Exchange and Production Equations: Understanding a Debate between Harrod and Sraffa

Abstract

Harrod’s claim, that the relative prices that solve Sraffa’s “no-surplus” equations reflect the ratios of the amounts exchanged, deserves more than the scanty tribute paid by the author of Production of Commodities by Means of Commodities. Not only, in fact, does this claim hold true in the simple sense referring to direct, bilateral exchange when there are two commodities (and, in special cases, when there are more than two), but it holds true generally, in the more elaborate sense referring to amounts directly and indirectly exchanged by pairs of industries