The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Sraffian Economics (New Developments)

  • Michael Mandler
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2792

Abstract

The Sraffian claim that the forces of competition can fail to determine the distribution of income stands opposed to the neoclassical conclusion that competitive equilibria are determinate. We show that when Sraffa is embedded in a general equilibrium model the indeterminacy claim can sometimes be valid. Sraffians go on to argue that economies use just the right number of production activities to generate exactly one dimension of indeterminacy. If, however, the devices Sraffians use to block extra dimensions of indeterminacy are applied systematically, then all indeterminacy can disappear. Sraffians also argue that capital-theory paradoxes lead to instability of equilibrium, but this position is hard to reconcile with the fact that if consumer demand satisfies the weak axiom then production economies are tâtonnement stable, even in the presence of linear activities and capital-theory paradoxes.

Keywords

Aggregate capital Aggregation Capital accumulation Capital theory paradoxes Determinacy of equilibrium Differentiability Differentiable production function Distribution of income Existence of equilibrium Expectations Factor prices Factor tâtonnement General equilibrium Growth accounting Indeterminacy Intensive rent Intertemporal rates of substitution Labour supply Leontiev utilities Linear activities Market clearing Neoclassical growth theory Overlapping generations Power Price effect Rent Reverse capital deepening Savings and investment Sraffian economics Stability of equilibrium Steady state Supply and demand tâtonnement Total factor productivity Value of capital Walras’ law 

JEL Classifications

D3 
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Notes

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Michael Mandler
    • 1
  1. 1.