Marx and Modern Economic Analysis, 2 vols.

• Author: Wolfson, Murray

Professor Caravale has done us all a service by collecting evaluations of Marxian economics by leading economists: Desai, Baumol, Garegani, Steedman, Hollander, Blaug, Sarnuelson, Caravale himself, and many others from Italy and elsewhere. They have expressed their various views earlier in the journal literature, but these essays are more than reprints; they represent careful and considered expositions. Caravale steps back and allows the essayists to speak for themselves. There is a price nonspecialists must pay for such modesty, because the writers assume that the reader has been closely following developments and simply jump in."

From the very outset the contributors draw a narrow compass for their efforts. The first volume is almost entirely concerned with the "transformation problem" from Marxian values to prices, and the modern economics with which it is analyzed is identified solely with Sraffa's closed input-output system. It becomes clear that Sraffa was concerned to solve Ricardo's problem of the "invariable standard of value" by which prices, wages and profit rates would be determined simultaneously by making the last an eigenvalue of an homogeneous linear system of commodities produced by commodities. It would appear from the universe of discourse, especially in first volume, that both advocates and critics of Marx are implicitly accepting Samuelson's gibe that Marx was a minor post-Ricardian.

Neither the presupposition of linearity or the identification of Marx with Ricardo seems warranted. How can it be that two volumes purporting to reflect modern economics never mention the influence of demand on values? The answer lies in Sraffa's suppositions: (a) commodities are produced by commodities, none of which are scarce exogenously determined resources; (b) the relations between commodities, including labor (labor power for Marx) are representable by fixed coefficients; (c) all the sectors of the economy are in complete equilibrium with each other, so that the inputs into each industry and worker's consumption are exactly matched by the output of those industries and workers; (d) consistency of inputs and outputs is sufficient to explain the rate of profit and prices, so that valuation reflects the balance in production.

There is no place for demand in such a rigid, completely consistent, equilibrated model. But let some resources be limited (or non linear) then production possibilities no longer represent a unique point in the...