Piero Sraffa facts for kids
Quick facts for kids
Piero Sraffa
|
|
|---|---|
 |
|
| Born | 5 August 1898 Turin, Italy
|
| Died | 3 September 1983 (aged 85) Cambridge, England, United Kingdom
|
| Field | Political economy |
| School or tradition |
Neo-Ricardian school |
| Alma mater | London School of Economics |
| Influences | |
Piero Sraffa (born August 5, 1898 – died September 3, 1983) was an important Italian economist. He taught economics at the University of Cambridge in England. His famous book, Production of Commodities by Means of Commodities, helped start a new way of thinking in economics called the neo-Ricardian school.
Contents
Early Life and Education
Piero Sraffa was born in Turin, Italy. His parents, Angelo and Irma Sraffa, were a well-off Italian Jewish couple. His father was a law professor and later a dean at Bocconi University in Milan. Even though he grew up in a Jewish family, Piero later became an agnostic, meaning he wasn't sure if God existed.
Because of his father's work, young Piero moved around a lot to different universities. During this time, he met Antonio Gramsci, a leader of the Communist Party of Italy. They became close friends because they shared similar political ideas. Sraffa also met Filippo Turati, an important leader of the Italian Socialist Party.
When he was 18, in 1917, Piero joined the military during World War I. He served as an officer in the Military Engineer Corps. After the war, he was part of a special group that looked into problems caused by the war. He managed to finish his university studies while in the military. In November 1920, he graduated with a paper about inflation in Italy during the war. His teacher was Luigi Einaudi, who later became a president of Italy.
Studying in London
From 1921 to 1922, Sraffa studied at the London School of Economics. While there, he met John Maynard Keynes, a very famous economist. Keynes asked Sraffa to work with him. This led Sraffa to write two articles in 1922 about the Italian banking system. One was in The Economic Journal, which Keynes edited. The other was in the Manchester Guardian newspaper. Keynes also asked Sraffa to help with the Italian version of his book, A Tract on Monetary Reform. Meeting Keynes was a big moment in Sraffa's life.
In 1922, Sraffa became a director in Milan, working in the labor department. He spent time with socialist groups there. He became friends with Carlo Rosselli and Raffaele Mattioli.
Facing Fascism in Italy
The march on Rome in 1922, when Benito Mussolini took power, greatly affected Sraffa's future. His father was attacked by a fascist group. Mussolini himself sent threatening messages to Piero, demanding he take back what he wrote in the Manchester Guardian article. Piero refused to do so.
In May 1924, his friend Antonio Gramsci returned to Rome after being stuck in Moscow and Vienna. Gramsci had been elected to Parliament. Their friendship grew stronger. On November 26, 1926, Italy passed a law that created a totalitarian state. On November 8, 1926, Antonio Gramsci was arrested. While Gramsci was in prison, Sraffa helped him by providing books, pens, and paper. This is how Gramsci was able to write his famous Prison Notebooks.
Sraffa's Economic Ideas
Piero Sraffa was known for challenging common economic ideas. He thought that some parts of the usual economic theories didn't make sense.
Challenging Old Ideas
In 1925 and 1926, Sraffa wrote about how businesses grow and how prices are set in a competitive market. He questioned the idea that prices are always set by where supply and demand curves meet. He argued that the idea of "decreasing returns" (where making more of something costs more per item) and "increasing returns" (where making more costs less per item) came from different places and couldn't explain the same supply curve.
Sraffa pointed out that if a company's production costs didn't change much when it made a little more or less, then prices would mostly depend on the cost of making things. Demand would not have much influence. He suggested that for many manufactured goods, the cost of production might stay fairly constant. This meant that the old idea that prices depend mostly on production costs might still be the best way to understand things.
He also noted that if a company's growth isn't limited by rising costs, it might be limited by how hard it is to sell more products. This could mean improving quality, lowering prices, or spending more on advertising. These ideas helped lead to the theory of imperfect competition, which looks at markets where companies have some control over prices.
Life in Cambridge
In 1927, John Maynard Keynes invited Sraffa to the University of Cambridge. This was partly because of Sraffa's new ideas about economics and partly to protect him from the dangerous political situation in Italy under fascism. Sraffa arrived in July 1927 and stayed in Cambridge for the rest of his life.
For his first three years, he taught advanced economic theory. Then, with Keynes's help, he became a librarian. This allowed him to focus on his studies and connect with many important thinkers.
Famous Connections
Sraffa was part of an informal group called the "cafeteria group" with Frank P. Ramsey and Ludwig Wittgenstein. They discussed Keynes's ideas about probability and other economic theories.
He also connected with other economists like Michał Kalecki, Maurice Dobb, Joan Robinson, and Nicholas Kaldor. Among philosophers, Frank P. Ramsey helped Sraffa with the early ideas for his book Production of Commodities by Means of Commodities, which came out in 1960.
In the early 1930s, Sraffa had a debate with Friedrich von Hayek, another economist. Sraffa carefully showed the problems in Hayek's ideas about how inflation affects savings and how interest rates are set.
In 1939, Sraffa was chosen as a fellow at Trinity College, Cambridge. A scholar named Luigi Pasinetti described five main stages of Sraffa's work in Cambridge:
- 1928-1931: He studied the history of economic theories to find the "reasonable" ideas of earlier economists.
- 1931-1940: He worked on editing the writings of David Ricardo, another important economist. This was a huge project.
- 1941-1945: He criticized the common economic ideas of his time, especially about how prices and wealth are shared. He also worked on his own economic equations.
- 1946-1955: He published the first ten volumes of Ricardo's works. This was a massive achievement.
- 1955-1960: He prepared his most famous book, Production of Commodities by Means of Commodities.
Production of Commodities by Means of Commodities
Sraffa's most important book, Production of Commodities by Means of Commodities, was published in 1960. In this book, he looked at how prices are set and how income is shared. He focused on how goods are produced using other goods, assuming that production levels and how resources are used don't change.
Sraffa wanted to improve the theory of value developed by earlier economists like Ricardo. He also wanted to show the problems in the common neoclassical theory of value and offer a different way to think about it.
In his book, Sraffa showed that:
- It's hard to figure out wages and profits at the same time. If you know the wage, you can find the profit rate, or vice versa.
- It's difficult to measure "capital" (like machines and buildings) without knowing the prices of the goods that make up that capital. So, you can't just calculate profit based on the value of capital.
- He also showed that as wages go up, businesses don't always replace workers with machines. Sometimes, it might make sense to replace machines with workers, even if wages are higher. This idea challenged the common belief that higher wages always lead to job losses.
Sraffa's ideas about capital led to a big discussion among economists known as the Cambridge capital controversy. This debate involved economists from Cambridge, England (like Sraffa and Joan Robinson) and economists from Cambridge, Massachusetts, USA (like Paul Samuelson and Robert Solow).
In 1966, it was generally agreed that Sraffa's ideas about capital were correct. This showed that the common way of explaining the "rate of interest on capital" was not always logical. This was seen as a major success for Sraffa's book.
Economists still discuss whether Sraffa's work completely disproves neoclassical economics. Many post-Keynesian economists use his ideas to explore different ways of understanding how economies work. Others think his work can still fit with modern economic models.
No matter what, Sraffa's work, especially his book from 1960, is seen as the starting point for the neo-Ricardian school of economics.
Personal Life and Connections
Piero Sraffa played a key role in getting Antonio Gramsci's prison notebooks from the Fascist government after Gramsci died in 1937. In 1924, Gramsci published a letter from Sraffa (signed only as S.). In the letter, Sraffa suggested that working with non-fascist groups was important to fight fascism. Gramsci at first disagreed but later followed Sraffa's advice.
Sraffa also had a famous influence on the philosopher Ludwig Wittgenstein. A story goes that Wittgenstein was talking about how a statement and what it describes must have the same "logical form." Sraffa made a rude gesture, common in Naples, and asked, "What is the logical form of that?" This moment is said to have helped Wittgenstein develop some of his most important ideas in his book Philosophical Investigations. Wittgenstein himself mentioned Sraffa's help in the introduction to his book.
Sraffa and Wittgenstein influenced each other deeply. Wittgenstein changed his ideas about how meaning works, moving from a very strict view to one where meaning comes from how words are used in everyday life. Similarly, Sraffa challenged the common economic ideas that focused on individual parts, instead looking at the whole system.
After his book was published, Sraffa's ideas became a big topic of discussion. Sraffa was known as a shy and private person who loved studying and books. His personal library had more than 8,000 books, many of which are now at Trinity College Library.
There's a popular story that Sraffa made a lot of money by investing in Japanese government bonds. He supposedly bought them right after the nuclear bombings of Hiroshima and Nagasaki, believing Japan would still honor its debts. Another version says he bought them during the war when they were very cheap.
In 1961, before the Nobel Prize in Economics was created, Sraffa received the Söderströmska Gold Medal from the Royal Swedish Academy of Science. He also received honorary doctorates from the Sorbonne in 1972 and Complutense University in Madrid in 1976.
Images for kids
-
Piero Sraffa
See also
In Spanish: Piero Sraffa para niños
