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Demystifying Sraffa’s Theory of Value in the Light of Arrow and Debreu

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  • Nadeem Naqvi

    (University of Giessen)

Abstract

This paper compares the models of Arrow and Debreu [1954] and Sraffa [1960], and concludes that (1) the models are informationally distinct conceptions of a capitalist economy, (2) they support radically distinct – though complete and entirely correct – theories of value, (3) the prices in the two theories are different both in terms of definitions and values, (4) in Sraffa‘s model it is impossible to define constant returns to scale, while in Arrow-Debreu this property is admissible, and (5) in Arrow-Debreu the interpersonal income distribution is determined whereas in Srafa‘s model the distribution of income between workers and capitalists is undetermined.

Suggested Citation

  • 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).
    • Handle: RePEc:mar:magkse:201150
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    File URL: https://www.uni-marburg.de/en/fb02/research-groups/economics/macroeconomics/research/magks-joint-discussion-papers-in-economics/papers/2011-papers/50-2011_naqvi.pdf
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    References listed on IDEAS

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    1. Samuelson, Paul A. & Etula, Erkko M., 2006. "Testing to confirm that Leontief-Sraffa matrix equations for input/output must obey constancy of returns to scale," Economics Letters, Elsevier, vol. 90(2), pages 183-188, February.
    2. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676.
    3. Joan Robinson & K. A. Naqvi, 1967. "The Badly Behaved Production Function," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 81(4), pages 579-591.
    4. Hahn, Frank, 1982. "The Neo-Ricardians," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 6(4), pages 353-374, December.
    5. Schefold, Bertram, 1985. "Cambridge Price Theory: Special Model or General Theory of Value?," American Economic Review, American Economic Association, vol. 75(2), pages 140-145, May.
    6. Ajit Sinha, 2007. "Sraffa and the Assumption of Constant Returns to Scale: A Critique of Samuelson and Etula," Contributions to Political Economy, Cambridge Political Economy Society, vol. 26(1), pages 61-70.
    7. 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.
    8. Naqvi, Nadeem, 2007. "Constant returns to scale and economic theories of value," MPRA Paper 5306, University Library of Munich, Germany.
    9. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
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    Cited by:

    1. Richard Arena, 2019. "Is still to-day the Study of the "Surplus Product" the True Object of Economics?," GREDEG Working Papers 2019-32, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.

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    More about this item

    Keywords

    constant returns to scale; theory of value; relations of production; counterfactual information; prices; exchange values; income distribution; general equilibrium; capital; marginal product;
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