Sraffa and the question of equilibrium

Abstract

Hahn’s (1982) influential critique of Sraffa (1960) crucially rests on his conclusion that "the only falsifiable entailment of the Sraffa equations is the postulate of a uniform rate of profit". This paper argues that the uniformity of the rates of profit in Sraffa’s system is not an assumption but rather a logical necessity of a system that determines its prices internally. It also shows that Hahn incorrectly identifies Sraffa’s sectoral rates of profit with commodities’ ‘own rates of profit’ of the intertemporal general equilibrium theory. This mistake lies at the heart of Hahn’s claim that Sraffa’s theory is a special case of the general equilibrium theory.Classification JEL: B21, B23, B24, B51

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