Piero Sraffa and the Production of Commodities by Means of Magic

Abstract

Piero Sraffa’s The Production of Commodities by Means of Commodities is the seminal attempt to create a physical, rather than a social, numeraire to measure the price of commodities. Sraffa’s physical numeraire is predicated on the physical identity and, therefore, direct commensurability of inputs and outputs. It is considered to be the viable alternative to Ricardo and Marx’s social numeraire that used labour time to measure the value of incommensurate inputs and outputs. Sraffa’s assumption of the identity of inputs and outputs contradicts the essential nature of the production process itself, where human activity changes one set of inputs into a different, and therefore incommensurate, set of outputs. This false premise underpins every critique of labour value theory, including from Samuelson and Steedman. Paradoxically, Sraffa’s assumptions also underpin the work of Marxists, notably Freeman and Kliman, who attempt to defend labour value theory in models where it does not apply.