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


  • Nadeem Naqvi

    () (University of Giessen)


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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    References listed on IDEAS

    1. Hahn, Frank, 1982. "The Neo-Ricardians," Cambridge Journal of Economics, Oxford University Press, vol. 6(4), pages 353-374, December.
    2. 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.
    3. Kurz,Heinz D. & Salvadori,Neri, 1997. "Theory of Production," Cambridge Books, Cambridge University Press, number 9780521588676, May.
    4. Paul A. Samuelson, 1962. "Parable and Realism in Capital Theory: The Surrogate Production Function," Review of Economic Studies, Oxford University Press, vol. 29(3), pages 193-206.
    5. Joan Robinson & K. A. Naqvi, 1967. "The Badly Behaved Production Function," The Quarterly Journal of Economics, Oxford University Press, vol. 81(4), pages 579-591.
    6. Naqvi, Nadeem, 2007. "Constant returns to scale and economic theories of value," MPRA Paper 5306, University Library of Munich, Germany.
    7. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
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    More about this item


    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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