Download e-book for iPad: A Revolution in Economic Theory: The Economics of Piero by Ajit Sinha

By Ajit Sinha

ISBN-10: 3319306154

ISBN-13: 9783319306155

ISBN-10: 3319306162

ISBN-13: 9783319306162

This booklet attracts at the paintings of 1 of the sharpest minds of the 20 th century, Piero Sraffa. Ludwig Wittgenstein credited him for 'the such a lot consequential rules' of the Philosophical Investigations (1953) and positioned him excessive on his brief checklist of geniuses. Sraffa's innovative contribution to economics used to be, despite the fact that, misplaced to the area simply because economists didn't be aware of the philosophical underpinnings of his economics. in line with exhaustive archival learn, Sinha provides an exhilarating new thesis that indicates how Sraffa challenged the standard mode of theorizing when it comes to crucial and mechanical causation and, in its place, argued for a descriptive or geometrical thought in accordance with simultaneous kin. A final result of this procedure used to be a whole elimination of 'agent's subjectivity' and 'marginal approach' or counterfactual reasoning from monetary research – the 2 basic pillars of orthodox financial theory.

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He also seems to accept the foundations of orthodox demand and supply price theory because he suggests that a rise in real wages must lead to a fall in the demand for labor, and that the natural value of money is determined by the equilibrium of the forces of demand and supply. However, the point that we must note is that Sraffa considers inflation or deflation as a situation of disequilibrium but he is careful to recognize that these phenomena have a time dimension, and once time comes into picture, removal of the causes of disequilibrium does not necessarily take the system back to the original equilibrium position—the up and down movements are not along the same curve.

So now a distinction between cost and value can be drawn: value of a commodity represents human labor whereas costs represent prices the producers pay for their inputs and the difference between value and costs represents the surplus, which explains the surplus income category. But to be able to subtract costs from value, Marx had to measure costs in the same unit as value, that is, in terms of human labor. But if the prices of the commodities that the producer uses as inputs are different from their values then one needs to know those prices prior to determining the surplus, and this was the problem that Marx was never able to resolve.

See Sinha (2010a) for my alternative position on this issue. 2 Before a New Beginning 35 land that optimally combines with the first dose of capital and labor and he will extend the output by increasing cultivation on additional parts of the land in a similar way until the whole plot of land is covered by optimal combination of land, labor and capital. Thus up to this point, the marginal and the average product of every dose of capital and labor would be equal and constant. 11 In other words, increasing returns due to a fixed factor assumes that getting rid of the factor is either impossible or requires cost; that is, the fixed factor has negative marginal productivity throughout the range of increasing returns on the doses of variable factors.

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A Revolution in Economic Theory: The Economics of Piero Sraffa by Ajit Sinha

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