7/28/2019 Piero Sraffa - Production of Commodities. a Comment http://slidepdf.com/reader/full/piero-sraffa-production-of-commodities-a-comment 1/4 Production of Commodities: A Comment Author(s): Piero Sraffa Reviewed work(s): Source: The Economic Journal, Vol. 72, No. 286 (Jun., 1962), pp. 477-479 Published by: Wiley on behalf of the Royal Economic Society Stable URL: http://www.jstor.org/stable/2228720 . Accessed: 06/03/2013 22:50 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Wiley and Royal Economic Society are collaborating with JSTOR to digitize, preserve and extend access to The Economic Journal. http://www.jstor.org This content downloaded on Wed, 6 Mar 2013 22:50:29 PM All use subject to JSTOR Terms and Conditions
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7/28/2019 Piero Sraffa - Production of Commodities. a Comment
Author(s): Piero SraffaReviewed work(s):Source: The Economic Journal, Vol. 72, No. 286 (Jun., 1962), pp. 477-479Published by: Wiley on behalf of the Royal Economic Society
Stable URL: http://www.jstor.org/stable/2228720 .
Accessed: 06/03/2013 22:50
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp
.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of
content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms
of scholarship. For more information about JSTOR, please contact [email protected].
.
Wiley and Royal Economic Society are collaborating with JSTOR to digitize, preserve and extend access to The
Economic Journal.
http://www.jstor.org
This content downloaded on Wed, 6 Mar 2013 22:50:29 PMAll use subject to JSTOR Terms and Conditions
given (a no-surplustwo-commoditysystem which is in a self-replacing tate).
Even in this simplestcase, however, if, with the same equations,the two com-
modities were producedin different proportions (so that the system ceased to
be in a self-replacingstate) the exchange ratio would remain the same but
the ratio between the excess productionsof the two commodities would be
changed, so that the two would no longer be equal. In the case of a system
of more than two commoditiesthe ratiosof the excessproductions would not
in general be equal to the values even n the self-replacingstate.
Sir Roy, however, having adopted the notion that the exchange values
are always equal to, and determined by, the ratio between the excess pro-
ductions of the commodities, is led to the conclusion that a change in the
composition of consumer demand " would at once, in accordanceith Mr.
Sraffa's wnequations,ffect the price ratios " (p. 784); and this even thoughthe words which I have italicised necessarily mply that the methods of pro-
duction would be unchanged. This misunderstanding, f I may adopt Sir
Roy's own words, " runs through all the complications of his subsequent
treatment."The second misunderstanding s incidental to Sir Roy Harrod's defence
of the idea of a quantity of capital and the related concept of period of pro-duction. He discussesthe example given in ? 48 of two industries in which
" the pattern f the periods of production is different": " at a low rate of
interest' a risein the rateof interestwill cause a greaterrise in the price of A,at higher ratesof interesta rise in the rate of interest will cause a greaterrise
in the price of B and at still higher rates of interest a rise will again cause a
greater rise in the price of A " (p. 786). This example is a crucial test for
the ideas of a quantity of capital and of period of production. Sir Roy,
however, disposesof it by trying to reduce it to another and quite distinct
case: namely, to the effect which a rise in the rate of interest has in raising
the value of partly worn out fixed-capital goods relatively to similar goods in
new condition (?83 of the book) and says: " this is the point that reallygives rise to the reversalsf the effect of interestincreases n Mr. Sraffa'scom-
plicated example " (p. 787). That these two effects cannot be identified,
and are in fact totally unrelated, will appear evident if it is considered that
one of them can arise only in connection with the depreciation of fixed
capital, while the other (the " reversals") is demonstrated n ? 48 exclusivelyin termsof circulatingcapital.
The above misunderstandingarises in the course of Sir Roy's attempt to
simplify my exposition by reducing two distinct cases to one. But whether
two or one, what they show is that it is not possible to define the quantity of
capital and the period of productionin a way that makes them independentof the rate of interest. These results,of course, cannot possibly" damage "
1 The term " rate of profits " is exclusively used in the book, but the review always replaces
it with " rate of interest." I have here followed the terminology of the review, instead of my
own.
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the definitionssuggested by Sir Roy himself, since the latter are explicitlymade to depend upon " a givenrateof interest (pp. 786-7). One can onlywonder what is the good of a quantity of capital or a period of productionwhich, since it depends on the rate of interest, cannot be used for its tra-ditional purpose,which is to determinethe rate of interest.
PIERO SRAFFA
TrinityCollege,
Cambridge.
CURRENT TOPICS
FELLOWSof the Royal EconomicSociety and economists enerallywillbe interested o hear that in connectionwith the bicentenaryn 1976of thepublicationof the Wealth f Nations,he Universityof Glasgowhopes toproduce a new edition of the collected works of Adam Smith. The re-sponsible ommittee f the Universitywouldbe grateful or the co-operationof any scholars nterestedn thisproject,andwouldbe glad to inform hemin more detail of theirplans and intentions.
SIR ROBERT SHONE has been appointed to be Director-General of thenew NationalEconomicDevelopmentCouncil,and SirDonaldMacDougallhas been appointed o be EconomicDirector.
IN consequenceof his new appointmentSir Donald MacDougall sunable o complete he SurveyArticleon " Theoriesof InternationalTradePolicy" that we had hoped to publishduring his autumn. Therewill bean intervalbefore he appearance f the nextarticle n thatseries.
Thefollowing avebeenadmitted oLibraryMembershipf theSociety:Andersonian ibrary,RoyalCollegeof Science&Technology,Glasgow.A. N. Z. BankLtd., Melbourne,Victoria,Australia.AustenPeayStateCollege,Clarksville, ennessee,U.S.A.Bedrijsfraadoorde Visserij,Ostend,Belgium.CentralSerialRecordDept., CornellUniversity, thaca, N.Y., U.S.A.ChristCollegeCo-op.SocietyLtd., Irinjalakuda,Kerala,India.CollegeofEducation, tateUniversity f NewYork,Albany,NewYork.Collegeof St. Thomas,St. Paul 1, Minnesota,U.S.A.ColumbiaUniversity n the City of New York, Dept. of Economics,
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