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Revisiting Classical Economics: Studies in Long-period Analysis

Editor(s):Kurz, Heinz D.
Salvadori, Neri
Reviewer(s):Martins, Nuno Ornelas

Published by EH.Net (January 2015)

Heinz D. Kurz and Neri Salvadori, editors, Revisiting Classical Economics: Studies in Long-period Analysis. London: Routledge, 2014. xix + 326 pp. $145 (hardcover), ISBN: 978-0-415-73290-1.

Reviewed for EH.Net by Nuno Ornelas Martins, Department of Economics and Business, Azores University.

The recent financial and economic crisis led to a crisis in economics, which triggered an interest in alternative economic theories, not least those developed by the classical economists.  Heinz Kurz (Professor of Economics at the University of Graz) and Neri Salvadori (Professor of Economics at the University of Pisa) provide in this volume a selection of essays concerned with the interpretation of classical economics which, they argue, provide an alternative approach to the mainstream perspective. The present volume is the fourth contribution to a series of collections of essays authored or co-authored by at least one of the two editors of the present volume.

In this volume, the essays are grouped into five parts. The first part, on classical economics and modern theory, contains two essays. The first is a comparison of the early works of Wassily Leontief and Piero Sraffa, showing how both authors started from a similar framework, but used it in different ways: Leontief was concerned essentially with practical problems, while Sraffa was concerned with refining the theoretical framework. The second essay is a reply to Mark Blaug, and more specifically to several misunderstandings of “Sraffian” economics.

The second part, focused more specifically on Sraffa’s contribution, comprises four essays. The first of these addresses Sraffa’s critique of marginalism, and the second essay contains a study of Sraffa’s methodology, in particular, of the relationship between economic theory, economic reality and the economic scientist, while drawing essentially upon Sraffa’s published writings (including not only the articles from the 1920s and 1930s, but also the book Production of Commodities by Means of Commodities). The third essay addresses a mathematical proof, using modern mathematical notation and not the mathematical approach Sraffa himself used, and the fourth essay addresses Sraffa’s criticism of several ideas of John Maynard Keynes, such as the independence between prices of consumption goods and of investment goods; the marginal efficiency of capital; exogenous money; and liquidity preference theory.

The third part reconstructs the path followed by Sraffa when writing Production of Commodities by Means of Commodities. The first essay addresses yet another topic in the collaboration between Sraffa and Abram Besicovitch, following other essays in previous volumes on this important collaboration. The second essay is a long and important essay on Sraffa’s perspective on the contribution of Ladislaus von Bortkiewicz. Sraffa argues that many of the criticisms made by Bortkiewicz (or Mikhail Tugan-Baranovsky) to Karl Marx reveal misunderstandings of important aspects of economic theory that Marx understood well, related to relative prices and the falling rate of profits.

Marx appears again in the next two essays that conclude this part, which are replies to Giorgio Gilibert and Giancarlo de Vivo, respectively. These are essays which had not been published before, for reasons related to the edition of the Sraffa Papers, which the authors explain in the Introduction to the volume. In these replies, the authors criticize the view, advanced by Gilibert and de Vivo, that the equations Sraffa started developing in 1927-28, which reached their final form in the 1960 book Production of Commodities, were inspired in Marx’s reproduction schemes from Capital, Volume II. Kurz and Salvadori note that Sraffa adopted an objectivist approach when he started developing his equations, which was much inspired in the natural sciences, and possessed similarities to the point of view of authors like William Petty and the Physiocrats. They argue that Sraffa found the similarities between his equations and Marx’s reproduction schemes subsequently, rather than being inspired by the latter, as Gilibert and de Vivo argue. There is certainly no doubt that Sraffa had a great interest in the natural sciences, which he interpreted in a way which led him to develop an objective approach purged of subjectivist elements. And there is also no doubt that Sraffa had the highest respect for Marx, who he saw as the last of the classicals, towering among the vulgar economists at a time when classical political economy was no longer dominant. The question at stake here is which of these elements, all of which had a great influence on Sraffa, led to the development of his early equations, for both can be seen as consistent with his equations.

The fourth part is on growth and distribution, and includes two essays on the connections between the classical approach and endogenous growth. The first essay is on endogenous growth in the context of a classical (Ricardian) model, and in the second essay we find a comparison between the endogenous growth model developed by Sérgio Rebelo, and a model developed by Luigi Pasinetti along classical (Ricardian) lines.

The fifth and final part of the volume addresses the topic of natural resources, and it consists of three essays. The first two essays address the connection between David Ricardo’s approach to natural resources and the Hotelling Rule: the first essay provides a more general discussion of the theme, and the second essay provides a mathematical illustration. Finally, the third essay of this part, which is the last chapter of the book, addresses Sergio Parrinello’s extension of Sraffa’s framework to the analysis of exhaustible resources.

Like the previous three volumes which precede it, this volume is a valuable contribution to the study of classical economics. Readers trained in economics, but less familiar with classical economics, will gain much from reading this volume. The readers who are already familiar with classical economics will also find important contributions, especially concerning the interpretation of Sraffa’s contribution, and its important connection to Marx, which will constitute probably the greatest source of interest for this volume among Sraffa scholars.

Nuno Ornelas Martins is Lecturer in Economics at the University of the Azores, and a member of the Centro de Estudos em Gestão e Economia. He is also a member of the Cambridge Social Ontology Group, and the author of The Cambridge Revival of Political Economy (Routledge, 2013).

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Subject(s):History of Economic Thought; Methodology
Geographic Area(s):Europe
Time Period(s):19th Century
20th Century: Pre WWII
20th Century: WWII and post-WWII