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Getting rid of a parenthetical ‘must’: the unintended consequences of non uniform profit rates in Sraffa’s equations
Sergio Nisticò

Last modified: 2019-06-16

Abstract


In order to show that the natural prices of the classical economists should be interpreted as the necessary prices that ensure the reproduction of the economic system, Sraffa decided to open Production of Commodities by means of Commodities (PoCbmoC) with the didactic assumption of a ‘society which produces just enough to maintain itself’ showing that relative prices ‘spring directly from the methods of production’, i.e. emerge as a necessity from the unique distribution of the output among industries that ensures the repetition of the economic process. In chapter II of PoCbmoC, dedicated to economies producing a surplus, prices are determined simultaneously with the distribution of the surplus. Accordingly, Sraffa adds among the unknowns of the price equations the rate of profits that, we are told from a seemingly unimportant specification inserted in a parenthetical expression, ‘must be uniform for all industries’ as if the must would give relative prices resulting from his equation the same attribute of necessity they have in a subsistence economy. After reviewing the literature that has focused on the opportunity to expand Sraffa’s approach to the general case of non-uniform profit rates across industries and on the classical notion of competition, the paper argues that getting rid of Sraffa’s must implies a broader questioning of how prices are set in contemporary economies, of the role of demand and of whether the notion of long-period prices is compatible with firms’ power to be price-maker.


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