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Constant returns to scale and economic theories of value

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  • Naqvi, Nadeem

Abstract

Jointly with Erkko Etula, Paul Samuelson [2006] claims that the “Leontief – Sraffa matrix equations for input/output must obey constant returns to scale”. However, in an unrelated work, Amartya Sen [2003] claims that Sraffa’s [1960] “analysis does not need any assumption of constant returns to scale.” In fact, Sraffa’s model cannot satisfy this property because it is impossible to define constant returns to scale in it. This claim is considerably stronger than Sen’s. The property of constant returns to scale is significant because it constitutes a line of demarcation between distinct, though interrelated, economic theories of value. (96 words)

Suggested Citation

  • Naqvi, Nadeem, 2007. "Constant returns to scale and economic theories of value," MPRA Paper 5306, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:5306
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    References listed on IDEAS

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    1. Amartya Sen, 2003. "Sraffa, Wittgenstein, and Gramsci," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1240-1255, December.
    2. Paul A. Samuelson, 1962. "Parable and Realism in Capital Theory: The Surrogate Production Function," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 29(3), pages 193-206.
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    Cited by:

    1. Nadeem Naqvi, 2011. "Demystifying Sraffa’s Theory of Value in the Light of Arrow and Debreu," MAGKS Papers on Economics 201150, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    2. Naqvi, Nadeem, 2011. "On two theories of value and distribution," MPRA Paper 35312, University Library of Munich, Germany.

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    More about this item

    Keywords

    Constant returns to scale; Theory of Value; Relations of production; Counterfactual information; Exchange Values; Classical Political Economy; Neoclassical theory; Leontief technology;
    All these keywords.

    JEL classification:

    • B00 - Schools of Economic Thought and Methodology - - General - - - History of Economic Thought, Methodology, and Heterodox Approaches
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • B40 - Schools of Economic Thought and Methodology - - Economic Methodology - - - General

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