The Standard Commodity and the Theory of Income Distribution

Abstract

Since the publication of Sraffa’s (1960) book: Production of Commodities by Means of Commodities numerous comments have been published with regard to its Chaps. 4 and 5, the construction and the proof of uniqueness of his Standard Commodity. While most of the commentators have stressed the importance of Sraffa’s Standard Commodity as an ‘invariable measure of value’, there are also some, cf., e.g., Pasinetti (1977, pp. 119–120), Woods (1978, p. 92), who find that its most remarkable theoretical implication lies in the demonstration that it is possible to treat the distribution of income logically prior to and independently of prices.

Regarding these views we shall show in the following that this assertion is a completely misleading one. The Standard Commodity and the therewith derived linear wage-profit curve $\tilde{w}(r)$ do not simplify the theory of income distribution, but in fact make it more obscure, i.e., either incomplete ore more complex, as compared to its presentation by means of a conventional nonlinear w(r)-curve, e.g., based on a numéraire which keeps national income fixed when changes in the distributional variables w and r are considered. Furthermore, our way of demonstrating this claim will to some extent indicate that Sraffa’s composite commodity may be of dubious economic significance quite generally, i.e., will not serve as an appropriate ‘measure of value’, also cf. Burmeister (1968, p. 86–87) for an early remark on this and Flaschel (1980). The present chapter thus should be conceived as a first argument towards the conclusion that an analysis based on Sraffa’s Production of Commodities by Means of Commodities should dispense with his hypothetical composite commodity, the ‘Standard Commodity’.