Table Of ContentRADICAL POLITICAL ECONOMY
For too long radical political economy has suffered for lack of a coherent
alternative to formal Marxian economic theory. People have had to choose
between (1) continuing to use a formal model based on the labor theory of
value as Marx developed in Capital to justify and retain one’s opposition to
capitalism, or (2) abandoning the formal Marxian framework as outdated,
and risk losing a critical evaluation of capitalism. Radical Political Economy:
Sraffa Versus Marx provides readers with a third choice.
A point-by-point comparison of Sraffian and Marxian treatments of
prices, profits, technological change, economic crises, environmental sus-
tainability, and the moral case against capitalism, are presented in six core
chapters. They explain how the Sraffian treatment surpasses the formal
Marxian treatment in every case. Both Marxian and Sraffian theories are
presented in a highly accessible way, while large professional literatures are
thoroughly referenced throughout.
Marx was not the first, but remains the greatest, critic of capitalism, and
richlydeserveshisplaceinhistory.Howeveritistimetouseintellectualtools
unavailable to Marx in the nineteenth century to improve upon his formal
analysis.ThisbookisofgreatimportancetothosewhostudySraffaandMarx,
aswellasacademicsandstudentswhoareinterestedinpoliticaleconomy,the
historyofeconomicthought,andeconomicandphilosophicaltheory.
Robin Hahnel is Professor Emeritus at the Department of Economics,
American University Washington DC, USA. He is also the Co-Director of
EconomicsforEquityandtheEnvironmentandhaspublishedwidelyinthe
fields of radical political economy and environmental economics.
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RADICAL POLITICAL
ECONOMY
Sraffa Versus Marx
Robin Hahnel
K ~~o~;J~n~~~up
ORKYOR LLONODONNLODNDOONN
Y
LONDONANDNEWYORK
Firstpublished2017
byRoutledge
2ParkSquare,MiltonPark,Abingdon,OxonOX144RN
andbyRoutledge
711ThirdAvenue,NewYork,NY10017
RoutledgeisanimprintoftheTaylor&FrancisGroup,aninformabusiness
©2017RobinHahnel
TherightofRobinHahneltobeidentifiedasauthorofthisworkhas
beenassertedbyhiminaccordancewithsections77and78ofthe
Copyright,DesignsandPatentsAct1988.
Allrightsreserved.Nopartofthisbookmaybereprintedorreproduced
orutilisedinanyformorbyanyelectronic,mechanical,orothermeans,
nowknownorhereafterinvented,includingphotocopyingand
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explanationwithoutintenttoinfringe.
BritishLibraryCataloguinginPublicationData
AcataloguerecordforthisbookisavailablefromtheBritishLibrary
LibraryofCongressCataloginginPublicationData
Names:Hahnel,Robin,author.
Title:Radicalpoliticaleconomy:SraffaVersusMarx/RobinHahnel.
Description:1Edition.|NewYork,NY:Routledge,2017.|Includes
bibliographicalreferencesandindex.
Identifiers:LCCN2017001421|ISBN9781138050020(hardback)|
ISBN9781138050037(pbk.)|ISBN9781315169149(ebook)
Subjects:LCSH:Economics.|Technologicalinnovations--Economic
aspects.|Capitalism--Moralandethicalaspects.|Marx,Karl,
1818-1883--Politicalandsocialviews.|Sraffa,Piero--Politicaland
socialviews.
Classification:LCCHB171.H23542017|DDC330.15/3--dc23
LCrecordavailableathttps://lccn.loc.gov/2017001421
ISBN:978-1-138-05002-0(hbk)
ISBN:978-1-138-05003-7(pbk)
ISBN:978-1-315-16914-9(ebk)
TypesetinBembo
byTaylor&FrancisBooks
CONTENTS
Preface vi
Introduction 1
1 Prices 5
2 Profits 22
3 Technological Change 37
4 Theories of Capitalist Crises 49
5 Economy and Environment 65
6 Moral Critique of Capitalism 78
Conclusion 100
References 103
Index 108
PREFACE
Marx deserves his place in history as the greatest critic of capitalism. Marx
opened our eyes to how the economic sphere of social life exerts a powerful
influence over the political, cultural, and reproductive spheres of social life.
Marx gave intellectual support to workers’ instinct that capitalism system-
atically exploits them. And Marx reminded us that life beyond capitalism,
where workers manage and coordinate their economic activities themselves,
democratically, fairly, and efficiently, is a real possibility.
HoweveragreatdealhashappenedsinceMarxdiedin1883.Thereare133
years of world history – some of which, such as the Soviet perversion of the
socialist vision, and capitalism’s recovery from the Great Depression, would
have come as a great surprise to Marx. And there have been new intellectual
discoveries as well, some of which, such as proof of the Frobenius–Perron
theorem in mathematics, and modern, egalitarian, philosophical theories of
distributive justice, provide us with intellectual tools unavailable to Marx.
It is time to acknowledge that Marx’s early attempt to fashion a formal
economic theory of price and income determination in capitalism based on
a “labor theory of value,” and elaborate a Hegelian “critique” of capitalism
can now be surpassed. Not surpassed by neoclassical theory, which only
disguises the origins of profits and their lack of moral legitimacy. Surpassed
instead by a modern reworking of classical economics along the lines pio-
neered by Piero Sraffa (1960), centered on the production and distribution
ofthephysicaleconomic“surplus,”andbyamodernegalitarianphilosophical
theory of distributive justice.
Preface vii
ThisbookarguesthatSraffiantheorycannowprovideastrongerbasisfor
radical political economy in the twenty-first century than formal Marxian
economic theory for a number of reasons:
(cid:1) Sraffian theory is devoid of embarrassing inconsistencies which plague
Marxian formal theory which apologists for capitalism exploit.
(cid:1) Because it uses familiar economic and philosophical concepts – rather
thanaconceptualapparatusabandonedlongagobyallexceptMarxists–
Sraffian theory is more intelligible to economists, philosophers, and lay
audiences today.
(cid:1) Sraffian theory and the “Fundamental Sraffian Theorem” show more
clearly why capitalists are parasites living off the work of others than
does Marxian theory and the “Fundamental Marxist Theorem.”
(cid:1) Formal Marxian economic theory misleads us to search for non-existent
crises which distracts us from focusing attention on actual sources of
crisis in capitalism.
(cid:1) Finally, no theory unsuited to analyzing the increasingly problematic
relation between human economic activity and the natural environment
will attract allegiance as the twenty-first century unfolds. Unlike the
Marxianlabortheoryofvaluewhichisill-suitedtoincorporatinginputs
from “nature” into our formal analysis, the Sraffian framework easily
accommodatesnaturalresourcesandrentsintoanexplanationofpriceand
income distribution. Moreover, recent developments demonstrate how
Sraffian theory can facilitate a rigorous analysis of what ecological
economists call environmental throughput, allow us to formulate suffi-
cient conditions for achieving environmental sustainability in a multi-
good economy, and sort out the “sense” from the “nonsense” in the
steady-state and de-growth literatures.
This book examines six topics: In each topic area both the Marxian and
Sraffian treatments are presented and compared. Those six core chapters are
preceded by an introduction that pays full homage to Marx, but argues that
it is time to improve on his formal modeling, and followed by a conclusion
summarizing the advantages of a radical version of modern Sraffian theory.
Since this book is intended for a broad audience, I will use a simple, two
sectorversionofboththeMarxianandSraffianmodelswhichrequiresnothing
more than simple algebra, and I will emphasize intuitive explanations for all
important results, referring readers to endnotes for more complicated cal-
culations and suitable sources for proofs of key theorems.
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INTRODUCTION
For too long radical political economy has suffered for lack of a coherent
alternative to formal Marxian economic theory. For too long those dis-
enamoredwiththeeconomicsof competitionand greedhave had only two
choices: (1) Continue to use a formal model based on the labor theory of
valueasMarxdevelopeditinCapital–tojustifyone’soppositiontocapitalism.
Or (2) abandon the Marxian framework as outmoded – and risk losing a
rationale for rejecting capitalism as fundamentally flawed. This book is dedi-
cated to providing the next generation fighting against the destructive effects
of financialized, neoliberal, global capitalism a third choice: (3) A modern,
rigorous,logicallysound,andprofoundlyradicalversionofSraffianeconomics.
Sraffiantheoryusesconceptsandtoolsfamiliarandacceptabletoeconomists
and philosophers in the twenty-first century. A radical version of Sraffian
theorycanbeeverybitascriticalofcapitalist inequalityasMarxism.Sraffian
theory suggests no mythical theories of crisis, allowing us to focus on real
sources of instability and crisis in capitalist economies. And finally, unlike
Marxiantheory,theSraffianframeworkprovestobewellsuitedtoaddressing
what is arguably already the paramount issue of the twenty-first century –
environmental sustainability. However, before beginning it is appropriate to
pay homage to Marx, who in all likelihood will forever remain the greatest
critic of capitalism.
Prior to Marx nobody understood how much the way we organize our
interrelated economic activities affects the way we think and behave. In the
