ABSTRACT
The starting point of Leontief’s framework is the input-output table, which is an analytical representation of the flows of commodities (and services) observed between various industries of an economic system. We start with a simple numerical example, taken from Sraffa (1960, Chapter I, § 2). Suppose we are observing an economic system with three industries: corn (c), iron (i) and plastic (p). These commodities are, at the same time, final goods and means of production: production is thus a circular process. Suppose that the system is in a stationary state, the same flows of commodities as inputs and as outputs are exchanged and produced each year by various industries. Let us record the physical flows of commodities in Table 6.1. In each column, we read the inputs of the various commodities in a given industry: in the first column, for example, we read the physical quantities of corn, iron and plastic entering as input in the corn industry. On each row, we read the deliveries of the same commodity to the various industries. Hence, the sums of the rows can be calculated since the row entries represent quantities of the same commodity. Vice versa, the sums of columns cannot be done since the corresponding entries refer to quantities of heterogeneous commodities. The total output levels of the industries are represented by the entries below the vertical arrows. Since we have assumed that we are observing a system in a stationary state, for each industry, its total output must equal the sum of the quantities of the same commodity that are delivered to various industries, that is, the sum of the respective row.
