Re: [OPE-L] Ajit's Paper on Sraffa and Late Wittgenstein

From: Ian Wright (wrighti@ACM.ORG)
Date: Thu Jun 15 2006 - 16:14:27 EDT

Hi Ajit

I missed this older message of yours. Sorry for the long delay in replying.

> But if 'beans' are "blocking goods" then obviously
> they are basics, no?

No. That's the reason for the problem. Blocking goods can exist in the
non-basic sector. (See Abraham-Frois and Berrebi's 1997 book.)

> The whole problem arises only if 'beans' are non-basics'.
> In that case, they cannot be "blocking" the growth of
> the basic sector.

Yes, they cannot block the growth, which is why the problem arises.

> In your example, there is no
> surplus--because you redefine 'surplus' as necessary.
> Thus by definition there is no 'non-basics' in your
> system and the 'beans' problem simply becomes
> meaningless.

Exactly. This is why the circular flow representation of Sraffa's
price equation does not suffer from this theoretical problem. The
basic/non-basic distinction, in the context of modelling a state of
self-replacing equilibrium, is purely an artifact of persisting with a
metaphor of an undistributed surplus. An undistributed surplus
interrupts the circular flow and fractures the economy into sectors
with feedforward (basics) but not feedback (non-basics) relations. But
in a state of self-replacing equilibrium the surplus is distributed.
This is another example of how applying Sraffa's surplus equations to
a self-replacing economy can lead to errors, in this case a problem of
negative prices.

Best wishes,

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