Closure for the Sraffa System: A Theory of Value, Distribution and Growth

The purpose of this paper is to pursue the implications of closing, in the sense of rendering determinate, the Sraffa equations of production, prices and distribution [Sraffa (1960)] by adding to them demand equations of the type estimated in Stone’s (1954) linear expenditure system. The motivation for the inquiry is this: it seems only natural that the closure for a system of production and price equations that have been formulated on objectivist foundations should be sought in a system of demand equations that has been designed to estimate observed consumer behaviour because it holds the promise of formulating a general equilibrium theory with empirical foundations.