Piero Sraffa’s The Production of Commodities by Means of Commodities is the seminal attempt to create a physical, rather than a social, numeraire to measure the price of commodities. Sraffa’s physical numeraire is predicated on the physical identity and, therefore, direct commensurability of inputs and outputs. It is considered to be the viable alternative to Ricardo and Marx’s social numeraire that used labour time to measure the value of incommensurate inputs and outputs. Sraffa’s assumption of the identity of inputs and outputs contradicts the essential nature of the production process itself, where human activity changes one set of inputs into a different, and therefore incommensurate, set of outputs. This false premise underpins every critique of labour value theory, including from Samuelson and Steedman. Paradoxically, Sraffa’s assumptions also underpin the work of Marxists, notably Freeman and Kliman, who attempt to defend labour value theory in models where it does not apply.
The assumption that capitalist globalization has been a period of overall stagnation is the dominant consensus opinion within Marxist political economy. This paper criticizes this opinion and shows that it rests on a mis-measure of the transition of the centrally planned economics of the ex-USSR, Central and Eastern Europe (CEE), and China developed by the official statistical agencies during the Cold War. This mis-measure has the effect of underestimating both the collapse of physical output in the ex-USSR and CEE during the transition and underestimating the growth of genuine national income after the creation of market economies where previously there had been none. This paper develops some alternative, much higher, estimates of the real growth of national income during the transition period.
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