Sraffa's production system: a theory independent of the atomic hypothesis
We now consider Sraffa's system of production, as it is an essential step towards a critical reorientation of Keynes' s theory.
In the field of economic theory, it is precisely Sraffa's system that can be compared to Saussure's 'system', or rather to his 'systeme synchro- nique'. In fact, neither a particular industry nor an individual unit (such as an economic agent) can be the ultimate basis of his system. Such a basis is nothing but 'the "objective" relationship among the various sectors, as determined by the particular technology of production of the system' (Baranzini and Scazzieri, 1986, p. 33), and it is represented by Sraffa's system of equations. This is precisely why Sraffa's starting point is equivalent to Saussure's ‘le tout solidaire'.21
Sraffa's ‘production economy' is based on the view of a ‘circular process' that originates from Quesnay's Tableau economique (Quesnay, 1972 ). This standpoint is in contrast to the unidirectional view of neoclassical economists leading from ‘factors of production' to ‘consumption goods' (its functional representation being the ‘production function'). In Sraffa's system, the commodity price is not determined through the interaction of producers and consumers (that is, by the behavioural relations underlying the notion of supply and demand for a particular commodity, as in the case of Marshall's Principles of Economics (Marshall, 1961 )). Rather, commodity prices are objectively determined so as to make it possible to repeat the process of production of the whole system. In fact, Sraffa's price mechanism, unlike in the usual manner of thinking, has an external and purely objective character and does not depend upon any behavioural function.
Sraffa's fundamental standpoint is, I think, explicitly disclosed in his ‘Production for Subsistence' model, in which ‘an extremely simple society which produces just enough to maintain itself' is considered (Sraffa, 1960, p. 3). In such a simple model, the kernel of Sraffa's price mechanism comes to light:
There is a unique set of exchange-values which if adopted by the market restores the original distribution of the products and makes it possible for the process to be repeated; such values spring directly from the methods of production.
(Sraffa, 1960, p. 3; emphasis added)
In Sraffa's system, the commodities that play the most notable role are the means of production, that is, the commodities that enter, directly or indirectly, the whole process of production. Therefore, the ‘market' that is being considered in this system is not that for the consumption goods purchased by the housewife with her shopping bag, but the exchange market between industries, the market for basic products. In the end, such an exchange is ultimately governed by the objective technological relationship among the various industries of the system.
Sraffa's assumption of a uniform rate of profits associated with the generation of surplus is quite distant from the usual manner of thinking, as it is not based on the competitive, profit-maximization behaviour of entrepreneurs. The assumption is rather a non-behavioural and logical device introduced in order to overcome an internal contradiction within the system, and to make it determinate.22 It follows that, if such an assumption could not be introduced, the system itself would become indeterminate and the annual cycle of production as well would not be feasible. In view of this, the following statement of Sraffa has decisive importance:
The result is that the distribution of the surplus must be determined through the same mechanism and at the same time as are the prices of commodities.
(Sraffa, 1960, p. 6.)
This sentence suggests a solution not only of the above analytical issue but also of the so-called Marxian transformation problem.
In Chapter 2, section 8, of Sraffa's book, the division of the surplus between capitalists and workers is considered and, corresponding to it, the quantity of labour employed in each industry and the wage per unit of labour, along with the rate of profits, are explicitly represented. Up to this point Sraffa's basic system of production is inherently a preinstitutional scheme and should be placed on almost the same logical level as Keynes's 'principle' of effective demand (see section 10.7 above), even if it is expressed in terms of a disaggregate multi-sectoral model. It follows that Sraffa's basic system of production is independent of behavioural relations, of assumptions about the market structure (as usually considered), and even of any institution, precisely in the same way as Keynes's principle of effective demand is. And it is hardly necessary to add that Sraffa's system of production is not based on logical atomism.