I've been out of town; hence the slightly delayed response to Fred. > >Gary, can Sraffa's theory explain absolute rent, i.e. rent on the least >productive land (or mines)? It is my understanding that it cannot (just >like Ricardo's theory could not). Sraffa (like Ricardo) assumes that the >least productive land pays no rent. But this is clearly false >empirically. Please correct me if I am wrong about Sraffa's theory >inability to explain absolute rent. > I'm no expert on Sraffa & rents, but I believe the answer to Fred's question is no, Sraffa's theory does not explain what Marx calls absolute rents. I don't believe that means that the framework rules out the possibility of absolute rents, or that absolute rents, explained by some mechanism external to the model, cannot be incorporated into the framework. > > >> > >Gary, has anyone incorporated differential rent into Sraffa's theory in a >more general way, including both agricultural and non-agricultural >commodities, and including a numeraire and the determination of relative >prices, and including the simultaneous determination of both rent and the >rate of profit? > Let's be clear: the phenomenon of rent arises in Sraffa (and Ricardo) in connection with the scarcity of INPUTS; what those scarce inputs are used to produce is irrelevant. So Fred's distinction between agricultural & non-agricultural PRODUCTS isn't really pertinent to the discussion, at least as far as we are concerned with Sraffa. Sraffa does develop his analysis of rent in terms of the scarce input land (and his example happens to involve the agricultural product corn). But the argument generalizes to any non-produced scarce input: at the end of the chapter Sraffa mentions obsolete machines as falling within the analysis. Petroleum, metal ores, natural gas, coal, would also fall within it. The most general treatments of rent from a Sraffian perspective are: (1) H.D. Kurz (1978): "Rent Theory in a Multisectoral Model," Oxford Economic Papers, (Vol. 30), pp.16-37. (2) G. Montani (1975) "Scarce natural Resources and Income Distribution," Metroeconomics (Vol. 27), pp.68-101. > >I argue that Marx's logical method of the prior determination of the rate >of profit is fundamentally different from Sraffas logical method of >simultaneous determination. Marx was not trying to develop the method of >simultaneous determination; rather Marx was trying to develop the method >of the prior determination of the rate of profit. This prior determination >is the basic premise of the whole Volume 3 of Capital. > >It is not just a matter of Sraffa having "more sophisticated >tools" (e.g. matrix algebra) than Marx. If Marx had known matrix algebra, >he would have rejected it, because it assumes that the rate of profit is >determined simultaneously with prices of production, rather than prior to >prices of production. This, of course, is the central question at issue. I would pose it another way: would Marx recognize the essential elements of his own system in Sraffa's model? I think yes, and have explained why in earlier posts and in published work. Fred thinks not, mainly because Marx determines the profit rate prior to the determination of prices. At some level, Fred & I will have to agree to disagree, since there's no way to establish what Marx would think if he were confronted with Sraffa's model. But I want to be clear that I NOT claiming, nor have I ever claimed that Sraffa's model is the same as Marx's. My claim is (i) that Sraffa's model solves the same problem Marx was grappling with -- the determination of the long-period normal rate of profit -- in terms of the same fundamental data that enter into Marx's explanation (technical conditions of production and the real wages of labor); and (ii) that Sraffa's approach is able to avoid the problematic labor-value analysis that Marx needed because matrix algebra was not part of his, that is, Marx's toolbox. Would Marx have ditched the value analysis if he had Sraffa's equations in front of him? Who knows? That depends partly on his ego, his temperament and how wedded he was to the ideological implications of his value analysis. My point, though, is that HE COULD HAVE DITCHED IT, and without abandoning much of what is central to his account of capitalism. When Fred says that "If Marx had known matrix algebra, he would have rejected it, because it assumes that the rate of profit is determined simultaneously with prices of production, rather than prior to prices of production," he's just reasserting that he believes the differences between the tools utilized by Marx and by Sraffa signals some fundamental difference in their understanding of how the profit rate is determined. So, again, would Marx have recognized his own project in Sraffa's equations? Maybe. Maybe not. But if not, then Fred would have another, and I think harder, question to answer: On what grounds could Marx's analysis be defended as an account of how market economies actually function? My reading provides a defense: Marx was on the right track but didn't have to tools to provide a robust solution. If we accept Fred's interpretation that Marx would have viewed Sraffa's model as a distortion or (to borrow some Post Keynesian terminology) bastardization of his own theory, how can we avoid the conclusion that Marx's theory of distribution is just an wrong-headed historical curiosity, interesting mainly for its ideological content? > >Has the numeraire in Sraffas theory ever been assumed to be a scarce, >privately owned mineral that yields rent, like actual gold? References >would be appreciated. > To my knowledge, no. But again, to be clear, the Sraffian literature would not regard gold as scarce, but as a commodity that is producible at increasing cost. The scarce entity would be mine-able land that contains gold ore. But anyway, we've established earlier in this discussion that the Sraffian framework doesn't take much interest in the question of selection of numeraire, so one wouldn't expect the literature to follow the line described in Fred's question: it'd just be a cumbersome exercise that wouldn't reveal anything very interesting. All the best, Gary
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