The ‘classical' approach to exhaustible resources

Sergio Parrinello is to be credited with having pioneered the extension of Piero Sraffa’s analysis at least in two important directions. ¹ First, in 1970 he reformulated the pure theory of international trade within a ‘classical’ framework of the analysis in which capital consists of heteregeneous produced means of production (Parrinello 1970). This was the starting point of a number of contributions by Steedman, Metcalfe, Mainwaring and others who showed that several of the traditional trade theorems, derived within the Heckscher-Ohlin-Samuelson trade model, do not carry over to a framework with a positive rate of profits and heterogeneous capital goods. Second, in 1983 Parrinello turned to the problem of exhaustible resources, such as oil or gas, and asked critically whether the long-period method Sraffa had adopted can also deal with this case or whether it has to be abandoned in favour of some other method (Parrinello 1983). Also this paper triggered a number of contributions taking up the challenge.