A Revolution in Economic Theory : The Economics of Piero Sraffa

This book draws on the work of one of the sharpest minds of the 20th century, Piero Sraffa. Ludwig Wittgenstein credited him for 'the most consequential ideas' of the __Philosophical Investigations__ (1953) and put him high on his short list of geniuses. Sraffa's revolutionary contribution to economics was, however, lost to the world because economists did not pay attention to the philosophical underpinnings of his economics. Based on exhaustive archival research, Sinha presents an exciting new thesis that shows how Sraffa challenged the usual mode of theorizing in terms of essential and mechanical causation and, instead, argued for a descriptive or geometrical theory based on simultaneous relations. A consequence of this approach was a complete removal of 'agent's subjectivity' and 'marginal method' or counterfactual reasoning from economic analysis – the two fundamental pillars of orthodox economic theory. "Drawing extensively on Sraffa's Cambridge archives, particularly his unpublished notes, Ajit Sinha reveals Sraffa's struggle - philosophical, methodological and technical - on the road towards the brief formulation in Production of Commodities by Means of Commodities (1960). Sinha puts paid thereby to alternative readings of that enigmatic work, including that of the late Pierangelo Garegnani, Sraffa's student and the leading Sraffian commentator. Sinha's concern with the philosophical underpinnings of the discipline and his dissatisfaction with technicality for its own sake reflect a broadness of intellectual vision that would serve well any economics program taking the history of thought seriously."--Samuel Hollander, Professor Emeritus, University of Toronto, Canada, and Officer of the Order of Canada 'The two main features of Ajit Sinha's book show the fundamental nature of its contribution to economic analysis and history of economic thought. On the one hand, the author offers a complete and thorough reconstruction and interpretation of Sraffa's works, including his unpublished papers. On the other hand, it strongly contributes to the recent revival of the economists' debates on the meaning of Sraffa's contribution to economics, especially and unusually stressing the importance of its philosophical underpinnings.' - Richard Arena, Professor of Economics, University of Nice Sophia Antipolis, France This book draws on the work of one of the sharpest minds of the 20th century, Piero Sraffa. Ludwig Wittgenstein credited him for 'the most consequential ideas' of the Philosophical Investigations (1953) and put him high on his short list of geniuses. Sraffa's revolutionary contribution to economics was, however, lost to the world because economists did not pay attention to the philosophical underpinnings of his economics. Based on exhaustive archival research, Sinha presents an exciting new thesis that shows how Sraffa challenged the usual mode of theorizing in terms of essential and mechanical causation and, instead, argued for a descriptive or geometrical theory based on simultaneous relations. A consequence of this approach was a complete removal of 'agent's subjectivity' and 'marginal method' or counterfactual reasoning from economic analysis - the two fundamental pillars of orthodox economic theory Dedication 6 Foreword 8 Preface 10 Contents 18 1: Prologue 19 The Classical Paradigm 19 The Post-classical Paradigm 34 2: Before a New Beginning 44 Money Matters 44 Theories of Value 49 The Turning Point 59 3: A New Beginning 67 The First and Second Equations 67 Difference and Change 76 To Induce or Not to Induce? 82 Efficient and Final Cause 85 The Modern Scientific Outlook 88 Did Sraffa Abandon the Modern Scientific Outlook? 98 4: The First Interlude 106 The Friendship Between Sraffa and Wittgenstein 107 The Philosophy of Tractatus 111 The Nature of the Break 113 The Nature of Sraffa’s Influence on Wittgenstein 116 5: ‘My Hypothesis’ 125 Before the Hypothesis 125 Enter Marx 127 Exit Marx: Enter Standard System 136 Switch in Techniques 159 Notes of 1955–59 161 6: The Second Interlude 166 Sraffa’s Early Position on Ricardo’s Theory of Value 167 The ‘Introduction’: A Dramatic Shift 170 Some Problems with Sraffa’s New Position 173 Why the New Interpretation? 181 A Retreat? 184 7: The Book 188 The Preface 189 The Subsistence System 196 Production with a ‘Surplus’ 199 Movements in Prices 207 The ‘Balancing’ or the Average Industry 210 The Standard System and the Standard Commodity 212 Uniqueness of the Standard System 221 What is Given, w or r? 229 The ‘Dated Labor’ and the Period of Production’ 231 To Switch or to Re-Switch? 233 Appendix 235 Why Must Industrial Rates of Profits be Uniform in Sraffa’s System of Equations? 235 8: Epilogue 239 References 243 Index 250 Front Matter....Pages i-xvii Prologue....Pages 1-25 Before a New Beginning....Pages 27-49 A New Beginning....Pages 51-89 The First Interlude....Pages 91-109 ‘My Hypothesis’....Pages 111-151 The Second Interlude....Pages 153-174 The Book....Pages 175-225 Epilogue....Pages 227-230 Back Matter....Pages 231-244