Sraffa’s Contributions to the Methodology of Economics

Abstract

This article highlights some of Sraffa’s main contributions to the methodology of economics. It argues that Sraffa rejected counterfactual reasoning and hence the ‘marginal method’ of analysis. Sraffa’s theory is built solely on factual and objective information and hence it removes psychology from economics as well. Sraffa’s theory shows that considerations of demand and the condition of equilibrium of demand and supply are irrelevant to a logical theory of prices. The article goes on to show how Sraffa’s novel approach to economic theory was able to expose the logical errors of ‘marginal method’ in the Austrian and Neo-classical theories of distribution. Finally, it also raises some questions for Sraffa’s theory that need to be resolved.

JEL: B2, B3, B4, B5