Classical economics after Sraffa

It can hardly be disputed that the edition of The Works and Correspondence of David Ricardo and especially Piero Sraffa’s Introduction in Volume I, containing Ricardo’s Principles, together with his Production of Commodities by Means of Commodities had a major impact on the way in which the Classical economists and especially Ricardo are seen today. The paper shows first how Sraffa’s contributions cast new light on the centrepiece of Classical economics—the theory of value and distribution. The latter forms the foundation of all other economic analysis, such as, for example, the problems of capital accumulation and economic development, of foreign trade and of taxation. Sraffa deserves the credit for having freed that approach from under thick layers of misinterpretation and for having shown that it had wrongly been abandoned—“submerged and forgotten”—prematurely. In particular, the Classical approach was not flawed beyond remedy, as Sraffa’s reformulation and elaboration of it demonstrated. Secondly, the paper illustrates the fecundity of the reformulated Classical approach by reviewing the work done on its basis in several fields of research, including production, scarce natural resources, income distribution, economic growth and foreign trade. Third, the Classical approach turned out not only to provide a solid basis for further research, but also provided a standpoint from which the major deficiencies of marginalist theory can be seen, which previously had passed unnoticed. Apparently, the development of economics does not follow a path shaped by a perfect selection mechanism that abandons anything that is erroneous and weak and keeps everything that is true and useful. After Sraffa, economics is no longer what it was.