Production of Commodities by Means of Commodities

We now turn to Sraffa’s 1960 book, the upshot of his earlier efforts. In the book we do not encounter the metaphors “photograph” and “man from the moon,” but it becomes abundantly clear what the equations mean and that they are designed to reformulate in a logically consistent way the approach to the theory of value and distribution of the classical economists.

The marginalist approach requires attention to be focused on change, for without change either in the scale of an industry or in the “proportions of the factors of production” there can be neither marginal product nor marginal cost. In a system in which, day after day, pro­duction continued unchanged in those respects, the marginal product of a factor (or alterna­tively the marginal cost of a product) would not merely be hard to find—it just would not be there to be found.

This is a warning to his readers: marginal products and marginal costs are analytical objects, not observable ones. In fact, even in a stationary state, the observer could cal­culate the marginal product of a factor or the marginal cost of a commodity, provided that infinitesimal changes were (counterfactually) assumed, but obviously no observer can experience them. Things are different with respect to what Wicksteed called “spurious” margins. Sraffa explained, “The most familiar case is that of the product of the ‘marginal land’ in agriculture, when lands of different qualities are cultivated side by side” (ibid.). In this case two different objects are envisaged by the observer, and the difference between them defines the increments implicit in the concept of margin. This concept of margin was actually introduced by the classical economists. Sraffa reminds us, “P H. Wicksteed, the purist of marginal theory, [...] condemns such a use of the term ‘marginal’ as a source of ‘dire confusion’ ” (ibid., v-vi).

The production equations Sraffa then discusses in chapters 1 and 2 of the book are actually variants of those he had elaborated in the late 1920s. Sraffa describes tech­nology by listing industries, where each industry is considered as fully described by the list of inputs it employs and the list of outputs it produces. Where do these data come from? Sraffa (1960) is silent about this. However, many remarks from the unpublished manuscripts (among them those mentioned in the above) clarify that these data are sup­posed to have been directly observed, as it is the case with the man from the moon. As regards the prices he determines for given real wages (conceived as an inventory of com­modities), he stressed explicitly that “such classical terms as ‘necessary price,’ ‘natural price’ or ‘price of production’ would meet the case” (ibid., 9). In the with-surplus case, these prices involve a uniform rate of profits on the value of the capital goods advanced in each industry of the economy. When Sraffa in chapter 12 of his book discusses the choice of technique problem, he starts from the premise that the choice “will be exclu­sively grounded on cheapness” (ibid., 83). The prices are seen to be the outcome of the cost-minimizing behavior of producers: “At any given level of the general rate of profits, the method that produces at a lower price is of course the most profitable of the two for a producer who builds a new plant” (ibid., 81).

Finally, we draw attention to Sraffa’s correspondence after the publication of his book. Interestingly the “photograph” metaphor reappears in it once and confirms the mean­ing we discussed in the above: its purpose is to draw attention to the classical approach, which is fundamentally different from the marginalist one, and to emphasize its objectiv- ist character revolving around the concept of physical costs and its development.

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