Marx deserves his place in history as the greatest critic of capitalism. Marx opened our eyes to how the economic sphere of social life exerts a powerful influence over the political, cultural, and reproductive spheres of social life. Marx gave intellectual support to workers’ instinct that capitalism systematically exploits them. And Marx reminded us that life beyond capitalism, where workers manage and coordinate their economic activities themselves, democratically, fairly, and efficiently, is a real possibility.
However a great deal has happened since Marx died in 1883. There are 133 years of world history – some of which, such as the Soviet perversion of the socialist vision, and capitalism’s recovery from the Great Depression, would have come as a great surprise to Marx. And there have been new intellectual discoveries as well, some of which, such as proof of the Frobenius–Perron theorem in mathematics, and modern, egalitarian, philosophical theories of distributive justice, provide us with intellectual tools unavailable to Marx.
It is time to acknowledge that Marx’s early attempt to fashion a formal economic theory of price and income determination in capitalism based on a “labor theory of value,” and elaborate a Hegelian “critique” of capitalism can now be surpassed. Not surpassed by neoclassical theory, which only disguises the origins of profits and their lack of moral legitimacy. Surpassed instead by a modern reworking of classical economics along the lines pioneered by Piero Sraffa (1960), centered on the production and distribution of the physical economic “surplus,” and by a modern egalitarian philosophical theory of distributive justice.
This book argues that Sraffian theory can now provide a stronger basis for radical political economy in the twenty-first century than formal Marxian economic theory for a number of reasons:
• Sraffian theory is devoid of embarrassing inconsistencies which plague Marxian formal theory which apologists for capitalism exploit.
• Because it uses familiar economic and philosophical concepts – rather than a conceptual apparatus abandoned long ago by all except Marxists – Sraffian theory is more intelligible to economists, philosophers, and lay audiences today.
• Sraffian theory and the “Fundamental Sraffian Theorem” show more clearly why capitalists are parasites living off the work of others than does Marxian theory and the “Fundamental Marxist Theorem.”
• Formal Marxian economic theory misleads us to search for non-existent crises which distracts us from focusing attention on actual sources of crisis in capitalism.
• Finally, no theory unsuited to analyzing the increasingly problematic relation between human economic activity and the natural environment will attract allegiance as the twenty-first century unfolds. Unlike the Marxian labor theory of value which is ill-suited to incorporating inputs from “nature” into our formal analysis, the Sraffian framework easily accommodates natural resources and rents into an explanation of price and income distribution. Moreover, recent developments demonstrate how Sraffian theory can facilitate a rigorous analysis of what ecological economists call environmental throughput, allow us to formulate sufficient conditions for achieving environmental sustainability in a multi-good economy, and sort out the “sense” from the “nonsense” in the steady-state and de-growth literatures.
This book examines six topics: In each topic area both the Marxian and Sraffian treatments are presented and compared. Those six core chapters are preceded by an introduction that pays full homage to Marx, but argues that it is time to improve on his formal modeling, and followed by a conclusion summarizing the advantages of a radical version of modern Sraffian theory.
Since this book is intended for a broad audience, I will use a simple, two sector version of both the Marxian and Sraffian models which requires nothing more than simple algebra, and I will emphasize intuitive explanations for all important results, referring readers to endnotes for more complicated calculations and suitable sources for proofs of key theorems.