Can we meaningfully speak of changes in price under the regime of changes in techniques?
- Publisher: Routledge
This paper presents a simulation exercise on Sraffa's system under various types of technical changes to show that the direction of changes in prices of commodities is contingent on the choice of the numeraire. Thus, such a comparison of prices in two systems turns out to be meaningless. This result points to the arbitrary nature of the neoclassical supply functions, as they inevitably compare prices across several Sraffa systems on the basis of an arbitrarily chosen numeraire. We anticipated such a result from our reading of Sraffa as part of his 'prelude to a critique of economic theory'.