Piero Sraffa on Ricardo

Piero Sraffa on Ricardo

As indicated above, the role played by the critical edition of Ricardo in the total research programme is that of facilitating -after a century of misinterpretation and distortion -the rehabilitation of the classical economists' analysis, based on the concept of surplus.

To understand the interpretative U-turn that this involved, we must look at the situation at the time when Sraffa began his work. In fact in the twenties Ricardo's theories seemed to be of little interest to economists. They were not lacking in justification for this attitude. Whether Marshall's interpretation (according to which Ricardo is an imprecise and partial forerunner of modern theory) or that of Jevons (according to whom Ricardo was responsible for a pernicious deviation of economics from the path of true science)6 is accepted, there is no need to waste time reading his work. This was, for example, the opinion of economists of the calibre of Robertson and Hicks, as we discover from their correspondence with Keynes.7 At best, a few economists accepted the Ricardian theory of rent (as providing the basis for the principle of diminishing returns) or the Ricardian monetary theory or the comparative-cost theory of international trade. The Ricardian labour theory of value was, in general, neglected by theorists and regarded by historians of economic thought as merely an object of antiquarian interest. The Ricardian concep­tion of the economic process, based on the concept of surplus, was completely submerged.

One indication of this situation is the way in which the Royal Economic Society handled the work on the critical edition of Ricardo. In 1928 this responsibility was entrusted to Professor Gregory of the University of London, an economic historian whose main interest was in monetary problems. Gregory did not commit himself very deeply to the task, and in 1930 was pleased to pass it on to Sraffa.
Nevertheless there was a certain amount of anticipation among Sraffa's friends concerning the outcome of his work. Publication was announced several times (notably by Keynes in his essay on Malthus, written in 1933). We can see that this anticipation was more than justified when the edition finally appeared. It is unanimously agreed to be a model of philological rigour. More than this, the edited texts, the notes and especially Sraffa's introduction to the first volume of the Principles of Political Economy and Taxation restored Ricardo (and in his wake the whole of classical political economy to a central place in economic theory, freeing the interpretation of his thought from the travesties of the marginalists.

Drastically simplifying Sraffa's exposition, we can distinguish two successive analytical stages in Ricardo's work. The first culminates in the Essay on the Influence of a Low Price of Corn (1815), in which Ricardo uses what would now be called a 'one-commodity model'. A certain quantity of grain is used as a means of production (seed-corn and subsistence wages for workers involved in the productive process); a larger quantity of grain is obtained as output. After reconstituting the initial supply of means of production, a surplus is therefore obtained; it goes to the property-owning classes (i.e. profit to capitalists and rent to landowners). If land with different degrees of fertility is used, competition between capitalists to rent the best land means that rent is paid for the best land equal to the difference between the surplus obtainable from this land and that obtainable from the poorest land currently being cultivated. This is the so-called Ricardian theory of Rent, which Ricardo actually took from Malthus, Torrens and West. As less and less fertile land is taken into cultivation as a consequence of population growth, the surplus from the least fertile land diminishes, as does the rate of profit. At the same time rents increase, while wages remain constant in real terms at the subsistence level.

Accumulation, which is dependent upon profit, slows down. To favour capitalists (and, therefore, economic growth), it was necessary to favour corn imports - in opposition to the land­owners over the distribution of the surplus. This is the root of Ricardo's liberalism.

The second stage - that of the Principles of Political Economy (successive editions published in 1817,1819 and 1821) - is the one in which Ricardo abandoned the one-commodity model, having taken Malthus's criticisms, and adopted the labour-embodied theory of value (according to which the value of each commodity is given by the quantity of labour directly or indirectly necessary for its production) to measure income and capital. From this he obtains the rate of profit as a ratio between aggregates of heterogeneous goods. In this sense, the theory of value had a subordinate and functional role relative to the theory of distribution, and allowed the latter to emphasize the conflict of interest between social classes (workers, capitalists and landowners) in the distribution of income. Nevertheless, within the labour theory of value there remained one problem which Ricardo had already tackled in the Principles and more directly in his later writings. This is the problem of the invariable standard of value and of the relationship between absolute and exchange values. In his Introduction to the Principles (1951) Sraffa offers a contribution which is not just interpretative but also theoretically innovative. This is a contribution which has perhaps not yet provoked all the attention it should have done, not least in relation to the problem of the links between the classical economists and Marx. As Sraffa pointed out, Ricardo attributes two meanings to the invariable standard which need to be clearly separated. The first is that of having invariable value with respect ot its own means of production when distribution of income between wages and profits alters with no change in technology. The second is that of invariable value with respect to tech­nological change over time. Having separated the two problems, Sraffa shows in Production of Commodities by Means of Com­modities (1960) how it may be possible to resolve the first by constructing a 'standard commodity' - a composite commodity in which the product and the whole of the means of production are made up of the same commodities, in the same proportions. As for the second problem, it is obvious that the measurement in terms of labour content retains some meaning, but it is also clear that the risk of metaphysical or subjective views increases (work as 'toil and trouble', as sacrifice). All the same, it is a problem on which economic theory has made no new progress after Sraffa's contribution.