Sraffa’s Critique and ‘Marshall’s Theory’

Abstract

George Shackle (1967: 289) characterised the first two decades of the twentieth century as an ‘Age of Tranquillity’ during which the evolving ‘Marshallian’ theoretical apparatus reigned virtually undisputed in the English-speaking world. The end to these tranquil times is most often associated with the Marshallian cost controversies of the 1920s, with Piero Sraffa’s (1925, 1926, 1930) contributions widely seen as epitomising the challenge to the prevailing orthodoxy. The setting in which these debates proceeded is suitably described in the following terms by Sraffa:

In the tranquil view which the modern theory of value presents us there is one dark spot which disturbs the harmony of the whole. This is represented by the supply curve, based upon the laws of increasing and diminishing returns. That its foundations are less solid than those of the other portions of the structure is generally recognised. That they are actually so weak as to be unable to support the weight imposed upon them is a doubt which slumbers beneath the consciousness of many, but which most succeed in silently suppressing. (Sraffa 1926: 536)