Wages in Classical Economics

Abstract

Recent discussions stimulated by Piero Sraffa’s editorial introduction and Commentaries on Ricardo (Works, Vols I–XI) and his slim but significant volume, Production of Commodities by Means of Commodities (1960) have brought to light the distinctive characteristics of the approach and structure of classical theory of value and distribution as contrasted with those of the marginalist theory which has dominated since the 1870s. The role of wages in classical theory needs to be perceived within the structure of its value and distribution theory, which analysed the central questions as to how surplus is generated, appropriated and distributed in a circular process of reproduction and further investigated into how these shaped and were, in turn, shaped by the process of accumulation. A central notion to the theory is that of surplus or ‘social net product’, defined as gross output of the economy produced during the chosen period minus ‘productive consumption’; the latter, being the material means of production and the requisites for the sustenance of labour engaged in production. Through the various stages of theoretical advancement, from Petty and Boisguillebert to Smith, Ricardo and Marx, the various categories and constituents of net product, and of the means of production, the classes of surplus appropriators and sharers, the forms of exchange and rules of surplus distribution, altered, reflecting historical developments and the relevant analytical perceptions.