Sraffa and Modern Economics, Volume I

Determinacy of equilibria in a model of intertemporal equilibrium with capital goods

Domenico Tosato*

1 Introduction

In the history of economic thought, the theory of value with fixed capital goods and capital formation is essentially linked to the names of Wicksell and Walras. Two different analytical roads were pursued. While Wicksell’s theoretical construction builds on the notion of aggregate capital measured in value terms, Walras’s model of general economic equilibrium is based on the assumption of heterogeneous capital goods available in arbitrarily given initial quantities. Piero Sraffa’s discovery of the possibility of reswitching of techniques — and, subsequently, of more general phenomena of capital deepening reversal — represents ...