ABSTRACT
It is a simple descriptive truth about real capitalist economies that they are open economies, open both to foreign trade and, in many cases at least, to international flows of both short and long term money capital. Moreover, such openness has been increasing, in some cases quite markedly. Hence to claim that one is studying real capitalist economies whilst analysing models of the closed economy is self-contradictory, at least from the descriptive perspective. Of course it might be, in principle, that closed economy theory nevertheless turned out to be very similar to open economy theory-but one could only establish this, if true, by conducting both analyses and then comparing them. Being in possession of the open economy analysis, then, one must use it if it differs significantly from the closed economy version and might as well use it even if it does not. It is against this background that we here consider Piero Sraffa’s great Production of Commodities by Means of Commodities, which contains no overt reference to the open economy. One simple and reasonable explanation for this silence may perhaps be found in Sraffa’s clear prefatory statement that ‘the set of propositions now published [have] been designed to serve as the basis for a critique of [the marginal theory of value and distribution]’ (Sraffa 1960a:vi). Since the marginal theory was presented by Böhm-Bawerk, Clark, Wicksell and many others in a closed economy setting, it was entirely appropriate to lay the foundations for a critique of that theory in the same terms. Indeed it would have been highly inappropriate to do otherwise; one can hardly base an internal logical criticism of a theory on alternative assumptions!
