From “Marx after Sraffa”

By Ian Steedman


Chapter 1. Principal Issues and Underlying Assumptions


 Sraffa’s book Production of Commodities by Means of Commodities, first published in 1960. had a quite precise purpose, indicated by its subtitle, Prelude to a Critique of Economic Theory. That purpose was to lay the foundation for the criticism of marginalist theories of wages, profits, rents and prices, a criticism which has now been carried out successfully….  


The relations between wages, profits, prices and conditions of production, to which Sraffa drew attention so sharply, were quickly seen to provide a foundation not only for the criticism of marginalist theory but also for the simple, definitive solution of certain issues which had long been debated by Marxists, The issues in question. while far from exhausting the entire content of Marx’s political economy, are not insignificant ones and their definitive solution should have been welcomed by all those working to develop the materialist account of capitalist society. It was not.  


The issues Involved  

On the basis of certain common, reasonable assumptions it may be shown that:  

  i)    the conditions of production and the real wage paid to workers, both specified in terms of physical quantities of commodities, suffice to determine the rate of profit (and less importantly, all prices of production;)  

ii)   the quantities of labour embodied in the various commodities, which can themselves only be determined once the conditions of production are known, thus play no essential role in the determination of the rate of profit (or of the prices of production);  

iii) Marx’s solution of the ‘transformation problem’ is incorrect, not only with respect to prices of production but also, more importantly, with respect to the rate of profit. The rate of  profit in a competitive capitalist economy is not equal, in general, to S/(C+ V), where S, C and V are aggregate surplus value, constant capital and variable capital respectively. Indeed, since the profit rate and all prices of production can be determined without reference to any value magnitude, the ‘transformation problem’ is a pseudo-problem, a chimera; there is no problem of deriving profits from surplus value and production prices from values to be solved;  

iv)  the social allocation of labour power can be determined without reference to any value magnitude;  

v)   the relationship between surplus labour and the existence of profits can be established quite independently of Marx’s concept of value;  

vi)  there is no a priori basis for establishing any expectation con­cerning the long-run movement of the rate of profit.  

The significance of these issues  


Marx, like other great theorists, regarded the analysis of the rate of profit as central to a coherent understanding of the workings of a capitalist economy. He saw the rate of profit as being the primary manifestation of surplus labour specific to capitalism; inevitably, then, he devoted much effort both to the criticism of earlier theories of the profit rate and to the development of his own theory. In that development he strove constantly to relate the rate of profit to value magnitudes. Consequently, the demonstration that the rate of profit, the prices of production and the social allocation of labour power can all be determined without any reference to value magnitudes raises questions which are fundamental to the appraisal of Marx’s whole project.  


To say this is not, of course, to reduce Marx’s theory to these particular issues; his scope was far wider. The fact remains, nevertheless, that these issues are crucial within Marx’s theory — and were known to be so by Marx. To attempt to sidestep them by suggesting that they are marginal issues, or that they belong to a non-Marxist frame of discourse, or that they are mere details without significance for Marx’s major work would be to demean Marx, not to defend him. Marx showed only contempt for those who sought to evade the ruthless criticism of ideas; no-one can ‘defend’ Marx by refusing to follow him in this regard.




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