Representing the production and circulation of commodities in material terms: On Sraffa's objectivism

Abstract

The paper discusses Sraffa's interpretation of the classical economists and, following their lead, his elaboration of an objectivist, surplus-based theory of value and distribution. The emphasis is on the twin concepts of physical real costs and social surplus on the one hand and that of a circular flow of production on the other. In order to determine relative prices within such an analytical scheme, the tool of simultaneous equations is indispensable. It is then argued that fixed capital turned out to be a formidable obstacle: whereas the circulating part of capital allows one to entertain the idea of a material-cum-value transmigration into the product, this idea loses much of its appeal with regard to the durable part. Sraffa eventually overcame the difficulty in terms of the joint-products approach.

Acknowledgments

We are grateful to the participants of the conference ‘Piero Sraffa, 1898–1983’, organised by the Istituto Italiano per gli Studi Filosofici in Naples, 9–11 October 2003, and of a seminar held at the University of Paris X–Nanterre in November 2004 for useful discussions and observations. We thank Jonathan Smith and the staff of Trinity College Library for continuous assistance while working on the Sraffa papers. We received valuable comments on earlier versions of the paper from Tony Aspromourgos, Christian Bidard, Gilbert Faccarello, Pierangelo Garegnani, Christian Gehrke, Geoff Harcourt, John King, André Lapidus, Gary Mongiovi, Annalisa Rosselli, Bertram Schefold and Ian Steedman. It goes without saying that the responsibility for any errors and misinterpretations is entirely ours. We should like to stress that the views contained in this paper have not been discussed with the other participants in the project of preparing an edition of Sraffa's papers and correspondence we are involved in, and therefore do not implicate them.

Notes

¹We should like to thank Pierangelo Garegnani, literary executor of Sraffa's papers and correspondence, for granting us permission to quote from them. References to the papers, which are kept at Trinity College Library, Cambridge, follow the catalogue prepared by Jonathan Smith, archivist. Unless otherwise stated, all emphases are in the original, where words or passages Sraffa underlined are italicised by us. Sraffa frequently abbreviated ‘and’ by ‘+’; we shall use the word instead of the symbol. Since in his texts Sraffa used both round and square brackets, all additions by us will be bracketed by {and}.

²Physical concepts were widely discussed, and occasionally also adopted by some economists, in the late 19th century (and also later). A case in point is the ‘Law of definite proportions’ on which, together with the law of the conservation of mass, John Dalton had based the ‘atomic theory’ in chemistry. The first of the two laws was discussed by authors such as Pantaleoni (1894, pp. 99 et seq.), whose work Sraffa had studied at an early time. In a lecture he gave in Perugia in 1925 Sraffa criticised the adoption of the law in economics. (We are grateful to Nerio Naldi for having reminded us of this fact.) And when he prepared his lectures on advanced theory of value, which he was supposed to give in Cambridge in Michaelmas term 1927–28 but then postponed for a year, he came back to the law and pointed out that since workers can be fed in different ways and yet produce the same kind of commodity, there is no reason to suppose that the law of definite proportions carries over from chemistry to economics. With a choice of technique, an additional argument was provided against the importation of the law in economics. More generally, Sraffa hardly ever adopted an idea or concept he found in the literature, economic or other, without adapting it to the particular problems he was concerned with and the analytical framework he had elaborated. He learned from the natural sciences and their methods, but he did not simply copy them.

³In Sraffa's diaries Petty's name appears for the first time on 27 November 1927 in a list of names containing also those of Adam Smith, the Physiocrats, Quesnay and Sismondi; see E1. Sraffa also referred to a paper by Cunningham (1892) in which the latter had defended Petty's approach against Marshall's description of ‘economics as the science of measurable motives’. The former is said to lay ‘a solid foundation of fact… . But when we start from motives, we loose {sic} all this advantage… . Motives are not obvious and we are likely to be mistaken about them.’ See D3/12/9: 18.

⁴A treatment of the problem of fixed capital has to wait until Section 6.

⁵This was motivated inter alia by a fact well known to Petty and the Physiocrats, namely, that in agriculture workers have to be paid even in periods when natural conditions prevent them from performing at all or at least from performing their normal tasks, such as in winter time. See Sraffa's respective observations in D3/12/12: 8.

⁶See also Sraffa's respective excerpts from the Histoire in D3/12/11: 88 and his quotation from Gentile (1899) in D3/12/10: 40: ‘Il Feuerbach disse, come espressione ultima e tipica del suo materialismo: l'uomo è nè più nè meno di ciò che mangia (der Mensch sei nur das, was er esse).’ In this context it should be mentioned that the name of the Young Hegelian and materialist philosopher Ludwig Andreas Feuerbach (1804–72) is mentioned in Sraffa's diary on 11 January 1928 together with that of the evolutionary philosopher Ernst Heinrich Haeckel (1834–1919).

⁷It had not escaped Sraffa's attention that Vilfredo Pareto (and, following him, also Francis Y. Edgeworth) had criticised earlier authors for treating as givens what had to be considered as unknowns in the theory of value: the objects of Pareto's focus were especially the wage fund theory, the labour theory of value, cost of production theories and the Austrian theory. Sraffa had carefully studied several of Pareto's contributions at an early time, which is reflected in many annotations in those that are in his library and in several references to Pareto in his early papers; see, in particular, Pareto (1901, 1902a, 1902b, 1906). On 11 January 1928 we find in Sraffa's Cambridge Pocket Diary next to the names mentioned in footnote 5 also the remark: ‘Par. systemes, II, 288, G. E. Set 1901’. There can be no doubt that this is a reference to p. 288 of Vol. II of Pareto's Les systèmes socialistes (Pareto, 1902a) and a paper published by Pareto in the September issue of 1901 of the Giornale degli Economisti (Pareto, 1901). (The latter paper is referred to in Pareto, 1902a, p. 287.) On the page mentioned Pareto deals with the necessity to determine (relative) prices in terms of simultaneous equations and introduces his criticism of the older economists who did not have this tool at their disposal and tried to simplify matters by taking a sufficiently large number of the variables under consideration as known magnitudes.

⁸Things were, of course, different with production conceived of as a finite sequence of labour inputs that result in the generation of a product. Ricardo every so often had recourse to such a simplified scheme and therefore had no difficulty to ascertain the total amount of labour ‘embodied’ in the commodity.

⁹As Sraffa noted in a document to which we will refer again in the following section: ‘The “extensive” theory of rent, and the labour theory of value only assume this kind of knowledge’ (D3/12/13: 2).

¹⁰In his observations on wages and profits Ricardo had typically assumed that all capital consisted only of the wages bill or could entirely be reduced to it. This had prompted Marx to accuse Ricardo of identifying the rate of profits with the rate of surplus value. On Sraffa's view of the relationship between Marx and Ricardo as it comes to the fore in his discussion of Ladislaus von Bortkiewicz's respective contributions at the beginning of 1943, see Gehrke & Kurz (2005).

¹¹Interestingly, in the document referred to he went on: ‘The horse (or his physiology) takes a strictly private view of his relation with his food, and does not allow any extraneous consideration to interfere: he is a perfect utilitarian and thus forms the ideal object of study of the marg.{inal} utility economist.’

¹²When Sraffa in the mid-1940s had developed the concept of ‘sub-system’ he established the fact that the total amount of labour needed directly and indirectly in the production of one unit of a commodity is equal to the labour employed directly in the various industries forming the corresponding sub-system that produces net one unit of the commodity under consideration; see also Sraffa (1960, appendix A).

¹³Sraffa also studied some of the latest contributions to anthropology, in particular the works of B. Malinowski and R. M. Firth. Here his main interest was to what extent and how a person's mind and behaviour were shaped by institutions, conventions, rules and the historical conditions of production, and what these disciplines had to say about the key figure of marginalism, homo oeconomicus. (See, for example, D3/12/7: 11.)

¹⁴Interestingly, in this document Sraffa still showed some vacillation about whether to include labour among the quantities so specified.

¹⁵Whitehead's book is mentioned at the end of Sraffa's diary of 1927–28 (E1).

¹⁶Starting from Whitehead, Sraffa expounded on the different points of view of classical and marginalist theory: ‘“Efficient causes” are facts of the past that act on the present: “final causes” are facts of the future that act on the present. The existence of the latter is at best dubious and they are better called “illusions”. The classical P.{olitical} E.{conomists} dealt only with the first sort of causes, i.e. of “material things” that have existed in the past. Modern economics deals with the second class, i.e. hopes for the future, such as utility, abstinence, disutility, etc.; these things, it must be noticed, refer only to the foresight of future acts’ (D3/12/10: 61 (1)).

¹⁷In his essay on Edgeworth Keynes stated: ‘Mathematical Psychics has not … fulfilled its early promise. … The atomic hypothesis which has worked so splendidly in physics breaks down in psychics. We are faced at every turn with the problems of discreteness, of discontinuity—the whole is not equal to the sum of the parts’ (Keynes, CW, Vol. X, p. 262). See also Sraffa's annotation of Labriola's assessment: ‘L'Economia ci rivela la Società nell'Individuo non l'Individuo nella Società {In the Economy we see the Society in the Individual, not the Individual in the Society}’ (Labriola, 1922, p. 40).

¹⁸See also Sraffa's following excerpts from Hertz (1899, pp. 1 and 23): ‘We form for ourselves images or symbols of external objects; and the form which we give them is such that the necessary consequents of the images in thought are always the images of the necessary consequents in nature of the things pictured.’ And: ‘We are justified in deciding that if our images are well adapted to the things, the actual relations of the things must be represented by simple relations between the images’ (D1/9: 9; emphasis added). This is reflected in Sraffa's following comment on the status of his first sets of equations. He stressed that ‘there is a causal connection (causa essendi) between the two sets of quantities’—that is, physical real costs on the one hand and values on the other—and that ‘the theory reproduces as a logical relation between two concepts … the concrete causal relation between the two facts’ (D1/9: 10).

¹⁹Sraffa also disagreed with Whitehead's characterisation of post-Smithian political economy as having ‘de-humanised industry’ (Whitehead, 1926, p. 158). On the inside back cover of his copy of the book he accused Whitehead of ‘sentimentalism’.

²⁰It had not escaped Sraffa, the man ‘from whom nothing is hid’ (Keynes, CW, Vol. X, p. 97), that apparently at least partly in response to the criticism levelled at classical mechanics, Marshall in Industry and Trade had chosen a new motto: ‘Natura abhorret saltum’, which was an altogether different proposition; see Sraffa's annotation in his copy of Marshall's book.

²¹See his statement: ‘Interest appears thus as the necessary means of overcoming an obstacle to production. It is a social necessity as distinguished from the material necessity of, say, putting coal into a locomotive that it may do its work’ (D3/12/18: 11).

²²Things are actually not quite so simple as Sraffa stressed in a note of December 1927 on the breeding of children, married men, bachelors, and family allowances (see D3/12/10: 65).

²³The concept of objectivisation, or ‘objectivation’, was also used in the sciences. According to Schrödinger, ‘two general principles … form the basis of the scientific method, the principle of the understandability of nature, and the principle of objectivation’ (Schrödinger, 1944, p. 117).

²⁴As Sraffa (D3/12/7: 18) noted, this view was expressed already in 1821 by an anonymous author in a critical disquisition on Malthus's doctrine (see Anonymous, 1821; see also D3/12/8: 10). Sraffa appears to have borrowed the terms ‘withdrawing’ and ‘inducing’ from the author whose pamphlet Marx in Theorien über den Mehrwert had dubbed ‘one of the best of the polemical works of the decade’ written by a Ricardian (see Marx, 1972, p. 117). Sraffa, in vain it seems, tried to discern who the author was. There is, however, evidence that it was not Samuel Bailey, as had variously been contended.

²⁵Again, things are not so simple, as Sraffa pointed out elsewhere, because there are, of course, alternative uses of land.

²⁶In this regard Sraffa also appears to have been partly inspired by Anonymous (1821, p. 106) who had stressed that ‘machines are like land; and owing to it, both must submit to take whatever they can get.’ See D3/12/7: 18.

²⁷A large part of Sraffa's early notes on fixed capital concern exclusively the case of seed, where by seed he generally meant the input of a commodity into its own production, viz. the use of seed corn to produce corn, but also, for example, the input of iron in the production of iron. Sraffa endorsed Smith's view that ‘No fixed capital can yield any revenue but by means of a circulating capital’ (WN, II.i.25). There is no space to provide a detailed account of why Sraffa at first, in 1927, accepted the ‘seed’ concept of fixed capital, but already a few months later, in 1928, rejected it (see, therefore, Kurz, 2003). Here it must suffice to observe that initially Sraffa saw reason not to reckon interest on the input of a commodity used in its own production, i.e. seed, since ‘seed does not enter into exchange, and its value is never determined: and since it is only through exchange{,} not through production{,} that individuals get hold of the surplus, no surplus is to be got from seed’ (D3/12/6: 18). In early or mid-1928 Sraffa abandoned his previous view as to the non-payment of interest on seed and fixed capital. He saw that the premise on which it rested was unfounded, namely, that this would not endanger the self-replacement of such capital items and, as a consequence, that of the system as a whole (see D3/12/9: 11).

²⁸In this context, see also Sraffa's annotations in Pareto (1902b and 1906) and his critical comment on the forces contemplated by the Lausanne economist in D3/12/9: 93.

²⁹As Sraffa noted, it can be traced back to Johann Heinrich von Thünen; see D3/12/10: 37.

³⁰In the manuscript the word has a wavy underlining which Sraffa in all probability added when re-reading the paper.

³¹It goes without saying that this requirement does not refer to the case in which a change in the rate of profits involves a change in the technique employed by cost-minimising producers and thus a change in the quantities of labour and means of production needed in the new situation. This proviso applies also with regard to the passage used as a motto of this paper.

³²In the remaining days of December 1942 he investigated the solvability of the equations related to the introduction of an equation for each age of the machine and whether in the case of constant efficiency the accountant's method gives the same result as the joint-products method. See Kurz & Salvadori (2004b).

³³The problem of extensive rent he had substantially solved as early as 1928; see, in particular, D3/12/7: 131–132.