Sraffa's 1920s critique and its relevance for the assessment of current mainstream microeconomic analysis

ANDRÉS LAZZARINI; GABRIEL BRONDINO

Ouro Preto

Encuentro; Second History of Economics Summer School in Latin America; 2017

Asociación Latinoamericana de Historia del Pensamiento Económico

The present essay aims to reassess the scope of Sraffa's critique ofMarshall's supply curves, which he developed in his mid-1920s articles. We tryto show here, after reconstructing the main tenets of Sraffa's critique, thedifferences between firm level and industry level supply curves, in the shortand in the long run. We examine the formal conditions that allows the marginalisttheory to derive long-period industry supply curves based on increasing costsfrom the conditions at the firm level, which, as stated by Sraffa, generallyenjoys decreasing costs. We finally argue that contemporary mainstreammicroeconomic textbooks lack a proper understanding of the meaning of the 'partial equilibrium' method followed by both Marshall and Sraffa, especiallyin the part of those textbooks that introduce the temporal dimensions toanalytically derive industry supply curves from the analysis of the behaviourof the individual firm in perfect competition.