The purpose of the paper is to show why the assumption of a non-self-replacing state in Sraffa's system, with single-product industries and circulating capital, could jeopardize the role of production prices in making the reproduction of the system possible. As a result, this assumption is not a merely simplifying, but rather a`characterizing' assumption, in so much as it changes in some fundamental respect the main results of the analysis. Speci®cally, unless self-replacement is assumed, the laws of returns (and therefore quantity-considerations) cannot be ignored.

No abstract

Sraffa and Keynes can doubtless be put together for their having made a true 'revolution' in economic theory in the last century. Though they followed different research paths one from each other, they both went very deeply into the foundations of the established economic theory, up to the point of subverting, within their own models, the traditional way of thinking and representing the functioning of an economic system. As regards Sraffa, after having set up a consistent logical framework firmly rooted into the classical tradition, he gave much emphasis to the non-market institutions and to the non-market values. With this latter aspect of the Sraffian theory the first part of the paper will be mainly concerned. Specifically, the attention will be addressed to the crucial role played by the notion of subsistence in the viability of a system and, in this way, its Smithian roots will be analysed in some detail, and the importance of that notion in the present times will be duly emphasized. As regards Keynes' approach, its focus on the determination of aggregate output represents a 'revolution' as well, as it contrasts sharply with the prevailing-at the time-Robbins's view regarding the supposed irrelevance of the social product, a central concept in the analysis of the old classical economists. Secondly, Keynes' approach is 'revolutionary' for the centrality of effective demand he assumed in determining the level of aggregate output-the relevant magnitudes being fixed outside the market mechanism. The decisions to be taken in a in system characterized by the pervasive influence and power of money institutions, in fact, cannot be ever thought of as conducive to an 'equilibrium' of the type contemplated by the traditional theory. The second part of the paper will be addressed to this peculiarity of Keynes' contribution and to all its possible links to the classical and Sraffa's approach. Lastly, some reflections will be produced as to the very uncomfortable state of the contemporary economic theory, which seems to have strongly regained the old form and content of the pre-Keynesian way of thinking, after having put under the carpet all the corrosive critiques which have sprung from the Sraffa 1960 seminal work.

No abstract

No abstract