The Construction of Long-Run Market Supply Curves: Some Notes on Sraffa’s Critique of Partial Equilibrium Analysis

Abstract

The 1925 paper by Piero Sraffa, ‘On the relations between cost and quantity produced’, originally published in Italian in Annali di Economia as ‘Sulle relazioni fra costo e quantità prodotta’, proposes a thorough and devastating criticism of Marshallian economics based on the method of partial equilibrium analysis of competitive prices. Just five years later Sraffa has no hesitation in concluding his contribution to the 1930 Economic Journal Symposium on Increasing Returns and the Representative Firm with the advice that Marshall’s Theory ‘should be discarded’ (Sraffa, 1930, p. 93). Note that Sraffa will never reconsider this issue, at least in published contributions, with the notable exception of a very brief hint in the Preface of his 1960 book, Production of Commodities by Means of Commodities.

We wish to thank, without implicating, Antonio D’Agata, Heinz D. Kurz, Gary Mongiovi, Alessandro Roncaglia, and Rodolfo Signorino for their careful reading and detailed comments on an earlier version of this chapter. Usual disclaimer applies. A previous version of this paper appeared in Italian in Tra Economia e Societá, edited by A. D’Agata, E. Giardina, and E. Sciacca (Milan: Giuffre), 2006.