The Palgrave Companion to Cambridge Economics by Robert A. Cord

Author:Robert A. Cord
Language: eng
Format: epub
Publisher: Palgrave Macmillan UK, London

4 The Debates in Capital Theory and the Sraffian Schools

The Sraffian revolution has thus been described in its constituent elements: method, critique of the marginalist approach, and reproposal in the new guise of the classical approach. How were the Sraffian ideas received?

Once again, we can try to answer this broad question by considering separate aspects. First, there have been a number of theoretical enquiries trying to reformulate Sraffa’s analysis in strict mathematical terms and developing some specific points within it. Second, there has been a series of debates on the solidity of Sraffa’s reinterpretation of Ricardo. In both streams, a series of important contributions have been made, but it is beyond our scope to consider them here.6

A third stream of discussion drew more attention worldwide, namely the two Cambridges debates on capital theory, running high in the 1960s and early 1970s but with few subsequent outbursts. In these debates, the so-called Anglo-Italian School (Pierangelo Garegnani, Luigi Pasinetti, Luigi Spaventa, and various others, including Nicholas Kaldor and Joan Robinson) confronted the Cambridge on the other side of the Atlantic (Paul Samuelson, Robert Solow, and others). The debates concerned the validity of Sraffa’s critiques; as it turned out, and as was recognized by Samuelson himself, such critiques held.7 But their relevance, it was said, was limited to the ‘aggregate’ version of the marginalist approach and did not affect general equilibrium theorizing (GET) of the Arrow–Debreu variety. The point is still a topic for debate: Walras’s original theory was indeed affected, and rescuing the Arrow–Debreu variety of GET means interpreting it in such a restrictive sense as to render it utterly useless in interpreting the real world.8 What is more, mainstream macroeconomics should have been abandoned: in fact, it was rescued as ‘lowbrow theory’ (the appellative is Samuelson’s, while Frank Hahn preferred to speak of ‘lowbrow theorists’). In short, the Sraffian critiques did not receive a theoretical rebuttal but simply a political one: In the cultural climate of the Reagan–Thatcher revival of the free market, they were ignored together with their conclusions on the fallibility of the invisible hand of the market, unable to automatically re-establish full employment.

Lastly, there came a series of contributions working on the reconstruction of classical political economy. Elsewhere I have proposed a distinction between three different lines of development, respectively, christened the Marxian, the Ricardian, and the Smithian Schools (see Roncaglia 1991, 2009: Chapter 8). Here I shall illustrate these reconstruction projects only briefly.

The first, the main exponent of which is Pierangelo Garegnani, interprets Sraffa’s analysis of production prices and their relationship with income distribution as ‘the core’ of the intended reconstruction of classical political economy. Garegnani (1990: 124–125) proposes ‘a distinction between two fields of analysis: a field where general quantitative relations of sufficiently definite form can be postulated’—‘the core’—‘and another field where relations in the economy are so complex and variable according to circumstances, as to allow not for general quantitative relations of sufficiently definite form’, namely the rest of economic theory: ‘The relations pertaining to

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