production and the profit rate were derived from a matrix of data expressed in value terms: that is, in quantities of labour, just as Marx’s theory seemed to require. Then Sraffa, using similar mathematics, calculated prices and the profit rate starting from the physical quantities of means of production, labour-power and produced commodities.’ Here values carry out nofunction and Marx’s theory of value disappears. Since Sraffa’s prices appear to be exactly the same as Marx’s prices of production, some economists quickly reached the distressing conclusion that prices of production and the profit rate could be derived without reference to Marx’s theory. Marx’s theory would in this case be irrelevant, a statement that strikes at the heart the theory of the origin of surplus value (or profit) from the expenditure of human labour stated by Marx in Capital.