Wednesday, November 4, 2020

Review of Production of Commodities by Means of Commodities: Prelude to a Critique of Economic Theory by Piero Sraffa

This review was written by Eugene Kernes

Book can be found in:
Genre = Economics
Intriguing Connections = Learning Economics: Basic to Advanced

Elaborate Description

This book examines what it would take for the economy to create all the products needed. A mathematical rendering of how the economy produces output. The standard system would have the same proportion of net product to the means of productions. Prices depend on the cost of the inputs, the basic goods. Goods that are created and used as part of production. Luxury goods do not enter back as inputs so do not impact price.

Lots of assumptions. Sraffa takes the assumptions and then gradually adds more and more real-life complexity. Some assumptions may be for mathematically simplicity and the functions do seem to create a marvel, the problem is that it would not add up practically. Within the math, many parts need to be simultaneously adjusted which is not possible practically. Within the math, labor is paid at the end of the production cycle, out of capital, but practically, that cannot be carried out. Many assumptions are given, but many other assumptions are hidden.

In this book, it is the labor share that determines the rate of reinvestment. Profit squeeze is the crisis story. Not an easy read. Expanding the book to add a lot more explanations to the mathematical details would be of great help.

Book Details

Edition ISBN:  0521099692
Pages to read:   96
Publication:     1978
1st Edition:      1960
Format:            Paperback

Ratings out of 5:
Readability     2
Content          2
Overall           2