On Sraffa’s Contribution to Economic Theory

It is not only during the last few decades that Sraffa has acquired an important place in discussions of economic theory. An article on the laws of variable returns published as early as 1926 (Sraffa, 1926) when he was 28, in which he was already pointing towards a criticism of the demand and supply theory of value, attracted much attention as soon as it appeared. At that time however the interest focused on some remarks on the theory of the firm, which were to be developed later by Joan Robinson in her theory of imperfect competition. The work by Sraffa which is at the heart of the discussion today belongs mainly to the period since 1951. Iam referring to the Works of Ricardo (1951–73) which Sraffa edited for the Royal Economic Society, and to his book, Production of Commodities by Means of Commodities, (1960). These works relate to two connected themes which are important (more important, perhaps, than is immediately apparent) for an understanding of the present situation of economic theory. The two themes are the criticism of the dominant demand-and-supply theory of distribution and relative prices, and the revival of a different approach to these problems: that of the British classical economists down to Ricardo. An attempt, however brief, at reporting Sraffa’s contribution therefore requires some preliminary words about the dominant and the classical approaches to distribution, and the criticism levelled against the former.