The Essentiality of Money in the Sraffa Papers

Since the publication of Production of Commodities by Means of Commodities (PCMC) in 1960 there has been much debate about the nature of prices in the Sraffa system. Some authors have argued that they were only a special case of Walrasian equilibrium prices, while others have insisted that, reflecting the conditions of the production of commodities and the state of distribution, they have a specificity which goes back to the old classical surplus approach. Little attention, however, has been devoted to one particular aspect of such prices: their real versus their monetary character. As is well known, modern Walrasian equilibrium prices are real prices, since their determination depends on forces that can be understood regardless of any assumption about money. Although the theory supposedly deals with with a monetary economy, money is considered neutral with respect to the determination of relative prices: whether or not money is ‘integrated’, the equilibrium price system remains unaffected. The question then arises as to whether it is the same with the Sraffa system, in other words should money also be considered as neutral with respect to the determination of relative prices. The object of the present chapter is an enquiry into what may be learned on this question from the Sraffa Papers (SP).