On Sraffa's Standard commodity: is its price invariant with respect to changes in income distribution?

Abstract

In his 1960 book, Sraffa suggested using a composite commodity, which he called the ‘Standard commodity’, to solve Ricardo's search for an invariable measure of value, i.e., a standard capable of isolating the price movements of any other commodity induced by changes in income distribution. The absence in Sraffa's book of an explicit proof of the invariance property of this standard gave rise to many misunderstandings about its meaning and its role as an invariable measure of value. In order to clear up these questions, Bellino (On Sraffa's Standard commodity, Cambridge Journal of Economics, vol. 28, 121–32, 2004) has proposed a ‘proper’ definition of an ‘invariable measure of value’, showing that Sraffa's Standard commodity does fulfil the requirements of this definition. He claims that the fulfilment of this property (but not the constancy of its ‘nominal’ price) qualifies the Standard commodity as an invariable measure of value. In this paper, a proof of the invariance of the price of the Standard commodity with respect to changes in income distribution is given, and the equivalence of this property with Bellino's definition of invariance is shown.

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