ABSTRACT
This volume contains a set of chapters written by the two of us, by one of us alone, or by one of us in collaboration with some other co-author. With the exception of this introduction all chapters have been previously published. The collection is a follow-up to two other volumes with essays from us, the 1998 volume entitled Understanding ‘Classical’ Economics. Studies in Long-period Theory (Kurz and Salvadori, 1998) and the 2003 volume entitled Classical Economics and Modern Theory. Studies in Long-period Analysis (Kurz and Salvadori, 2003). In order to get a more complete picture of what we mean by ‘classical’ economics and why we think it necessary to resurrect and develop the standpoint of the classical economists and those working in their tradition, we ask the interested reader to kindly also consult our previous books. Since some of the chapters reprinted in this volume contain a continuation of arguments developed in chapters published in the earlier two volumes – occasionally directly in response to critics of our work – the reader might find it useful to have the previous volumes at hand when reading this one. The material is subdivided in three parts. Part I deals with ‘Classical economics
and modern theory’ and has four chapters. Chapter 2 grew out of a paper given at the ‘Colloque international Jean-Baptiste Say’, Institut des Sciences de l’Homme, Lyon, 26-28 October 2000. The chapter focuses attention on the differences of opinion between Ricardo and Say in the theory of value and distribution – the main field in dispute between the two. It is shown that whilst at the beginning of their encounter Say acknowledged Ricardo’s authority in political economy, already at the time of his notes to the French edition of Ricardo’s Principles, published in 1819, he changed his attitude. After Ricardo’s death he openly attacked Ricardo and apparently was intent to diminish the latter’s achievements. However, there is clear evidence that Say’s reception of Ricardo’s surplus-based approach to the theory of value and distribution abounds with misunderstandings. These concern, in particular, the distinction between ‘value’ and ‘riches’, the theory of value and the problem of the measure of value, and the explanation of rents and profits. Desirous of establishing himself as an original thinker, Say re-defined the scope, method and content of political economy, opting for a more inductive approach. When confronted with Ricardo’s criticism of his interpretations and views he frequently responded in an evasive way. Ricardo felt with an ever increasing
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astonishment, which was to turn into disenchantment, that the substance of Say’s respective arguments, which he thought erroneous or misleading, was basically left untouched. Therefore, his belief in Say’s ability to understand his, Ricardo’s, doctrine gradually vanished. Chapter 3 discusses the numerical examples of land saving and capital saving agricultural improvementsRicardo provided in chapter 2, ‘On rent’, of thePrinciples. His illustrations of the second kind of improvements in particularmetwith fierce criticism, beginningwith EdwinCannan. It ismaintained that Ricardo was not wrong in any substantive sense and that he could only be criticized for having changed the definition of rent as regards the timing of its payment from post to ante factum. Chapter 4 scrutinizes LéonWalras’s ‘Exposition and refutation of the English theory’, by which Walras meant first and foremost Ricardo’s theory, in lessons 38-40 of part 7 of his Eléments d’économie politique pure. WhileWalras succeeded in pointing out some weaknesses and unnecessarily restrictive assumptions in Ricardo’s theory of differential rent, he made a number of mistakes and misunderstood specific elements of Ricardo’s theory. He was not aware of the fact that singularly restrictive assumptions must hold in corn production in order for marginal productivity curves of capital with regard to each quality of land to exist. His objection that Ricardo tried ‘to determine two unknowns with one equation’, involving that his system was underdetermined, is untenable. More important, Walras failed to see that the classical approach to the theory of value and distribution is fundamentally different from his own demand and supply approach. He treated Ricardo’s theory as if it were just an early and rude version of his own elaborate neoclassical general equilibrium theory. He missed the fact that the data of the classical theory are different from those of the marginalist one and in particular that profits and wages are not treated in a symmetrical manner. Chapter 5 raises the question of whether Ricardian extensive rent is aNash equilibrium. FollowingRicardo and the other Classical authors, none of the modern contributors to the analysis of extensive rent has given a role to the distribution of land ownership among landlords. In this chapter, on the contrary, it is argued that if the demand for agricultural commodities and the distribution of marginal land ownership is such that demand can be satisfied only if the owner of the largest plot of that land rents out at least a part of his or her land, then a positive rent is possible (if landlords behave in a strategic way). In the analysis provided only two cases are explored: that in which each owner has the same amount of marginal land and that in which there are just two owners. Part II is devoted to ‘Sraffa’s contributions’ and has four chapters. Chapter 6
deals with an important aspect of Sraffa’s preparation of The Works and Correspondence of David Ricardo (Ricardo, 1951-1973). As is well known, the publication of the edition was delayed for a considerable time. One of the reasons for the delay was that Jacob H. Hollander, a then leading authority on Ricardo, effectively obstructed the progress of the edition for many years, first by not disclosing to Sraffa the ‘Ricardiana’ he had acquired, and then, after Sraffa had provided compelling evidence that theymust have been in his possession, by refusing Sraffa access to them. How andwhyHollander did so requires an intricate story to be unravelled, using hitherto unknown material from several archives. An early
version of the paperwas presented at a session of theHESmeeting at theUniversity of British Columbia inVancouver, 30 June-3 July 2000, and at theHETSAmeeting at Wesley College, Sydney, 4-7 July 2000. Chapter 7 is devoted to a discussion of Sraffa’s ‘objectivist’point of view in the theory of value and distribution. The paper was first given at the IXth conference of the Association Charles Gide devoted to the theme ‘Agréger, répartir, échanger: la valeur d’Aristote à Sraffa, Shapley et Debreu’ at BETA, Université Luis Pasteur, in Strasbourg, 27-29 September 2001. The objectivist point of view, Sraffa was to discover, had been anticipated by the classical economists, whose analysis he was keen to revive by shedding the weaknesses of its earlier formulations and elaborating on their strengths. The chapter draws on Sraffa’s hitherto unpublished papers kept at Trinity College Library, Cambridge, focusing attention on the first period of his interpretative and constructive work, 1927-1931. A follow-up to the chapter providing a more detailed discussion of the various facets of this fascinating topic and especially Sraffa’s concern with the relationship between economics and the laws established by the natural sciences is Kurz and Salvadori (2005) which is reprinted in Kurz, Pasinetti and Salvadori (2007). An early version of Chapter 8 was given on the occasion of a conference at the Max Planck Institute for Research into Economic Systems in Jena, Germany, 29 November-1 December 2001, devoted to alternative approaches to the theory of production. The emphasis in the chapter is on the characteristic features of the Classical theory, including its objectivist orientation; its explanation of all property incomes in terms of the social surplus generated in production conceived of as a circular flow; and its treatment of wages conceived of either as an inventory of commodities or as a share in the social product as a given magnitude. Chapter 9 adds to our previous discussion of Sraffa’s collaboration with his ‘mathematical friends’ (Frank Ramsey, Alister Watson and Abram S. Besicovitch); see Kurz and Salvadori (2003, chapter 10). The chapter was originally given at the conference ‘Piero Sraffa’ organized by the Italian Academy of Science, the Accademia Nazionale dei Lincei, in Rome, 11-12 February 2003. In it we discuss two problems Sraffa faced in the course of preparing his 1960 book: (i) the problem of fixed capital which turned out to be a veritable touchstone to his objectivist approach, because whereas in the case of circulating capital goods the process of value transfer to the product and the physical ‘destruction’ of the input are one and the same thing, in the case of fixed capital items this is typically not so; (ii) the problem of carrying over the distinction between basic and non-basic commodities from systems with only single production to those with joint production. While with Besicovitch’s help Sraffa was able to solve the first problem in terms of the joint-products approach we encounter in chapter X of Sraffa (1960) as early as late summer 1943, he became aware of the second problem only in spring 1957 whenhewas putting together his book fromhis old notes. The problem turned out to be intricate and necessitated substantial changes in the structure and content of the book. Sraffa and Besicovitch worked hard on this problem fromAugust to November 1957 and there is a further result found byBesicovitch inDecember 1957which was not included in the book, whose manuscript was complete by the end of January 1958.
